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Refining the Derogation Test on Material Tax Selectivity: The Equality Test

Begoña Pérez-Bernabeu

DOI https://doi.org/10.21552/estal/2017/4/8

Keywords: Material Selectivity, Tax, Derogation, Equality Test

The research focuses on the problems that the ECJ has found in recent cases at applying the classic three step selectivity test in the area of taxation. The Court is confronted with the Member States’ attempt to circumvent the State aid rules by creating ad hoc general tax systems so there is no general system against which the tax measures can be assessed. In order to avoid this circumvention, the ECJ has shifted its case law on material tax selectivity towards a new “comparability test” (also called “equality test”) based on a non-formalistic approach which takes into account the underlying objectives of the tax measure. This “comparability test” encompasses an objectives-based approach which provides Member States a higher degree of freedom. However it seems to be rather vague because it involves the difficult task of distinguishing permissible goals from impermissible goals which irretrievably leads us to a case-by-case analysis which does not provide the desirable degree of legal certainty and predictability. The main conclusion of this research is that the criterion of material tax selectivity is not definitively formulated in the ECJ case law but, on the contrary, it is open to refinements in order to meet the challenges that current and future State aid cases may raise.
Keywords: Material Selectivity; Tax; Derogation; Equality Test.

Begoña Pérez-Bernabeu, Associate Professor, Tax Law Department, Faculty of Law, University of Alicante, Spain. This paper falls within the framework of a research project funded by the Spanish Ministry of Economy and Competitiveness, Reference DER2015-68072-P (MINECO/FEDER) of which the author is Principal Investigator of the research team. Moreover, the author is also a member of the Research Group of Excellence PROMETEO/2016/053, funded by the Spanish Regional Government of the Comunidad Valenciana (Conselleria de Educación, Investigación, Cultura y Deporte, Generalitat Valenciana).


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