Robert Newey & Co
Solicitors and Chartered Tax Advisers –Regulated by the Law Society
51 Lafone Street
phone +44 (0)20 7403 0787
fax +44 (0)20 7403 6693
Robert Newey MA LLM CTA (Fellow) AIIT
Member of the Chown Dewhurst Tax Group
Tax Law in the European Union:
The Current State of Play
The European Union (the “EU”) now has 25 Member States. As a result, EU tax law now
affects more than 454 million people. This may be a good time to review the current state of
EU tax law, which has been evolving rapidly.
There has been a heated debate about tax issues in the EU for some time. European
developments have prompted many recent changes to national tax systems. This is true both
in the UK and in other member states.
Indirect taxes (e.g. VAT and customs duties)
VAT is a European tax, governed chiefly by directives.1 Directives are binding, as to the result
to be achieved, on Member States. The national authorities are free, however, to choose the
form and methods by which they achieve the result.2 VAT advice may therefore involve a
review of European law, national (e.g. UK) law and the actual practice of the tax authorities.
Customs Duties are governed by regulations.3 A European regulation is binding in its entirety
and is directly applicable in all Member States.4 It is a type of primary legislation, which should
not be confused with statutory instruments passed pursuant to UK Acts of Parliament. In
principle, therefore the customs treatment of goods is identical regardless of where goods enter
Direct taxes (e.g. income tax, capital gains tax, corporation tax)
Direct taxes are still meant to be matters for Member States, not for the EU. There are, however,
a growing number of exceptions. These are outlined below.
Legislation and other initiatives of national governments
Until recently there have only been a few European directives in the field of direct taxes. There
has been rather more activity of late. The following is a su