Pillar 2, Fiat, and the EU Unanimity Rule on Tax Matters

(2023) EC Tax Review 1, 2-8

12 Pages Posted: 4 Jan 2023 Last revised: 18 Jan 2023

Date Written: January 3, 2023


Taxation is one of only a handful of policy areas within the EU where approval of new legislation is still dependent upon unanimous voting. Over the years, there have been several attempts to move away from the unanimity rule, but these have been met with strong resistance from (some) Member States. The difficulties in approving EU tax legislation, resulting from the endurance of the unanimity rule, have led to the development of various alternative circuitous paths to harmonisation, including most recently state aid law and enhanced cooperation. This Editorial considers the current approach of keeping the unanimity rule, whilst at the same time consistently exploring alternative pathways to circumvent it. Its central argument is that this approach is a reflection of the trade-off between (perceived) national tax sovereignty on one hand, and tax efficiency and fairness on the other hand. Whilst keeping this rule arguably ensures higher (although far from absolute) levels of tax sovereignty for Member States, it also results in less efficient, and probably less equitable, tax systems within the Union. Conversely, abolishing it would improve tax efficiency, and probably equity, even if it would also result in lower levels of tax sovereignty. As the recent Court decision in Fiat demonstrates, however, the current approach of keeping the unanimity rule whilst consistently exploring new alternatives to circumventing it, has led to high levels of legal uncertainty, with limited gains for either tax sovereignty, or tax efficiency and fairness.

Keywords: taxation, EU tax policy, tax sovereignty, EU legislative procedure

Suggested Citation

de la Feria, Rita, Pillar 2, Fiat, and the EU Unanimity Rule on Tax Matters (January 3, 2023). (2023) EC Tax Review 1, 2-8, Available at SSRN: https://ssrn.com/abstract=4316822

Rita De la Feria (Contact Author)

University of Leeds ( email )

School of Law
Liberty Building
Leeds, LS2 9JT
United Kingdom

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