Made in America for European Tax: The Internal Consistency Test

50 Pages Posted: 31 Oct 2007 Last revised: 27 Feb 2013

See all articles by Ruth Mason

Ruth Mason

University of Virginia School of Law


The European Court of Justice (ECJ) has come under increasing criticism for overstepping its institutional authority in tax cases by invalidating national tax regimes that are not discriminatory. This Article offers an explanation for the ECJ's difficulties in tax cases. "Overlapping taxation," the simultaneous exercise of tax jurisdiction by two countries in cross-border tax cases, tends to create real - but non-discriminatory - cross-border tax disadvantages that the Court may mistake for discrimination. When the Court invalidates such non-discriminatory tax legislation, it encroaches on the tax sovereignty of the EU Member States and jeopardizes their ability to raise sufficient tax revenue to fund their social programs. To address this problem, this Article proposes that the ECJ adopt the "internal consistency approach" in tax cases. Under this approach, developed by the U.S. Supreme Court to analyze state tax discrimination claims under the dormant Commerce Clause, the ECJ would ask: If all 27 Member States enacted the challenged rule, would intra-Community commerce bear a burden that purely domestic commerce would not also bear? This Article shows how use of this test could reduce the risk of judicial error in tax cases, thereby deferring to Member State tax autonomy while potentially fostering market integration.

Keywords: Supreme Court, European Union, European Court of Justice, ECJ, state taxation, Member State taxation, compensatory taxes, double taxation, per-country approach, overall approach, internal consistency, disparities, tax discrimination, Schumacker, Schempp, Marks & Spencer, Manninen, integration

JEL Classification: F15, H20, H24, H70, H77, K34, K35, P52

Suggested Citation

Mason, Ruth, Made in America for European Tax: The Internal Consistency Test. Boston College Law Review, Vol. 49, No. 4, 2008, Available at SSRN:

Ruth Mason (Contact Author)

University of Virginia School of Law ( email )

United States

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