The Selectivity of Tax Measures: A Tale of Two Consistencies

Abstract:

The selectivity criterion under Article 107 (1) Treaty on the Functioning of the European Union (TFEU), which in many cases is decisive for assessing whether Member States’ tax benefits constitute state aid, is often still construed along the lines of the ECJ’s Adria-Wien Pipeline decision. However, the ECJ has in the meantime taken a markedly different course with its landmark Paint Graphos and Gibraltar decisions. Against this background, the present contribution argues that the selectivity criterion should impose two cumulative consistency requirements on Member States. De jure selectivity addresses internal consistency, i.e., the consistent implementation of their own reference systems whereas de facto selectivity could in the future guarantee external consistency, i.e., compliance with international minimum standards.

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