57 larcier Implementation of Regional Taxing Powers and EU Law: Recent Cases and Future Challenges 1 Edoardo Traversa 2 Executive Summary This article aims at determining the conditions under which local and regional authorities may exercise their taxing powers while fulfilling their obligations under European Union law. Furthermore, it seeks to assess the possibility of combining new transfers of tax competences within Member States with the achievement of the Internal Market. It results from the analysis of the EU legislation and case-law, that, in many respects, EU law not only restricts the exercise by regional and local authorities the autonomous taxing powers that have been allocated to them in the internal legal order but also limits the autonomy of the Member States to organize the allocation of taxing powers between different levels of power. 1. Taxing Powers of Regional Authorities in an European Context: Constitutional Framework or Patchwork? According to a traditional view, often expressed in the case-law of the Court of Justice 3 , the obligation of the Member States to implement EU (tax) law does not have an impact on the internal constitutional framework regulating the attribution of (taxing) powers to and their exercise by local and regional authorities. This position is however to be nuanced, in the light of the numerous examples of interaction between EU law and regional competences. 1 The present article has been already published in EC Tax Review under the title “Is it still room left in EU law for tax autonomy of Member States’ regional and local authorities?” (2011, 20, EC Tax Review 1, p. 4-15). It is based on a dissertation presented on 30 May 2007, for the joint Degree of Docteur en Droit (Catholic University of Louvain) and Dottore di ricerca in Diritto tributario europeo (University of Bologna) under the joint supervision of Prof. Di Pietro (Bologna) and Prof. J. Autenne (U.C.Louvain), before a Committee com- posed of Profs. M. Wathelet (U.C.Louvain), J. Malherbe (U.C.Louvain), F. Gallo (Rome, Italian Constitu- tional Court), G. de Vergottini (Bologna), M. Verdussen (U.C.Louvain) and Dean of the Law Faculty of the University of Louvain J.-L. Renchon. An updated version has been published under the title L’autonomie fiscale des collectivités territoriales face au droit communautaire, Brussels, Larcier, 2010. The author wished to thank Barbara Vintras, research assistant at the Catholic University of Louvain, for her valuable assistance in the preparation of the draft. 2 Catholic University of Louvain, Belgium Of Counsel, Liedekerke, Brussels. 3 See for example, ECJ 25 May 1982, Case 96/81, Commission v. the Netherlands, ECR., p. 1791, para. 12 and Case 97/81, Commission v. the Netherlands, ECR, p. 1819, para. 12; 2 February 1982, Commission v. Bel- gium., joint Cases 68/81 à 73/81, ECR, p.153, para. 5. fiscal.federalism.book Page 57 Friday, September 23, 2011 12:08 PM