POLICY LESSONS FROM THE PROBLEMS RAISED BY THE CADBURY SCHWEPPES LITIGATION
POLICY LESSONS FROM THE PROBLEMS RAISED BY THE CADBURY SCHWEPPES LITIGATION

Summary/Abstract: This paper examines the lessons that can be drawn by a national – in the specific case the UK – government from the case-law of the ECJ in direct tax matters, especially after the Cadbury Schweppes case1. Tax matters are highly sensitive since they are closely connected with sovereignty issues. In the last 50 years the biggest sovereignty issue was status of the European Communities (now European Union), thus resulting in the highly sensitive subject of European tax law. To assess what kind of lessons this European tax law has for national governments the most important source to be examined is the case law of the European Court of Justice (hereafter ECJ) since we can assume that the basis and scope of positive harmonisation in other than direct tax matters is not so heavily disputed as this matter. The first part of the paper analyses the nature of tax law and the involvement of the EU in direct tax matters. The second part gives a general idea on the most important question of the subject, the application of the freedom of establishment according to Article 43 of the Treaty establishing the European Community (hereafter Treaty). The third part is preoccupied with the Opinions of Advocate Generals in tax cases since they are a good indicator to what considerations are given to different arguments, giving even such notions a thought which are not reflected in the judgments. The fourth part considers the most important case of the ECJ on direct tax issues before the Cadbury Schweppes case, especially because the UK was concerned.

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