Enhanced co-operation: a way forward for tax harmonisation in the EU?

This paper examines the evolution of enhanced cooperation at the legislative and judicial levels and then identifies the challenges and opportunities created by these developments in the politically sensitive field of taxation. It starts by explaining how the Treaty provisions were gradually amended to simplify the application of enhanced cooperation. Following the Treaty of Lisbon, some scholars critically maintained that ¡®the procedural hurdles are still fairly high¡¯; yet, as this contribution shows, the process of ¡®liberalisation¡¯ continued through the lenient interpretation of the Treaty provisions on enhanced cooperation by the Court of Justice of the European Union. The first judgments demonstrate that the Court joined the Treaty makers in their attempt to make the procedure more workable. The downside of this development is that greater effectiveness has been achieved through the dilution of special safeguards envisaged by the EU Treaties with regard to the use of flexible regulatory instruments in European governance. The potential impact of these changes on the dynamics of tax integration in the EU is discussed in the final section.