Smart tax competition is a new form of undesirable tax competition within the internal market, often arising across the national borders within the internal market. This article focuses on the three main forms of smart tax competition, i.e. (i) giving selective advantages to foreign undertakings based on a smart exploitation of cross-border tax disparities, (ii) protecting domestic undertakings through compensatory relief for international double taxation and (iii) acting at the level of application of anti-abuse measures. The analysis is carried out from the perspective of the EU internal market and combines a review of compatibility (with primary EU law and, in particular, State aids) issues with a potential solution through a coordinated international tax policy at EU level and a development in the interpretation and application of State aids rules.
Intertax