Dissemination of Tax Good Governance Standards by the EU and the OECD : A Comparative Analysis of Changes in Treatment and Tone

The limited powers of the European Union (EU) in the field of direct taxation law have traditionally been interpreted against the background of the significance of fiscal policy for national concepts of sovereignty. The EU’s actions in direct tax matters have therefore chiefly focused on selective measures to harmonize the corporate taxation systems of the Member States. Nevertheless, initiatives for a common external fiscal policy at the Union level have grown in importance in the 21st century, in particular in connection with the dissemination of the EU standards for good governance in the tax area (hence, tax good governance).From the outset, tax good governance has been linked to the ideas of transparency, exchange of information and fair tax competition (those were later complemented by anti-BEPS minimum standards). Notwithstanding, the EU’s approach to communicating, disseminating and executing its norms has undergone noticeable changes over the past 14 years. Early documents still centered on pushing the EU’s agenda forward by way of identifying case-by-case solutions at the negotiation stage, thereby arguably acknowledging the importance of equal footing. By contrast, more recent instruments – most prominently the EU list of non-cooperative jurisdictions for tax purposes (EU blacklist) – are characterized by the unilateral imposition of EU standards and parallel introduction of defensive (tax and non-tax) measures to encourage compliance by third countries, in particular low-income countries. These developments have not taken place in a vacuum and should therefore be read in connection with the actions taken by the relevant stakeholders as well as external powers such as international organizations and intergovernmental networks. In this regard, the different development of the approaches of the EU and the OECD to disseminate their standards of tax good governance seems particularly remarkable, since the EU has often relied on OECD concepts for the legal design of its hard or soft law and thus largely paralleled the measures taken and methods chosen at the OECD level. Against this background, this paper sets out to contribute to the scholarly discussions on the EU’s mission to promote tax good governance standards and its intersections with corresponding OECD work by assessing the changes in treatment and tone at the EU level and contextualizing these developments with parallel initiatives on harmful tax competition, transparency, exchange of information and BEPS at the OECD level. This comparative analysis allows to yield the following conclusions: that the EU’s attitude has changed diametrically in comparison to the OECD’s approach; that there are several factors which might be able to explain this rather unusual phenomenon; and that the current EU policy actions to promote tax good governance are nevertheless faced with criticism for reproducing antiquated and biased patterns of thought and behavior in relation to low-income countries which, in light of the current zeitgeist and geopolitical developments, deserve a reassessment