Tax law and corporate law as competitive factors

Tax Law belongs to the central factors of entrepreneurial activity. As such, it is doubly exposed to the notion of competition: it shapes the competition of market participants amongst each another, and it is a central issue of an increasing competition of Member States against each other. The design of a tax system therefore shapes the economic power of a state and beyond, as well as the efficiency of its social welfare systems. International tax competition has also major impacts on the provision of public services. The situation in corporate law is not much different - it offers the legal framework for the combination of capital and labour and can facilitate market processes but equally hinder them. Therefore corporate law competition in Europe must be scrutinized in more detail.

Even though the concept of regulatory competition may be alien to the reasoning of the traditional jurisprudence in tax and corporate law, which was focused on the isolated nation state, it is a fact today that cannot be denied. The follow-up questions concerning the reactions of individual states to the challenges posed by this unusual market situation are of great importance. A scientific approach first of all requires a comprehensive analysis of the economic foundations of this competitive behaviour, which, however, must be complemented by an empirical survey of the existing "methods of attack and defence".From a legal standpoint, the consequences are twofold: On the level of national law the question surfaces how to account for international factor mobility in the context of tax or corporate law. On the level of international law it must be examined whether and to what extent this competitive behaviour is restricted by legal rules (such as WTO law, EU law or bilateral treaties).