The Future of EU Differentiated Integration: The Tax Microcosm

The EU’s path of integration sees it adopt harmonizing agendas in many areas of EU law. As they touch on areas of Member State sovereignty, these agendas are proving difficult to achieve, either without significant reform, or at all. As a consequence, the future development of EU law in the direction of continued integration is not certain. Differentiated integration may be the viable alternative. The research question this article therefore seeks to answer is: how far should harmonization go in the EU? In answering this question, the adoption of a case study methodology allows for generalizing from a specific example to the wider EU trajectory. Tax embodies the tensions between Member State sovereignty and EU law harmonizing agendas, and in the context of the imperative to harmonize caused by the digitization of the economy, it is a microcosm. The tax microcosm demonstrates that there are limits to how far harmonization can go in the EU, and that the future will likely see more differentiated integration.