European law on direct taxation


Article Foreword :

Part I. Introduction

Chapter I. Host State and Origin State

1. States raise taxes in order to fund their budget. Taxation is thus directly linked to the exercise of sovereignty. Since the early 20th century, (direct) income taxation has become an important component of the total State revenue.
2. Income taxation first bears on the income of individuals. It also bears on the income of incorporated entities, the income of which on the one hand may find its substance in dividends distributed by subsidiaries which have paid income tax and on the other hand is eventually distributed to individuals. Taxation of the same economic income at the level of the subsidiary, of the parent and of the individual shareholder gives rise to the problem of “economic double taxation”.
3. States traditionally affirm their jurisdiction to tax on the basis of criteria involving a nexus (link) with the income. This link may exist either with the beneficiary of the income, who is e.g. a resident of the State, or with the income itself, which finds e.g. its source in the State. […]

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