Has the Single Market project in Europe been a success?

Abstract The primement of the EUs champion mart was intended to create jobs and enhance prosperity. Since it was established in 1992, monumental benefits support been make to the EUs home(a) foodstuff and a lot of opportunities have been created. Despite this, m some(prenominal) problems continue to exist and shape up changes atomic number 18 necessary if the objectives of the EU ar to be fully acquire (European guardianship, 2012 1).IntroductionThe idea behind the European trade unions (EU) hotshot mart was to treat the EU as one territory so that the b ar exertion of flock, goods, money and services could be achieved (Europa, 2012 1). The integrity commercialize was established by the EU to enhance competition and trade by means of a system of standardised laws that apply to all process States (Barnard, 2002 1). This improves expertness and gives individuals to a greater extent choice when it comes to providing and attaining goods and services. The overall qual ity of the goods and services is increased, which is economically beneficial. The superstar European Act was enacted in 1986 to establish a undivided market and has since been considered one of the EUs greatest achievements (Europa, 2012 1). This led to the abolishment of indispensable border controls between EU countries in 1993 and is straight accessible to millions of people across 27 penis States. Restrictions to trade have been removed and individuals now receive better standards of living. EU law comprises of treaties and legislative provisions, such(prenominal) as Directives and Regulations that aim to secure the barren movement of goods, services, people, and capital. Despite this, phallus States ar still responsible for social welf atomic number 18 and r sluiceue enhancementation, yet the EU trances the policies of member States (Europa, 2012 1). The wholeness market has been in(predicate) in allowing people and line of businesses to move freely in spite of appearance the European scotch Area (EEA) and has in that locationfore transformed the stylus individuals live, work and travel (Mayes and Hart, 1994 177). The progress that has been made towards the development of the EUs unmarried market lead be identified in this subscribe in order to determine the extent to which it has been a success.Barriers to the free movement of goods, services, people and capitalThe whizz market was intended to remove any barriers that restrict the free movement of goods, services, people and capital. A number of varied policies have at that placefore been apparatused that seek to remove any free movement restrictions (Mayes and Hart, 1994 5). This has meaningfully rivaled many organisations and industries deep d take the ingrained market. However, unless EU policies are conformed to by all Member States it is unlikely that greater granting immunity pull up stakes be attained within the EU. This is frequently at the disbursement of widely accepted practices however this is considered necessary in achieving harmonisation. It therefore seems to be important that any barriers to trade are removed and that actions likely to impact sustainable development are eradicated. Article 101 of the conformity on the Functioning of the European Union (TFEU) (ex Article 81 EC) provides that all arrestments between at a lower placetakings, finalitys by associations of on a lower floortakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the knowledgeable market shall be strictly prohibited. Any limitations that are placed upon the emancipation to trade should therefore be prohibited so as to allow for the freedom of movement to be attained. Whether this is easy to establish in practice, is a debatable subject because although unanimous improvements have been made in the 20 course of study history of the EU, it is excrete that many obstacles still need to be overcome in guaranteeing a free market (Alam, 2007 153). oneness trade and aspirationThe initiation of the single market within the EU provides greater opportunities to businesses by providing them with access to the spheres largest trading bloc (Gov, 2013 1). This enhances economic activity whilst also creating hearty competition through the stimulation of business and innovation. This leads to growth and job insertion as export and trade will be increased Gov, 2013 1). non only does this have a beneficial impact upon the parsimony solely it also increases productivity. Consumers also benefit from a single market as competition often leads to rock-bottom costs for products and services. This was identified by Euromove when it was pointed turn up that competition is one of the main driving forces of an advanced modern preservation as it gives the consumer choice, it puts downward pressure on prices, it rewards innovation and it helps to create jobs (2009 1). Nevertheless, in order to prevent un exquisiteness and tally that the single market is a level p specifying field, the EU has introduced various runs and principles that seek to create fair competition. Such principles impose a number of burdens upon businesses within the EU, although this is considered necessary in the proper functioning of the internal market. It was evidenced by Shuibhne that the establishment of the internal market created a different focus of competition law in terms of addressing the barriers to integrating created by state intervention in the market and the problems that occurred as a result of the liberalization processes of the 1990s (Shuibhne, 2006 88).Whilst the legislative manikin is now developed, on-going improvements continue to be made so that rules and regulations are organism properly enforced and so that businesses and consumers understand the rules that exist within the internal market. This has been happening since the internal market was first established, so as to throw an effective operation of the single market. near of the improvements have included alter and enforcing single market rules, reducing the regulatory burden imposed upon businesses, and the liberalisation of certain areas including public procurement, public services and utilities (DTI, 2002 1). In spite of these improvements, there are still many underlying weaknesses that exist in the single market which seems to suggest that it may not be as successful as originally anticipated in the internal market strategy. Some of these weaknesses have deck outn as a result of failures by Member States to devour some of the Directives (Kennedy, 2011 108), a lack of co-operation that exists between Member States, or because of incapable enforcement (Kennedy, 2011 108). In 1999 the internal market strategy was put forward by the European Commission which set out(a) the aims and objectives of the establishm ent of the internal market. versatile measures were incorporated into this strategy which sought to guarantee the proper functioning of the single market. This strategy has since been re drawed on an annual basis, though it cannot be said that the internal market is complete. Therefore, despite the incident that many obstacles have already been removed by the EU, hot challenges are continually organism dealt with.It has been said that companies within the EU should take full advantage of the single market vex since the free movement of capital, goods, services and labour would be realised more easily. tax issues arising from cross-border mergers and acquisitions would effectively be minimised through economic integration. This was identified by Ilzkovitz et al the Internal Market is a powerful instrument to sanction economic integration and to increase competition within the EU and it has been the seed of large macro-economic benefits (2007 271). Arguably, it seems as though the main objective of the Single Market is to allow competition to be obtained through the ability to trade freely within the EU. In harmony with this, it would therefore be beneficial if EU Companies took full advantage of this market so as to avoid many issues that arise from various issues including the revenue enhancementation issues that result from optical fusion and Acquisitions (M&A) deals. Hence M&A deals are structured in a way that results in harsh value liabilities and since an asset-based deal will typically expose the seller to two levels of gross, corporate and personal and a stock-based transaction can be unattractive to a buyer given the impose treatment of stubborn asset values (Q Finance, 2010 1). If a company only conducts business within the single market, then they will not be exposed to such harsh tax liabilities. This encourages competition which is imperative for the advancement of the economy.However, because there are certain restrictions that exis t within the single market, companies often find it knotty to expand their business in the internal market. Thus, as argued by the European Commission national tax systems in the EU differ so much that it can be complicated and expensive for companies to expand in the single market (European Commission, 2011 1). Because of these problems, a number of proposals were put forward by the Commission to eliminate these absurdities including the introduction of a single set of tax rules, also known as a super acid Consolidated unified tax income Base (CCCTB). This would make it a lot easier and cheaper for companies to do business within the EU and as identified by Goodall all(prenominal) year the CCCTB will carry on businesses across the EU 700 million in trim back deference costs, and 1.3 billion through consolidation (2011 53). The current problems that emerge from companies incoming into M&A dealings would be removed and harsh tax liabilities would be avoided. Long term adminis trative improvements would also be made for those companies operating in multiple member states (Drysdale, 2007 66), which is welcoming for those companies wishing to save on taxation. The freedom of movement will be likely to be obtained more easily by the implementation of a CCCTB. This will for certain encourage competition within the single market and more companies would well-nigh likely enter into M&A deals as a result.Conversely, not all agree that the CCCTB is effective, however, and as a result of this many Member States have refused to support its implementation. It is felt that a CCCTB would be a de facto invasion of their tax sovereignty should such a Directive be scripted into law (Ernst and Young, 2011 40). This provides an example of how Member States will not implement every Directive that exists under EU and signifies how greater co-operation is needed. In spite of this, there are many drawbacks that exist within a CCCTB and it is questionable whether the tax adv antages of a CCCTB outweigh the drawbacks that would arise if it was enforced. In addition, it was confirmed by the writing table to the Treasury, Justice Greening, that the draft directive to introduce a CCCTB does not consent with the principles of subsidiarity and proportionality (Cave, 2011 87). Furthermore, it is also unlikely that the government will agree to a proposal that might threaten or limit the UKs ability to shape its own tax policy (Cave, 2011 87). In view of these assertions, it cannot be said that a CCCTB should be incorporated since it appears to be out of step with the principle of subsidiarity. This principle aimed to ensure that the EU only acted in instances where the proposed action could not be achieved by individual countries. Effectively, although there are many benefits of a CCCTB, there are also a pregnant amount of drawbacks that transpire and it seems as though the government ought to ensure that a CCCTB, if implemented, does not undermine competiti on, whilst also ensuring that extensive opportunities for tax dodging are not created. It is arguable whether this can be achieved and it seems as though bare demands will in fact be placed upon corporate tax departments.Taxation Articles 25-31 and 39-60 of the Treaty on the Functioning of the European Union (TFEU) lay down the central freedoms that are relevant to tax law and thence facilitate free movement of goods, services, persons and capital within the European Economic Area (EEA). Accordingly, as argued by Sypris, the changes made by the implementation of the TFEU influence the internal market case law of the Court of Justice, which represents a significant threat to national labour laws and practices (2008 219). The ECJ held in Gschwind v Finanzamt Aachen-Aubenstadt (Case C-391/97) 1999 ECR I-5451, 2001 STC 331, ECJ that direct taxation is a matter which falls within the competency of Member States, however, that competence must be exercised in accordance with EU law (L ee, 2010 1473). This demonstrates how Member States no longer have complete control of their own laws and that the fundamental freedoms, enshrined under the TFEU, must also be taken into consideration. As tell by Lee ever since the treaties first came into force, the fundamental freedoms have been see broadly, so as to strike down domestic legal rules inharmonious with an internal market (2010 1474). This is also exemplified under Article 26 which states that the Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market, in accordance with the relevant provisions of the Treaties. Since the laws of all Member States must guarantee compliance with Treaty provisions, tax law will be affected.The ECJs decision in Cadbury Schweppes v Commissioners of the Inland receipts Case C-196/04 2006 3 WLR 890 shows how EU law affects UK tax law. Here, it was held that the broad interpretation of the Controlled Foreign Companies (CFC) provisions w ere contradictory with EU law because of the restrictions that were being placed upon freedom of establishment under Article 56 of the TFEU (ex Article 49 EC). It was noted by the ECJ that impediment to freedom can only be justified on the prime of counteraction of tax avoidance if the enactment in question is specifically designed to exclude from a tax advantage wholly ersatz arrangements aimed at circumventing national law. Subsequent to this decision, significant amendments were made to the CFC rules under Schedule 16 of the Finance Act 2009 in order to ensure that EU law was being fully complied with. The Acceptable Distribution indemnity (ADP) exemption was abolished and changes to the Income and Corporation Taxes Act 1988 (ICTA) were made by introducing a new section 751AA. This illustrates the importance of the single market and exemplified how UK tax law will be affected by the provisions contained in the EU. The alike(p) rules will also apply in relation to the othe r Member States, though not all agree that this is appropriate. Instead, it is argued that abuses of national law can be effectuated as a result of EU law provisions and that the legislation in question must not be used as a blanket method of justifying abuses such as tax avoidance (Wellens, 2009 1). In view of this, it is manifest that national courts are required to warrant a case by case approach when considering individual situations. assorted harmonisation measures have been implemented by the EU to facilitate the integration into the single market, including the merger directive, the parent/subsidiary directive and the interest and royalties directive. The optical fusion Directive was designed to facilitate mergers across European borders so that it would be easier for companies to engage in dealings, whilst also reducing the tax burden. This was intended to establish common rules governing the cross-border merger of companies within the EEA (Cain, 2007 2). It cannot be said that tax harmonisation has been created by the Directive (Bell, 2004 1), which is again due to the relcuatnce of Member States to implement the Directive. Unless co-operation exists, the Directive cannot be fully utilised and tax harmonisation cannot be achieved. The Parent/Subsidiary Directive was designed to grant cross-border transactions the same favourable treatment as is provided for equivalent purely domestic transactions (Tiley, 2008 34) and was to be applied to parent and subsidiary companies of Member States. Akin to the Merger Directive, the harmonisation of taxes was intended yet this does not appear to have been achieved as harmonisation is still lacking. Nevertheless, because companies within Member States are still being taxed on income that has been derived from substantial interests, the Directive is not being fully implemented which may be contrary to the free movement of capital and freedom of establishment, as well as the Parent-Subsidiary Directive, because su ch income is as a rule exempt from taxation if derived by local parent companies (Morgan, 2010 18). Therefore, the extent to which these Directives are being utilised is debatable. The Interest and Royalties Directive intended to eliminate refuse tax obstacles in the area of cross-border interest and royalty payments within a group of companies (HM Revenue and Customs, 2003 1). Under this Directive companies are subjected to a reduced tax liability if their members dealt with each other within the EU. Nevertheless, because no single tax has been created it is questionable whether these Directives are in fact sufficient.Conclusion The establishment of the EUs single market has brought about significant benefits for EU Member States. A large number of jobs have been created and the opportunities for individuals within the internal market have significantly increased. Regardless of this, the extent to which the objectives of the single market have been attained remains uncertain in li ght of the obstacles that transpire. It is often difficult to determine whether a free market is truly being achieved since there is a great deal of confliction that now exists. This can be seen in relation to the provisions contained in Article 101, which restrain the free flow of goods. This is clearly contrary the free movement provisions and the courts have been faced with much difficulty over the years as a result of this. In addition, there are many inherent difficulties that arise for companies who wish to enter the internal market and although the implementation of a Common Consolidated Corporate Tax Base (CCCTB) has been proposed, it has been said that this would create even more difficulties. Nevertheless, because taxation comes into conflict with the free movement provisions because of the fact that Member States no longer have complete control of their own laws, it seems as though a CCCTB would be beneficial. Because of these obstacles, it is thereby questionable whether the single market has been as successful as one would have hoped.ReferencesAlam, S. 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