EU fundamental freedoms protect the rights of citizens and the rights of legal persons in cross-border cases. This puts the competences of the Member States at a natural limit. Within the framework of fundamental freedoms, the need for protection and intervention must be weighed against each other. In addition, discrimination without an international reference is not protected by EU law, so the national constitutional protection courts are responsible for this. Among other things, the various fundamental freedoms and possible restrictions on them and the justifications for them will be considered below.

At the beginning, it is important to classify the fundamental freedoms that are protected in the European Union. Because these result largely from the primary law of the EU. In this way, they also become directly applicable within the Member States. This in turn gives rise to rights for persons within the Union.

In particular, the linking of these rights to the concept of the intra-European internal market is to be highlighted in accordance with Article 3(3) TEU and Article 26(2) TFEU. This implies, for example, the free movement of goods, capital, services and people across borders within the EU. In addition, the EU's fundamental freedoms should provide the same opportunities and opportunities for all market participants. Therefore, above all, market equality and market freedom are defined as a means of fair competition.

The EU fundamental freedoms include, inter alia, the free movement of goods under Article 34 (continued TFEU), the free movement of persons under Article 45 (continued TFEU), the freedom of establishment under Article 49 (continued TFEU) and the freedom to provide services under Article 56 (continued TFEU). Lastly, the free movement of capital under Article 63 of the TFEU is one of them. There is also a competitive relationship between the individual freedoms, which must be observed in the examination.

The examination points will also be discussed later, with the general freedom of movement under Article 21 TFEU and the non-discrimination of Union citizens under Article 18 TFEU also being applicable as a test yardstick. Nevertheless, little importance has been attached to these aspects in tax law so far. In addition, these also apply in relation to the EEA States and Switzerland.

Now the EU’s fundamental freedoms are also at the heart of tax law. Primarily in direct taxes, the focus is on these freedoms. Because of the unanimity principle under Article 115 TFEU within the EU and the thus limited competence of the EU Commission and the European Council, the main competence with regard to direct taxes lies, as always, with the individual Member States. Thus, there can hardly be any talk of timely harmonisation. Conversely, the Member States must, of course, observe EU law in their regulations.

In particular, the individual fundamental freedoms can also be assigned different types of tax, which are particularly affected or must be taken into account. For example, the free movement of goods is particularly associated with sales tax, and the free movement of workers is primarily associated with income tax. Within the framework of the three remaining freedoms (freedom of establishment, freedom of movement of capital and freedom to provide services), the facts of business taxation, income from self-employment and capital income are addressed. As a result, the focus is particularly on income tax, corporate tax and business tax.

Before the audit scheme for the EU's fundamental freedoms follows, it is necessary to briefly identify any violations of these and their effects. Because it is not only the various institutions within the EU that must comply with them, but also all EU Member States. However, if a Member State violates any fundamental freedoms by means of a regulation or a law, this remains insignificant due to the priority of application of the EU.

For those Member States that have adopted a prohibited regime that is adversely interpreted in cross-border cases, there is another way to remedy this. Instead of withdrawing the entire situation, there is the option to apply this to domestic cases as well, so equality would be restored.

Logically, it is also important to pay attention to the corresponding case law of the ECJ. Because so far, it decides in each individual case independently of previous decisions. However, this entails the danger of legal certainty, as hardly a clear line seems to be visible.

2.2.1. Application of the EU's fundamental freedoms

When examining whether fundamental freedoms have been restricted in a natural or legal person, there are three different areas. First of all, the scope must be reviewed. The subdivision into the personal and the factual scope applies.

In both areas, a distinction must first be made according to the fundamental freedoms. But the freedoms of movement of persons are only applicable to EU citizens or companies established in the EU. Furthermore, for all fundamental freedoms, national discrimination in countries is not protected by the fundamental freedoms of the EU. Because this is the task of the interior constitutional protection. It is therefore important to pay particular attention to the scope of the EU's fundamental freedoms, that it must always be a cross-border issue.

In addition to the two mentioned areas of application, the spatial can also play a role. However, this is usually the case when it comes to matters with non-EU countries, but with which there are other agreements.

2.2.2. Harm on EU fundamental freedoms

The next check is on the so-called interference with fundamental freedoms. These can be divided into discriminations and restrictions. Discrimination can be further divided into direct and indirect discrimination. Direct discrimination means discrimination based on origin or, for example, on nationality. On the other hand, there is talk of indirect discrimination, unless the characteristics just mentioned are decisive, but other characteristics are used and EU foreigners are thus restricted in their rights. Often, residence or habitual residence is used as a discriminatory feature. These discriminations are generally prohibited, whether they are obvious or covert.

There may also be a restriction. In doing so, a Member State restricts fundamental freedoms through national legislation, which can logically also be illegal.

Now, with regard to possible violations of fundamental freedoms and thus arising unequal treatment, two dimensions must be considered, which the ECJ also takes into account in its examinations. On the one hand, a burden comparison is carried out, according to which cross-border processes are to be treated in the same way as purely domestic situations. In addition, a comparability test is still necessary. The international and national situation must be comparable. However, in the past, the ECJ has often applied different test densities and different comparative standards in its decisions.

Justification is the central means of either restricting or continuing to protect fundamental freedoms. This is because a balance must be struck between the internal market and the competences of the individual Member States with regard to their own tax revenue. There are justification grounds written at European level in the Treaties and recognised by the ECJ, other unwritten grounds on grounds of overriding public interest. The latter include, for example, the need for fiscal control, the maintenance of a balanced distribution of taxation powers and, as is so often the case in tax law, the prevention of abuse. In addition, an accumulation of international tax benefits should be avoided.

On the other hand, there are just as many reasons that the ECJ considers to be insufficient for a restriction of the EU’s fundamental freedoms. This includes a possible tax loss, national economic and labour market policy as well as a compensation of the advantage by other countries that are tax-favorable. The decisions of the ECJ must always respect proportionality. National measures must be appropriate, necessary and proportionate.

In conclusion, the EU’s fundamental freedoms are a very precious and highly protected value within the European Union. Consequently, there must also be strong justifications for these to be restricted. Just as with international loss offsetting, the case law of the ECJ must be observed. However, it is precisely in its decisions that the most detailed justifications are not always to be found and therefore they are not always directly traceable.