The Case for an EU Cap on Interest on Underpaid Tax: Protecting the Internal Market

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review


This article examines whether the differences in the calculation of interest on underpaid taxes among EU Member States could conflict with or impact the functioning of the EU internal market. The analysis indicates that such a conflict exists, and that an EU minimum standard protecting taxpayers’ rights is justified to remedy this while harmonizing the rules on interest accrual entirely would likely exceed the limits of the proportionality principle. The article’s starting point is the recent Danish Supreme Court ruling on beneficial ownership which recommends that the Danish legislator review national rules on interest accrual in cases of prolonged tax proceedings and consider a remedy that allows disputed amounts to be deposited with tax authorities. It evaluates the international and EU legal frameworks addressing this issue and compares interest accrual rules between Member States. The article finds that these legal frameworks offer insufficient guidance. It also discusses the Danish Supreme Court’s suggested remedy and asserts that it is ineffective and inefficient. Furthermore, this study demonstrates that it is not suitable as an EU minimum standard, and the latter should instead be designed as a maximum percentage of the disputed amount. This relatively simple approach is a suitable manner for realizing the intended objective as it would incentivize taxpayers to pay their tax bills on time while safeguarding their fundamental human rights wherever they are established in the EU. Moreover, it would prevent placing undue administrative burdens on either taxpayers or tax administrations and would not impede Member States’ abilities to design their tax administrative procedures to fit their national tax systems and practices.
Udgave nummer1
Sider (fra-til)8-23
Antal sider16
StatusUdgivet - 2024

Bibliografisk note

Published online: December 2023


  • Tax surcharges
  • Tax penalties
  • Interest
  • EU
  • Internal market
  • Taxpayers' rights