Fiscal dumping or legitimate competition?

The concept of fiscal dumping evokes unfair behaviour, similar to trade dumping, in which a country adopts aggressive policies to damage its competitors. According to Prof. Valente, however, this view is misguided.
EU Member States are bound by two fundamental principles:

• Minimum coordination guaranteed by European institutions, which imposes common rules on taxation and competition
• The fiscal sovereignty of Member States, which can set their own tax rates, provided they remain within the bounds of legal legitimacy.

‘Low tax rates do not mean dumping. They are legitimate instruments of fiscal and economic policy. There is no European ban on setting more competitive tax levels.’ The phenomenon of tax base mobility, Valente observes, is structural and inevitable: taxpayers and businesses move to more favourable jurisdictions. To speak of dumping is to confuse a physiological mechanism of competition with an unfair practice.

Italy: a fully legitimate system

Italy, Prof. Valente emphasises, operates in full compliance with European rules.
“There is nothing illegal about it. Italy, like other states, exercises its fiscal sovereignty. It is natural for taxpayers to evaluate the available options and choose based on convenience. It is the responsibility of each state to create the conditions to retain its taxpayers and attract new ones.”
Economic and fiscal history shows that competition is a constant. Just think of Ireland, which already in 1996 adopted a corporate tax rate of 12.5%, becoming a magnet for multinationals.
Today, globalisation, digitalisation and even the metaverse are amplifying this dynamic, making companies “invisible” and increasingly mobile.

The European comparison: Ireland, the Netherlands, France

The Irish and Dutch cases are emblematic examples of how fiscal sovereignty can be used to attract investment and tax bases.
In recent years, Italy has introduced measures that follow the same logic, but adapted to its own economic and social specificities. France, for its part, could adopt similar strategies to make its system more attractive.
In this sense, competition between states is not an anomaly but a feature of modern international taxation.

The real issue: lack of multilateral coordination

The issue, Prof. Valente points out, is not simply a matter of alleged dumping. The central problem is the absence of solid multilateral coordination.
Every time a legal or regulatory element is introduced into the value chain – tariffs, tax rules, special regimes – companies and states react. It is a game of action and reaction that fuels tax competition.
Tax laws, most of which date back to the 19th century, are struggling to adapt to the complexity of the digital and globalised economy. Without a more cohesive common framework, competition risks degenerating into fragmentation.

Conclusions: towards a balanced European tax system

The French Prime Minister’s statements have sparked a political debate, but they do not accurately reflect the legal and economic reality.
According to Prof. Piergiorgio Valente:

• Italy does not engage in tax dumping
• the Italian system is fully legitimate and compliant with European rules
• taxpayer mobility is a natural and recognised phenomenon
• the future requires greater coordination and shared rules

The challenge for Europe is not to limit tax competition, but to steer it towards criteria of fairness, transparency and sustainability, ensuring that tax attraction policies promote real development in the territories and not just the migration of tax bases.