Dynamic References to International Soft Law Agreements: Flexibility with Limits

The European Union relies increasingly on non -binding international agreements as a blueprint for its legislation on direct taxation. This implies converting a flexible soft law instrument into hard law that is subsequently difficult to amend due to the unanimity principle. A nascent trend to ensure that such Union legislation nevertheless stays in sync with future developments of the underlying soft law agreement are dynamic references to the latter. However, the scope for this approach is limited by the requirements of sufficient democratic legitimacy and legality of taxation, and respect for the institutional balance of the Union. Dynamic references to international soft law standards should therefore primarily be used as a source of interpretation or illustration for the concretization of already executable rules in the relevant EU legal act. They do not normally allow to incorporate also amendments and supplements of the original soft law agreement, unless additional safeguards exist that ensure compliance with the aforementioned Union law principles - at the expense of the desired flexibility, however. In this regard, the better approach would be the conferral of delegated powers upon the Commission to ensure a timely yet controlled alignment of the relevant Union tax legislation with new soft law standards.