"The internal market of the European Union refers to the fusing together of the economies of the Member States of the EU and the creation of an integrated market in which the factors of production, as well as the fruits of production, can move freely, without hindrance. In order to achieve this, an area without internal frontiers in which a free movement of goods, persons, services and capital is ensured has been created. This “Single Market” is all about bringing down barriers and simplifying existing rules to enable everyone in the EU to make the most of the opportunities offered by these “four freedoms”. Even though the idea behind the internal market is to create an area with no obstacles for the enjoyment of the four freedoms, member States may restrict free movement in exceptional cases, for example when there is a risk resulting from issues such as public health, environment or consumer protection. In the absence of a justification, hindering free movement across the internal market is forbidden.
State aid means that a company receives government support. As this government support might lead to an advantage over its competitors, it could distort the free competition within the European Union. Therefore, European Union law generally prohibits state aid, unless it is exceptionally justified by reasons of general economic development. State aid is thereby defined as an advantage in any form whatsoever conferred by national public authorities to undertakings on a selective basis, which as a result distorts or may distort competition or is likely to affect trade between the member states of the EU. Subsidies granted to individuals or general measures open to all enterprises, such as general taxation measures or employment legislation, are not covered by this prohibition and do not constitute state aid.
Corporate taxation relates to the taxation imposed on the income or capital of corporations or analogous legal entities. Breaches of corporate tax law and arrangements to evade legal obligations, thereby defeating the object or purpose of the applicable corporate tax law, can negatively affect the proper functioning of the internal market of the European Union. Such breaches and arrangements can give rise to unfair tax competition and extensive tax evasion, distorting the level playing field for businesses and resulting in a loss of tax revenues for Member States and for the budget of the European Union as a whole. Tax evasion has to be distinguished from tax avoidance, which is legal. Tax avoidance namely entails all legal actions taken to lessen tax liability and maximise after-tax income. Examples of this could be to take legitimate tax deductions, set up a tax deferral plan or to take tax credits for spending money for legitimate purposes. Making use of a tax loophole is also tax avoidance, since this entails a way to reduce taxes by a lack of legislation prohibiting this. Tax evasion on the other hand is using illegal means to avoid paying taxes. This usually involves hiding or misrepresenting income, by for example underreporting income, inflating deductions without proof, hiding or not reporting cash transactions or hiding money in offshore accounts."