The European Court of Justice is, as anyone who follows its activities will know, an unpredictable body.

A year ago, before the M&S and other judgments, everyone confidently expected it to hand taxpayers billions back in overpaid tax as had been its practice, it did an abrupt about turn and began to rule in favour of member states.

With experts predicting ‘one case a week’ of importance to tax professionals in 2007, what can we expect of the EU’s highest tax court?

What’s happened?

The ECJ has historically accepted taxpayers’ arguments when they brought cases against their member states.

States’ tax rules have to comply with the EC Treaty, which specifies in particular that taxpayers should be allowed to establish themselves wherever they wish and also move capital around freely. Any restriction on that can be challenged.

This has led to all manner of challenges under tax rules, with companies and individuals alleging that discriminatory provisions that distinguish between the rights of UK subsidiaries of companies and foreign subsidiaries, for example, restrict their movement.

The ECJ had always waived such challenges through and reprimanded governments, but things have changed.

For a start, the cases are a lot more serious. The Group Litigation Orders represent a challenge to the UK Treasury running into the billions.

Member states have forcefully made their case to European figures that the ECJ should be more concerned about those risks.

The Marks & Spencer case last year saw the court agree with the taxpayers’ claims, but quibble over the detail, severely limiting the impact. That has led some to believe that the court is now member-state friendly, and not taxpayer friendly.

What’s going to happen?

Nobody is entirely clear. Peter Cussons, the PwC partner and an avid ECJ follower, says he thinks the court has come full circle in some ways. The Cadbury Schweppes judgment this year strongly backed corporates’ right to situate treasury functions offshore, even if it was nuanced in its basics, he says.

There is a lot of discussion about the attitude of the new Eastern European judges, who are thought to be less receptive to the demands of corporates.

There is certainly a realisation in Europe that some of these claims can be expensive. But the body is tasked with implementing the single market, and whether or not the politicians exert pressure or not, that is what it is ultimately answerable to.