​Taxation is the competence of the EU Member States, which have granted the EU only limited powers in this area.

European tax law

Taxation is the competence of the EU Member States, which have granted the EU only limited powers in this area. As EU tax policy aims to ensure the smooth functioning of the single market, harmonisation of indirect taxation was carried out earlier than harmonisation of direct taxation. Recently, combating harmful tax evasion and avoidance has become a priority policy area. Measures in the field of taxation must be adopted unanimously by the Member States. The European Parliament has the right to give an opinion in the field of taxation, except in budgetary matters, where the Parliament is co-legislator.

The objectives of the European tax law

The EU tax policy strategy is set out in the Commissions communication entitled "Tax policy in the European Union - Priorities for the years ahead". The decision to introduce, abolish and modify taxes is left to the EU Member States. Each Member State has the right to choose the tax system it considers most appropriate, provided that it respects european tax rules. In this context, the main priorities of EU tax policy are the elimination of tax obstacles to cross-border economic activity, the fight against harmful tax competition and tax evasion, and the promotion of closer cooperation between tax administrations in ensuring control and combating fraud. Greater tax policy coordination would result in Member States tax policies supporting wider EU policy objectives

Initiatives and progress

The annual tax activity report published by the Commission presents the EUs achievements and the tax issues to be addressed. In light of media reports on the sheer scale of the phenomenon, the fight against tax fraud and aggressive tax planning has been identified as a political priority. Work is also underway to reform the corporate tax system to make corporate taxation in the EU fairer and better suited to the modern digital economy within the internal market, and another policy priority is to develop a targeted VAT system.

On 1 January 2018, legislation came into force requiring Member States to provide tax authorities with access to data collected under anti-money laundering rules. National tax authorities gain direct access to information about the beneficial owners of companies, trusts and other entities, as well as records of companies due diligence on customers. Under the new european tax rules, tax authorities can quickly and effectively intervene in cases of tax evasion and avoidance and eliminate criminal structures.

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