This document is an excerpt from the EUR-Lex website
EU TAX POLICY
The EU has no powers to levy or collect taxes — these powers rest with EU Member States. The main focus of EU tax policy is the smooth operation of its single market, i.e. ensuring that cross-border economic activity is not impeded by tax barriers and that distortions of competition are avoided. It seeks to ensure that citizens and businesses do not experience difficulties in regard to double taxation, distortion of competition, claiming tax refunds and obtaining information on tax rules in relation to other Member States.
EU harmonisation efforts have predominantly concentrated on legislation on taxes levied on goods and services (indirect taxes, such as value added tax (VAT) and excise duties levied on energy products, electricity, alcohol and manufactured tobacco) rather than taxes on incomes or profits (direct taxes). Nevertheless, some progress has been made on measures to deal with tax evasion on savings and mutual assistance between tax administrations.
Specific rules regarding taxation are laid down in Articles 110 to 113 of the Treaty on the Functioning of the EU. Adopting harmonised legislation on taxation requires the unanimous agreement of all Member States in the Council, which has tended to act as a brake on the adoption of common rules. As a result, recently, a group of 11 Member States has been authorised to establish enhanced cooperation among themselves in the area of financial transaction tax and more use is now being made of non-binding approaches, such as recommendations, as a means of achieving coordination in the tax field.