Information & Resources
EU taxation policy
Tax policy in the EU consists of two parts:
- direct taxation (the sole responsibility of Member States)
- indirect taxation (affects free movement of goods and the freedom to provide services)
Tax policy ensures that competition between Member States on the internal market is not distorted by differences in indirect taxation rates and systems. Measures have also been adopted to prevent the adverse effects of tax competition if companies transfer money between European Union Member States.
The Treaty on the Functioning of the European Union - Articles 110 to 113 Tax Provisions
Decisions on taxation are taken exclusively by the Council of Ministers of the EU and by unanimity, in accordance with Article 113 of the Treaty on the Functioning of the European Union: “The Council shall, acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition”.
As for other policies, the Commission is responsible for proposing legislation and ensuring that it is correctly implemented.