Tax harmonization

Tax harmonization is one of the goals pursued by the EU to harmonize the nationally applicable tax rates and profit determination regulations of the EU member states. There are only approaches, however, because the EU cannot bring about any regulations on its own. Rather, the national governments of the euro countries would have to agree to compromises in tax policy, which everyone can agree to. But tax policy is a core element of the national sovereignty of those countries that has largely been adhered to so far.

The member states of the EU are even trying to use national tax policies to gain advantages over other euro countries.

Example: The major corporate income tax rates vary in the EU between 38.7% and 10%. With low taxes, economically underdeveloped candidate countries in particular encourage companies to settle with them and not in neighboring countries.

The tax differential in the EU also creates incentives (e.g. for stock corporations) to shift profits to EU low-tax countries. Even if the corporate income tax rates could be harmonized and adjusted, the different profit determination regulations of the euro countries, which have a significant influence on the amount of the effective tax burden, would also have to be harmonized and adjusted.

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