Prospects for harmonisation and convergence of tax systems of the EU countries

The harmonisation of tax systems among EU member states is essential for creating a unified market and economy. Differences in tax systems hinder economic convergence and integration, especially in the context of increased market competition. Harmonising EU tax policies, while considering national specificities, can address these challenges. The Treaty of Rome, which established the European Union, defines tax harmonisation as the alignment of tax strategies within the framework of integration cooperation, including policy coordination, standardisation, and partial unification of tax systems within international regional associations. This process aims to create a cohesive tax structure and a unified procedure for major tax collection across EU countries, without requiring complete unification. The primary areas of tax harmonisation include the alignment of indirect tax collection mechanisms (such as VAT and excise duties) and the unification of corporate taxation. The harmonisation of VAT has been particularly significant, transitioning through various stages to enhance trade transparency within the EU. Key legislation, including the VAT Directive (2006/112/EC), has established a standardised framework for VAT collection, based on the principle of destination-based taxation. Efforts to modernise the VAT system continue, with initiatives like 'VAT in the Digital Age' aimed at improving compliance and reducing fraud. Excise taxes within the EU have also been unified, with measures to standardise and simplify the processes for excisable goods. The general provisions for excise duties are outlined in Council Directive (EU) 2020/262, which includes digitised supervision of goods movement and harmonised customs procedures. Specific directives address the taxation of alcoholic beverages, tobacco products, and oil, setting minimum excise rates and allowing for national variations where necessary.