Taxation
Find out how the EU harmonises certain tax rules to support the functioning of the single market, ensure fairness and combat fraud.
The EU does not impose taxes. It is the member states which set tax rates, collect taxes and decide how tax revenues are spent.
However, some national tax rules have been harmonised in the EU to establish and ensure the functioning of the single market.
The Council is the sole legislator on EU tax matters.
What the EU is doing on taxation
Taxes are used to fund essential services such as education, healthcare, safety, investments in infrastructure and other important priorities.
The EU aligns and harmonises specific aspects of tax laws to ensure the proper functioning of the single market.
The Council decides unanimously on tax regulations and directives. The Parliament is consulted.
How the EU is fighting tax fraud
The EU promotes good tax governance, fair taxation and global tax transparency to combat tax fraud, evasion and avoidance both within the EU and at international level.
EU list of non-cooperative jurisdictions for tax purposes
In its fight against tax evasion and avoidance the Council has set up and regularly updates a list of jurisdictions which do not cooperate with member states and have failed to fulfil their commitments to good tax governance criteria or have refused to do so.
One of the consequences of the list is that funds from several EU instruments, such as the European fund for sustainable development plus (EFSD+) or the European fund for strategic investments (EFSI), cannot be channelled through these jurisdictions.
Taxation in the digital era
As economies become increasingly digitalised, tax rules need to be updated to ensure that all sectors of our economies pay their fair share of taxes and contribute to the functioning of our societies.
The EU works on updating relevant tax rules in the area of both direct (corporate) taxation and indirect taxation (VAT and excise duties), and on administrative cooperation between member states.
The EU acts as a catalyst for the ongoing global reform of international rules on corporate taxation.
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Last review: 5 February 2025