The organisation of the tax system and the definition of tax policy are determined by each state in its own way, depending on all the significant factors that characterise that state. However, within the single internal market of the European Union, Member States should pursue tax policies that move in broadly similar directions, since the activities and measures undertaken by one country may have an impact on neighbouring and other countries. In this respect, the European Union plays only a supporting role, and its objective is not to “standardise” national tax systems, but rather to ensure that they are compatible not only with one another, but also with the objectives laid down in the Treaty establishing the European Community. Given that taxes, from the perspective of the subject matter of taxation, may constitute a barrier to the implementation of the fundamental principles of free trade and the basic elements of the internal market, the need arose for the harmonisation (alignment) of certain tax laws of European Union Member States, as well as of countries committed to accession to the European Union.
Key Words: internal market, tax competition, European Union law.