Chapter 16: Taxation

The acquis on taxation requires harmonisation of Member States’ (acceding countries’) tax legislation with that of the EU predominantly in the area of indirect taxation, namely value-added tax (VAT) and excise duties. and; It also covers some aspects of direct taxation (personal income tax and and; corporate income tax) and sets rules for the elimination of double taxation and; and prevention of tax evasion, while requiring administrative co-operation on tax matters.

With regard to indirect taxation, the acquis lays down the scope, definitions and principles of VAT. Excise duties on energy products, tobacco products and alcoholic beverages fall as well under the acquis in this field. EU legislation on excise duties comprises the definition of goods categories that are subject to excise duty, their production, storage and circulation within the EU, method of taxation, minimum excise duty rates and scope of exemptions. As regards direct taxation, the legislation in the field of corporate income tax covers taxes on income and capital. In the field of personal income tax, focus of the legislation is taxation of interest, pension and dividend payments made to individuals.

Furthermore, Member States are committed to complying with the principles of the Code of Conduct for Business Taxation, aimed at the elimination of harmful tax measures. Administrative co-operation and mutual assistance between Member States is aimed at ensuring a smooth functioning of the internal market as concerns taxation and provides tools to prevent intra-Community tax evasion and tax avoidance.