ABSTRACT
Direct tax policy is a neglected – yet fundamental – component of the single market. For one reason, certain taxes can create serious distortions in the single market. Instead of a level playing field, citizens and companies end up facing discriminatory taxes, residents are taxed differently from non-residents, tax benefits are lost to workers who live in one country and work in another, free trade is impeded by double taxation of cross-border income flows, and the growth of genuine European multinationals is hindered. Taxation is certainly a technical issue. International taxation is perhaps the most complicated and technical of all tax policies. The distortionary influence of domestic tax measures on the establishment and functioning of the common market was recognized soon after the conclusion of the European Economic Community Treaty. Up until the 1980s, the results achieved in tax coordination were poor.
