ABSTRACT
The concept of a common market involves the elimination of all obstacles to intra-community trade in order to merge the national markets into a single market bringing about conditions as close as possible to those of a genuine internal market. A debate about tax and fiscal cooperation and harmonization has existed in Europe since the foundation of the European Economic Community in 1957. It has been intensified mainly because of the European Economic and Monetary Union as national competencies in the area of monetary policy have been significantly reduced and transferred on the European Central Bank. Fiscal policy has become a basic tool for national governments to mitigate the uneven economic development and economic shocks across individual countries especially for the euro area members. But fiscal policy remains a symbol of national sovereignty, which the governments do not want to give up, so the idea of fiscal harmonization has been gradually narrowed to tax harmonization. There is also no unambiguous consensus in the extent of tax harmonization as economic theory suggests that differences in taxation may affect the economic growth and economic performance.
