Harmonization of Direct Taxation in the EU

Proceedings of ‏The 3rd International Conference on Future of Business, Management and Economics

Year: 2021

DOI: https://www.doi.org/10.33422/3rd.icfbme.2021.06.35

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Harmonization of Direct Taxation in the EU

MSc. Matjaž Kovač



Direct taxes (personal income tax, corporation tax, capital tax) are paid on income and capital flows. Direct taxation interferes with fundamental freedoms, namely the free movement of persons (natural or legal) and the free movement of capital. In the common market, not only work and entrepreneurship are subject to the right of free movement, but also capital. Investors should be able to invest their money where they think the risk/return ratio is best. In addition, the right of establishment establishes the need for the free movement of capital, which usually involves the cross-border movement of capital (assets). In presenting article I will discuss about different types of direct tax harmonization: harmonization of taxation of mergers, divisions, transfers of funds and exchanges of shares of companies from different Member States, harmonization of the tax system of parent and subsidiaries, harmonization of the system of taxation of interest payments and royalties of related companies, and harmonization corporate income tax bases (CCCTB)

Keywords: Fundamental Freedoms, Common Market, Harmonization of Taxes, Direct Taxes, CCCTB.