The importance of value-added tax harmonization in the European Union single market

Download This Article

Simeana Beshi ORCID logo, Bedri Peci ORCID logo

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.


The research focuses on the impact of value-added tax (VAT) harmonization as necessary to ensure the establishment and functioning of the single market. The aim is to show the legal basis and national actions taken by the nations to fulfill the Directives’ requirement for harmonization as a precondition for promoting the single market. This paper also examines Member States’ (MS) ongoing efforts to harmonize national tax systems because of fiscal sovereignty to choose its own VAT structure which prevents complete harmonization and the European Court of Justice (ECJ) interpretation approach to VAT. An example of a harmonized tax inside the European Union (EU) is VAT. The development and effectiveness of a single market is the EU’s top priority. To realize the goal of creating a single market, all barriers to the free movement of people, capital, goods, and services between the MS must be eliminated (Kollmann, 2019). To fulfill the research aims, the histogram methodology and several statistical analyses were utilized to summarize data and hypothesis testing. The findings underline that, from the MS’s viewpoint, the EU VAT is primarily a significant source of revenue. From the viewpoint of the EU, a harmonized VAT should be seen as a fundamental part of the single market. The research is of particular relevance to researchers, tax practitioners, VAT policy designers, etc. The VAT harmonization process and challenges in the EU are an excellent platform for analyzing the views of science, doctrine, and practice on this issue. This research will enable further research into the strategy and challenges of VAT harmonization.

Keywords: Harmonization, Acquis Communautaire, Single Market, Fundamental Freedoms, ECJ

Authors’ individual contribution: Conceptualization — S.B. and B.P.; Methodology — S.B. and B.P.; Validation — S.B. and B.P.; Formal Analysis — S.B. and B.P.; Investigation — S.B. and B.P.; Resources — S.B. and B.P.; Data Curation — S.B. and B.P.; Writing — Original Draft — S.B. and B.P.; Writing — Review & Editing — S.B. and B.P.; Visualization — S.B. and B.P.; Supervision — S.B. and B.P.; Project Administration — S.B. and B.P.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: H2, K2, K3

Received: 09.09.2022
Accepted: 16.02.2023
Published online: 20.02.2023

How to cite this paper: Beshi, S., & Peci, B. (2023). The importance of value-added tax harmonization in the European Union single market. Corporate & Business Strategy Review, 4(1), 142–157.