Graduate paper analyzes tax competition as a function of increasing the quality of life in the member states of the European Union. Tax competition is the subject of many discussions as it represents the competition between states at the level of tax rates, and also the situation in which tax policy affects the level of income available to tax systems in other countries. The European Union has devised a Fiscalis program that encourages co-operation between countries' tax systems to function properly. The paper analyzes the tax environment of member states, the trend of tax revenues and harmful tax competition. The most commonly it is referred to "race to the bottom" that cause negative effects, and they are reflected in reducing the welfare of the population of all countries, suboptimal levels of taxation and underestimation of public goods. Tax harmonization allows the adjustment of tax rules to avoid national tax measures to not adversely affect the functioning of the common market. Harmonization is most commonly achieved with indirect taxes not governed by a common tax policy. On the other hand, tax competition increases the mobility of the population, attracts labor, contributes to the growth of gross domestic product in which they come and reduces unemployment. Such competition favors the less developed countries. Multinational companies are investing around the world and expect as much investment return as possible and are considered as drivers of tax competition. Aside from the tax burden that affects the investment decision in a country, factors such as the degree of education, presence of new technologies, business costs and others are highlighted