The subject of this paper is value added tax, and the aim of the paper is to investigate the role and significance of taxes in the tax system of the Republic of Croatia and the European Union. It has been established that the value added tax has a great fiscal and economic significance in every country, but also that this significance differs from country to country. This is because there are different types and different rates of this tax. In the European Union, there are only general provisions that to a lesser extent regulate the value added tax system in the member states, while the states are given the possibility of their own regulation of this tax system. The analysis of value added tax rates indicated their diversity and a wide range of tax rates. The highest tax rate in the member states is 27%, and the lowest is 19%. The Republic of Croatia has a rate of 25%, and Denmark is the only country with a higher rate (27%). It was concluded that the importance of taxes for the economy and the state budget is greater the higher the tax rate, however, other factors also play a role. Among them, the type of products and services that are taxed at reduced or general rates, as well as the structure of economic activity, stand out. It was also determined that at the average level of the European Union countries, the share of taxes in the gross domestic product, as well as in total fiscal revenues, is increasing. Considering the different economic activity and fiscal policy of the member states of the European Union, it is not difficult to understand why even today there is no stricter harmonization of this tax among the member states. Given that in most countries the value added tax is the most important tax, even small changes in its system can cause major changes for public finances, but also for the taxpayers themselves.