Introduction:

The starting point of this study is the question, whether or not the European Union has a centralized fiscal structure. Our analysis will show that the answer to this question is: No, because there is only a low or medium degree of Fiscal Centralization. But this answer is misleading, because though there might be only a low or moderate degree of Fiscal Centralization, there is a significant degree of intergovernmental fiscal relations inside the EU, which can be best described as Fiscal Integration and not as Fiscal Centralization. This paper is divided into 4 sections. In the next section we describe the fundamental characteristics of Fiscal Centralization and Fiscal Integration. In section 3 we apply the rather theoretical findings from section 2 to the case of the European Union. Section 4 summarizes the results and provides an outlook on the possible future development of the EU’s financial system towards more centralization or integration.