Subject of this paper is the income tax in the countries of the European union. This final paper begins with the description of the income tax itself, it's relatively short history, process of it's billing and development, and it's application in certain countries. After that the general characteristics of the income tax are stated, it's goals and it's effects on the modern tax systems are mentioned, and the three basic forms it can appear in are described. Furthermore, the disadvantages of it are stated as are the categories of the tax rates which it can be classified in. Next up the subject of tax harmonization between the tax systems of countries of the European union is brought up, and the basic principles of the harmonization itself are described. After that the concept of the dual income tax is introduced, it's history and application. In the end, the income tax systems in specific countries of the European union are described and explained, and the function of the income tax in the Republic of Croatia is analyzed in more detail.