The paper is focused on issues of fiscal policy coordination in the Euro area and the national fiscal policy optionswith regard to the convergence requirements for the entry of the EMU by new EU member states. The mainresearch question concerns the evaluation of the impact of the fiscal sovereignty in the new EU member states ontheir preparation to join the Euro area.The differentiation of fiscal policies in the EU has become an issue in achieving compliance with the EMU criteriafor public finances. An evaluation is made of the considerable differentiation of the EU national tax systems andtax structures which result in tax competition among different member states and in erosion of the taxharmonization achieved in the Single market.The differentiation of the direct taxes among the old and the new EUmember states is analyzed in order to discuss the options for further coordination of the corporate taxation.As the existing fiscal barriers among the EU states have become a substantial barrier to the internal trade in theEU further steps to tax harmonization are revealed as a medium term options.The challenges of cyclical adjustment and fiscal consolidation sustainability in the new EU member states areanalyzed by comparative study of their own experience and that of the EMU member states. Different types offiscal policies are analyzed quot; reflationary, deflationary and supply side oriented policies.Based on empirical analysis the comparison of three types of fiscal policies is undertaken in order to evaluate thehigh degree of differentiation among the implemented fiscal policies in the countries’ “ins” and “outs’ of theEMU of the EC.Conclusions are drawn for the main trends in the EU governance reform and the fiscal sustainability of the EMUmember states and the new EU member states.
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