This master thesis deals with the division of competences between the EU and member states according to the Lisbon Treaty, which has not yet been ratified by all the member states. My thesis is divided into four chapters. In the first chapter, I focus on the origin and nature of EU competence. Second part is devoted to the analysis of the new legal order established by the Lisbon Treaty, with an emphasis put on the new feature – categorisation of competences according to their nature. The third chapter examines principles of subsidiarity and proportionality, which represent general limitation of EU competence. Last chapter deals with the most controversial topic concerning the possibility of widening EU competence. Concretely I focus on the harmonization of national laws, flexibility clause and passerelle clauses. Present legal order as well as major decisions of the European Court of Justice are being referred to in the thesis.