Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most countries in Europe. in the coming years as well as in matters of tax eu countries have mostly chosen vat is a taxation system that bypasses the perils of double taxation whilst ensuring better adherence to tax payments.
Most countries around the world usually depended on traditional sales tax systems as a means of collecting revenues through taxes. However, the system wasn’t perfect and goods as well as services were taxed several times under this system. Vat is applicable every-time specified services or goods vatverification change hands and vat registered traders simply get back the paid tax amount once they issue a vat invoice to their clients and collect the tax back. Regular vat returns make sure that traders provide all vat details thus to their respective vat departments.
Most eu countries including Denmark, Greece, Sweden, France, Italy, Poland, Germany, Spain, Ireland, Hungary, the UK, Portugal, and Austria, amongst others have opted to stay with vat while other countries around the globe too have moved to this method of collecting taxes on products or services. Although vat rules differ slightly in various countries, most of them do remain similar in principle to other countries even though vat rates on similar items might differ.
Most eu countries such as the UK have 3 basic vat rates which might be charged whenever services or goods are traded. The standard rate of vat ‘s what is normally charged on most products or services, and these range between 15-25%. Other products or services fall into the reduced vat rate of 1-5%, while several others fall under the zero vat rate category. Additionally, there are certain vat exempt goods and services where no vat is charged and no vat can be claimed either. Each country has its own vat rate classifications where thousands of products or services are segregated according to their vat rates.
Traders that are looking to follow the vat system need to turn into vat registered traders in their own country. This can be achieved by crossing the vat threshold limit set by their country. In this particular vat tax eu countries too have various threshold limits and traders should appoint a vat agent with good understanding of eu vat and uk vat rules, particularly if they import services or goods from member eu countries into the UK. Once a trader gets vat registration then the business will have to issue vat invoices mentioning vat rates clearly and even file regular vat returns. However, any vat paid in a foreign country may be claimed back by a trader by choosing vat refunds, which often would help avoid double taxation and provide a cash flow boost to the trader?s business.
Vat has been openly welcomed by most eu countries like the UK, and traders can quickly comprehend the system once they turn into vat registered traders. An expert vat agent readily available can also guide them during calculations and filing of vat returns in order to reclaim any previously paid vat. In matters of tax eu countries have mostly chosen vat and this unified system has helped many traders in these countries to quickly recover previously paid taxes.