Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most European countries Vatcontrol.com
. in the future years as well as in matters of tax eu countries have mostly opted for vat is a taxation system that bypasses the possible risks with double taxation while also ensuring better adherence to tax payments.
Most countries around the world usually depended on traditional sales tax systems as a way of collecting revenues through taxes. However, the system wasn’t perfect and goods as well as services were taxed multiple times under this system. Vat is applicable every-time specified goods or services 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 ensure that traders provide all vat details to their respective vat departments.
Most eu countries including Denmark, Greece, Sweden, France, Italy, Poland, Germany, Spain, Ireland, Hungary, the United Kingdom, Portugal, and Austria, amongst others have opted to remain with vat while other countries around the globe too have shifted to this process of collecting taxes on products or services. Although vat rules differ slightly in a number of countries, most of them do remain similar in principle to other countries although vat rates on similar items might differ.
Most eu countries such as the UK have 3 basic vat rates which might be charged whenever goods or services are sold. The regular rate of vat ‘s what is usually charged on most products or services, which range from 15-25%. Other products or services fall under the reduced vat rate of 1-5%, while a few others fall into the zero vat rate category. There are also 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 goods and services are segregated in line with their vat rates.
Traders that want to adhere to the vat system need to become vat registered traders in their own country. This can be achieved by crossing the vat threshold limit set by their country. In this vat tax eu countries too have various threshold limits and traders might need to appoint a vat agent with good knowledge of eu vat and uk vat rules, particularly if they import goods or services from member eu countries to the UK. When a trader gets vat registration then the business will have to issue vat invoices mentioning vat rates clearly as well as file regular vat returns. However, any vat paid in a foreign country could be claimed back by the trader by opting for vat refunds, which in turn would aid in avoiding double taxation and give 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 understand the system once they become vat registered traders. A professional vat agent on hand 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 opted for vat and this unified system helps many traders in these countries to quickly recover previously paid taxes.