Most EU countries have slowly switched over to VAT or value added tax on services and goods, along with order to comply with a standard code all eu countries that follow vat need to follow vat eu directives. These directives are amended regularly in a bid to help fine tune the system so as to avoid tax leaks and ensure better co-operation among member countries in collecting and refunding vat.
The European Union through its website ec.europa.eu tries to educate member countries and vat registered traders in various countries on a number of rules and regulations that apply on current and future vat rates and refunds. Several countries in Europe including the UK, Sweden, Poland, Greece, Germany, Italy, etc have slowly moved to the system of vat tax in a bid to improve tax revenues and also to plug tax holes http://vatvalidation.com/vat which were previously draining precious resources. Each vat enabled country has its own interpretation of european vat or europa vat rules that may vary slightly but are almost similar in principle.
For instance, in the United Kingdom a trader which has crossed across the vat threshold limit will need to turn into a vat registered trader before issuing any vat invoice. The following vat collected from the trader is then adjusted against any vat paid as well as the difference is paid to HM Revenue and Customs or hmrc vat department that looks after all issues linked to customs duties, excise and vat in the UK. Similarly, a trader in Poland would need to issue a faktura invoice, which essence is a vat invoice but in Polish language, and pay vat to the relevant vat department in that country.
Since each country has adopted vat in a slightly different manner by applying varying vat rates to similar products, traders all across Europe usually have to hire a vat agent or vat consultant to assist file vat returns regularly. These agents need to be experts in interpreting vat eu rules and vat rules applicable in their own country. For example, a UK trader with vat registration has to appoint a vat agent that is conversant with uk vat rules. In the event that trader imports goods from other vat european countries that have already charged vat on the same then a vat agent of that trader will be able to file for vat refund so as to reclaim vat back. This method is pretty lengthy but could help European traders recover vat amounts previously paid, which in turn can lower their costs and improve their cash flow.
The europa website attempts to educate all vat enabled eu countries to adhere to a standard system of vat so as to decrease friction among states as a result of varying vat rates on similar goods or services. Several countries in Europe too have come with their very own amendments while they try to adapt completely to eu vat directives for better vat compliance in their own country and across borders too.
The move of shifting over to vat has benefited various European countries as they have witnessed higher revenue collections over the years. However, in a bid to ensure better co-operation between member countries, vat eu directives and amendments issued by the European Commission have made constant efforts to further improve the system of collecting and refunding vat.