Most European Union countries have slowly switched over to VAT or value added tax on goods and services, along with order to abide by a standard code all eu countries that follow vat need to follow vat eu directives. These directives are amended regularly in a bid to further fine tune the system in order 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 raise tax revenues as well as plug tax holes which were previously draining precious resources. Each vat enabled country possesses its own interpretation of european vat or europa vat rules that might vary slightly but they are almost similar in principle.
For example, 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 http://vatvalidation.com/vat invoice. The following vat collected from the trader is then adjusted against any vat paid and the difference is paid to HM Revenue and Customs or hmrc vat department that looks after all issues connected to customs duties, excise and vat in the UK. Similarly, a trader in Poland would need to issue a faktura invoice, which essence is really a vat invoice however 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 needs to appoint a vat agent that is conversant with uk vat rules. In the event that trader imports goods from other vat countries in Europe that have already charged vat on the same then a vat agent of this trader will be able to apply for vat refund so as to reclaim vat back. This method is pretty lengthy but can help European traders recover vat amounts previously paid, which in turn can lower their costs and enhance their cash flow.
The europa website attempts to educate all vat enabled eu countries to adhere to a standard system of vat in order to decrease friction among states as a result of varying vat rates on similar goods or services. Several European countries too have come with their own amendments while they attempt to adapt completely to eu vat directives for better vat compliance in their country and across borders too.
The move of shifting to vat has benefited various European countries since they have witnessed higher revenue collections over time. However, in a bid to make sure better co-operation between member countries, vat eu directives and amendments issued by the EU Commission have made constant efforts to further improve the system of collecting and refunding vat.