Most EU countries have slowly switched over to VAT or value added tax on services and goods, and in order to comply with a common code all eu countries that follow vat need to follow vat eu directives. These directives are amended regularly in a bid to help optimize the system so as to avoid tax leaks and make sure better co-operation among member countries in collecting and refunding vat.
The European countries through its website ec.europa.eu attempts to educate states and vat registered traders in a variety of countries on a number of 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 shifted to vat check 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 has its own interpretation of european vat or europa vat rules that might vary slightly but are almost similar in principle.
For example, in the UK a trader that has crossed over the vat threshold limit will need to turn into a vat registered trader before issuing any vat invoice. The subsequent vat collected from the trader will then be 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 but in Polish language, and pay vat to the relevant vat department in the country.
Since each country has adopted vat in a slightly different manner by applying varying vat rates to similar products, traders all over Europe usually need to hire a vat agent or vat consultant to assist file vat returns regularly. These agents have to be experts in interpreting vat eu rules and vat rules applicable in their own country. For instance, a UK trader with vat registration needs to appoint a vat agent that is conversant with uk vat rules. If that trader imports goods from other vat european countries which have already charged vat on the same then a vat agent of this trader should be able to apply 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 enhance their cash flow.
The europa website tries to educate all vat enabled eu countries to adhere to a common system of vat so as to decrease friction among member countries due to varying vat rates on similar goods or services. Several European countries too have come with their own amendments as they try to adapt completely to eu vat directives for better vat compliance in their country and across borders too.
The move of shifting over to vat has benefited various European countries since they have witnessed higher revenue collections over time. However, in a bid to ensure better co-operation between member countries, vat eu directives and amendments issued by the EU Commission are making constant efforts to improve the system of collecting and refunding vat.