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 can be 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 means of collecting revenues through taxes. However, the system was not perfect and goods as well as services were taxed several times under this system. Vat is relevant every-time specified services or goods change hands and vat registered traders simply get back the paid amount of taxes when 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 remain vat registration number with vat while other countries around the world too have moved to this method of collecting taxes on products or services. Although vat rules differ slightly in a number of countries, the majority of them do remain similar in principle to other countries although vat rates on similar items might differ.
Most eu countries such as the United kingdom has 3 basic vat rates that are charged whenever goods or services are traded. The standard rate of vat 's what is usually charged on many goods and services, and these range between 15-25%. Other goods and services fall under the reduced vat rate of 1-5%, while a few 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 possesses its own vat rate classifications where thousands of products or services are segregated in line with their vat rates.
Traders that are looking to follow the vat system have to turn into vat registered traders in their own country. This is often 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 understanding of eu vat and uk vat rules, especially if they import goods or services from member eu countries to the UK. When a trader gets vat registration then a business will have to issue vat invoices mentioning vat rates clearly as well as file regular vat returns. However, any vat paid in another country could be claimed back by a trader by choosing vat refunds, which in turn would aid in avoiding double taxation and give a income boost to the trader?s business.
Vat has been openly welcomed by most eu countries like the UK, and traders can easily understand the system once they turn into vat registered traders. A professional vat agent readily available may also guide them during calculations and filing of vat returns so as to reclaim any previously paid vat. In matters of tax eu countries have mostly opted for vat and also this unified system helps many traders in these countries to quickly recover previously paid taxes.