Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most countries in Europe Vatcontrol.com
. Within the future years and in matters of tax eu countries have mostly chosen vat is a taxation system that bypasses the possible risks with double taxation whilst 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 services or goods 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 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, among others have opted to stay with vat while other countries around the world too have moved to this process of collecting taxes on goods and 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 including the UK have 3 basic vat rates which might be charged whenever goods or services are sold. The regular rate of vat is what is usually charged on most goods and services, and these range from 15-25%. Other goods and services fall into the lower vat rate of 1-5%, while a few others fall under the zero vat rate category. Additionally, there are certain vat exempt products or services where no vat is charged and no vat could be claimed either. Each country has its own vat rate classifications where a large number of products or services are segregated according to their vat rates.
Traders that are looking to follow the vat system have 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 understanding of eu vat and uk vat rules, especially if they import services or goods from member eu countries into the UK. Once a trader gets vat registration then the business will need to issue vat invoices mentioning vat rates clearly and even file regular vat returns. However, any vat paid in a foreign country may be claimed back by the trader by opting for vat refunds, which often would aid in avoiding double taxation and provide 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 when they become vat registered traders. An expert vat agent readily available 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 also this unified system has helped many traders in these countries to quickly recover previously paid taxes.