Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most countries in Europe. Within the future years as well as in matters of tax eu countries have mostly chosen vat can be a taxation system that bypasses the perils of double taxation while also 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 along with services were taxed several times under this system. Vat is applicable every-time specified services or goods vat verification change hands and vat registered traders simply get back the paid tax amount when 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, amongst others have opted to stay 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 even though vat rates on similar items might differ.
Most eu countries such as the United kingdom has 3 basic vat rates which might be charged whenever goods or services are sold. The regular rate of vat is what is normally charged on many products or services, which range between 15-25%. Other products or services fall into the lower vat rate of 1-5%, while several others fall into the zero vat rate category. There are also certain vat exempt goods and services where no vat is charged and no vat could be claimed either. Each country has its own vat rate classifications where thousands of goods and services are segregated according to their vat rates.
Traders that want to follow the vat system have to become vat registered traders in their 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 have to issue vat invoices mentioning vat rates clearly and even file regular vat returns. However, any vat paid in another country could be claimed back by the trader by opting for vat refunds, which often would help avoid double taxation and give a cash flow boost to the trader?s business.
Vat continues to be openly welcomed by most eu countries including the UK, and traders can easily understand the system when they become vat registered traders. An expert vat agent on hand may 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 chosen vat and also this unified system helps many traders in these countries to quickly recover previously paid taxes.