Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most European countries Vatcontrol-com
. in the coming years as well as in matters of tax eu countries have mostly chosen vat is a taxation system that bypasses the perils of double taxation whilst ensuring better adherence to tax payments.
Most countries around the globe usually been dependent 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 multiple times under this system. Vat is relevant every-time specified goods or services 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 to their respective vat departments.
Most eu countries including Denmark, Greece, Sweden, France, Italy, Poland, Germany, Spain, Ireland, Hungary, the United Kingdom, 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 goods and 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 that are charged whenever services or goods are sold. The standard rate of vat is what is usually charged on many products or services, which range between 15-25%. Other goods and services fall into the reduced 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 goods and 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 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 knowledge 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 as well as file regular vat returns. However, any vat paid in a foreign country could be claimed back by the trader by choosing vat refunds, which often would aid in avoiding 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 once they become vat registered traders. An expert vat agent on hand 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 helps many traders in such countries to quickly recover previously paid taxes.