Introduced first in France in 1954, VAT or value added tax was slowly implemented in most European countries Vatcontrol.com
. Within the coming years as well as in matters of tax eu countries have mostly opted for vat can be 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 means 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 relevant every-time specified services or goods change hands and vat registered traders simply get back the paid amount of taxes 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 shifted to this method of collecting taxes on products or services. Although vat rules differ slightly in various 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 sold. The standard rate of vat is what is normally charged on many products or services, which range between 15-25%. Other goods and services fall into the lower vat rate of 1-5%, while a few others fall into 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 thousands of goods and services are segregated in line with their vat rates.
Traders that are looking to adhere to the vat system need 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 particular 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 goods or services from member eu countries to the UK. When 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 another country could be claimed back by a trader by opting for vat refunds, which often would help avoid double taxation and provide 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 quickly understand the system when they become vat registered traders. A professional 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 this unified system has helped many traders in such countries to quickly recover previously paid taxes.