Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most European countries vatcontrol.com
. Within the future years and in matters of tax eu countries have mostly opted for 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 means of collecting revenues through taxes. However, the system was not 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 tax amount once they issue a vat invoice to their clients and collect the tax back. Regular vat returns make sure 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, among others have opted to remain with vat while other countries around the world too have shifted to this process 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 even though vat rates on similar items might differ.
Most eu countries such as the UK have 3 basic vat rates that are charged whenever services or goods are sold. The standard rate of vat ‘s what is usually charged on many products or services, and these range between 15-25%. Other products or services fall under the reduced vat rate of 1-5%, while several others fall into 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 has its own vat rate classifications where a large number of products or services are segregated according to their vat rates.
Traders that want to follow the vat system need to become vat registered traders in their 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 knowledge of eu vat and uk vat rules, especially if they import goods or services from member eu countries to the UK. Once a trader gets vat registration then the business will have 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 income 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 once they become vat registered traders. An expert vat agent readily available can 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 chosen vat and this unified system has helped many traders in such countries to quickly recover previously paid taxes.