Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most European countries. Within the coming years as well as in matters of tax eu countries have mostly opted for vat is a taxation system that bypasses the perils of double taxation while also ensuring better adherence to tax payments.
Most countries around the world usually been dependent on traditional sales tax systems as a way 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 goods or services vat verification 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 globe too have moved to this method of collecting taxes on products or 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 that are charged whenever goods or services are traded. The regular rate of vat is what is usually charged on many goods and services, and these range between 15-25%. Other products or services fall under the lower vat rate of 1-5%, while several 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 can be claimed either. Each country possesses its own vat rate classifications where thousands of products or services are segregated in line with their vat rates.
Traders that are looking 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. When 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 opting for vat refunds, which often would aid in avoiding double taxation and give a income boost for the trader?s business.
Vat continues to be openly welcomed by most eu countries like the UK, and traders can quickly comprehend 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 such countries to quickly recover previously paid taxes.