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 and 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 depended on traditional sales tax systems as a means of collecting revenues through taxes. However, the system was not perfect and goods as well as services were taxed multiple times under this system. Vat is applicable every-time specified goods or services 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 United Kingdom, Portugal, and Austria, amongst others have opted to remain 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 various countries, most 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 which might be charged whenever goods or services are traded. The standard rate of vat ‘s what is usually charged on most products or services, and these range from 15-25%. Other products or services fall under the lower 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 adhere to the vat system need 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 have 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 choosing vat refunds, which in turn would aid in avoiding double taxation and give a cash flow boost for the trader?s business.
Vat has been openly welcomed by most eu countries like the UK, and traders can easily comprehend the system when they turn into 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 also this unified system has helped many traders in these countries to quickly recover previously paid taxes.