Most EU countries have slowly switched to VAT or value added tax on services and goods, and in order to comply with a standard code all eu countries that follow vat need to follow vat eu directives. These directives are amended regularly in a bid to further optimize the system in order to avoid tax leaks and ensure better co-operation among member countries in collecting and refunding vat.
The European Union through its website ec.europa.eu attempts to educate states and vat registered traders in various countries on a number of rules and regulations that apply on current and future vat rates and refunds. Several countries in Europe including the UK, Sweden, Poland, Greece, Germany, Italy, etc have slowly shifted to the system of vat tax in a bid to raise tax revenues as well as plug tax holes that were previously draining precious resources. Each vat enabled country has its own interpretation of european vat or europa vat rules that may vary slightly but they are almost similar in principle.
For instance, in the UK a trader which has crossed across the vat threshold limit will need to turn into a vat registered trader before issuing any vat https://vatvalidation.com/vat invoice. The following vat collected from the trader will then be adjusted against any vat paid as well as the difference is paid to HM Revenue and Customs or hmrc vat department that looks after all issues connected to customs duties, excise and vat in the UK. Similarly, a trader in Poland would need to issue a faktura invoice, which essence is a vat invoice however in Polish language, and pay vat to the relevant vat department in the country.
Since each country has adopted vat in a slightly different manner through the use of varying vat rates to similar products, traders all across Europe usually need to hire a vat agent or vat consultant to assist file vat returns regularly. These agents have to be experts in interpreting vat eu rules and vat rules applicable in their own country. For example, a UK trader with vat registration needs to appoint a vat agent that is conversant with uk vat rules. In the event that trader imports goods from other vat european countries that have already charged vat on the same then a vat agent of this trader should be able to file for vat refund in order to reclaim vat back. This process is pretty lengthy but could help European traders recover vat amounts previously paid, which inturn can lower their costs and improve their cash flow.
The europa website tries to educate all vat enabled eu countries to follow a standard system of vat so as to decrease friction among states as a result of varying vat rates on similar goods or services. Several countries in Europe too have come with their own amendments as they try to adapt completely to eu vat directives for better vat compliance in their country and across borders too.
The move of shifting to vat has benefited various European countries since they have witnessed higher revenue collections over the years. However, in a bid to make sure better co-operation between states, vat eu directives and amendments from the European Commission are making constant efforts to further improve the system of collecting and refunding vat.