Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most European countries. in the future years as well as in matters of tax eu countries have mostly chosen vat can be a taxation system that bypasses the perils of double taxation while also ensuring better adherence to tax payments.
Most countries around the world usually depended 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 vat verification 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 make sure 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 UK, 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 including the United kingdom has 3 basic vat rates that are charged whenever services or goods are traded. The regular rate of vat ‘s what is normally charged on most goods and services, and these range between 15-25%. Other goods and services fall into the reduced 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 has its own vat rate classifications where thousands of products or services are segregated in line with their vat rates.
Traders that are looking to adhere to the vat system have to become vat registered traders in their own country. This can be 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 should 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 to the UK. Once 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 a foreign country may be claimed back by a trader by choosing vat refunds, which in turn would help avoid double taxation and give a income boost to the trader?s business.
Vat has been openly welcomed by most eu countries including the UK, and traders can quickly comprehend the system when they become vat registered traders. An expert 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.