Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most countries in Europe www.vatcontrol.com
. in the coming years as well as in matters of tax eu countries have mostly opted for vat can be a taxation system that bypasses the possible risks with double taxation while also ensuring better adherence to tax payments.
Most countries around the globe usually depended 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 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 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, among others have opted to stay with vat while other countries around the world too have moved to this process of collecting taxes on goods and services. Although vat rules differ slightly in a number of 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 United kingdom has 3 basic vat rates which might be charged whenever services or goods are sold. The regular rate of vat ‘s what is usually charged on many goods and services, and these range between 15-25%. Other goods and services fall into the lower vat rate of 1-5%, while several others fall under the zero vat rate category. There are also certain vat exempt goods and services where no vat is charged and no vat can be claimed either. Each country possesses its own vat rate classifications where thousands of goods and services are segregated according to their vat rates.
Traders that are looking to adhere to the vat system have to turn into vat registered traders in their 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 understanding of eu vat and uk vat rules, particularly if they import goods or services 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 opting for vat refunds, which in turn 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 including the UK, and traders can easily understand the system when they turn into 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 this unified system helps many traders in these countries to quickly recover previously paid taxes.