Most European Union countries have slowly switched over to VAT or value added tax on services and goods, and in order to comply with a common code all eu countries that follow vat have 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 states 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 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 and also to plug tax holes https://vatvalidation.com/vat that were previously draining precious resources. Each vat enabled country has its own interpretation of european vat or europa vat rules that might vary slightly but they are almost similar in principle.
For instance, in the UK a trader that has crossed over the vat threshold limit will have to turn into a vat registered trader before issuing any vat invoice. The following vat collected from the trader will then be adjusted against any vat paid and 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 United Kingdom. Similarly, a trader in Poland would need to issue a faktura invoice, which essence is really a vat invoice but in Polish language, and pay vat to the relevant vat department in that country.
Since each country has adopted vat in a slightly different manner by applying varying vat rates to similar products, traders all over Europe usually need to hire a vat agent or vat consultant to help file vat returns regularly. These agents need 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 may be conversant with uk vat rules. In the event that trader imports goods from other vat countries in Europe which have already charged vat on the same then the vat agent of this trader will be able to file for vat refund so as to reclaim vat back. This process is quite lengthy but can help European traders recover vat amounts previously paid, which in turn can lower their costs and improve their income.
The europa website tries to educate all vat enabled eu countries to adhere to a standard system of vat so as to decrease friction among member countries as a result of varying vat rates on similar goods or services. Several European countries too have come up with their very own amendments as they attempt 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 as they have witnessed higher revenue collections over time. However, in a bid to ensure better co-operation between states, vat eu directives and amendments issued by the European Commission are making constant efforts to improve the system of collecting and refunding vat.