Introduced first in France in 1954, VAT or value added tax was slowly implemented in most European countries. in the coming years and in matters of tax eu countries have mostly opted for vat is a taxation system that bypasses the perils of double taxation whilst ensuring better adherence to tax payments.
Most countries around the world usually been dependent 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 applicable every-time specified goods or services https://vatverification.com 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, amongst others have opted to remain with vat while other countries around the globe too have shifted to this process of collecting taxes on goods and services. Although vat rules differ slightly in a number of countries, the majority of them do remain similar in principle to other countries although vat rates on similar items might differ.
Most eu countries including the United kingdom has 3 basic vat rates that are charged whenever goods or services are sold. The standard rate of vat is what is normally charged on many goods and services, which range between 15-25%. Other products or services fall under 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 in line with their vat rates.
Traders that are looking to follow the vat system have to become vat registered traders in their country. This is often achieved by crossing the vat threshold limit set by their country. In this vat tax eu countries too have various threshold limits and traders should appoint a vat agent with good understanding of eu vat and uk vat rules, especially if they import goods or services from member eu countries to 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 may be claimed back by the trader by choosing vat refunds, which in turn would aid in avoiding double taxation and provide a cash flow boost to the trader?s business.
Vat continues to be openly welcomed by most eu countries including the UK, and traders can easily comprehend the system once they become vat registered traders. A professional vat agent readily available may also guide them during calculations and filing of vat returns so as to reclaim any previously paid vat. In matters of tax eu countries have mostly chosen vat and this unified system helps many traders in such countries to quickly recover previously paid taxes.