In matters of tax eu countries have mostly opted for vat

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. VAT is a taxation system that bypasses the perils of double taxation while also ensuring better adherence to tax payments.

Most countries around the globe usually depended on traditional sales tax systems as a means of collecting revenues through taxes. However, the system was not perfect and goods as well as services were taxed multiple times under this system. Vat is applicable every-time specified goods or services change hands and vat registered traders simply get back the paid tax amount when they issue a vat invoice to their clients and collect the tax back. Regular vat returns ensure that traders provide all vat details to their respective vat departments.

Most eu countries including Denmark, Greece, Sweden, France, Italy, Poland, Germany, Spain, Ireland, Hungary, the UK, Portugal, and Austria, among others have opted to remain with vat while other countries around the globe too have shifted to this method of collecting taxes on goods and 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 UK have 3 basic vat rates that are charged whenever goods or services are sold. The standard rate of vat is what is usually 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 a few others fall into 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 has its own vat rate classifications where thousands of goods and services are segregated according to their vat rates.

Traders that want to follow the vat system need to turn into vat registered traders in their own 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 knowledge of eu vat and uk vat rules, especially if they import goods or services from member eu countries into 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 another country could be claimed back by a trader by opting for vat refunds, which in turn would help avoid double taxation and provide a cash flow boost to the trader’s business.

Vat has been openly welcomed by most eu countries including the UK, and traders can quickly understand the system once they turn into vat registered traders. An expert vat agent on hand can 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 opted for vat and this unified system has helped many traders in such countries to quickly recover previously paid taxes.