Most European Union countries have slowly switched over to VAT or value added tax on services and goods, and in order to abide by a common code all eu countries that follow vat have to follow vat eu directives. These directives are amended regularly in a bid to help fine tune the system so as 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 member countries and vat registered traders in a variety of 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 moved to www.vatcheck.com/vat the system of vat tax in a bid to improve tax revenues as well as plug tax holes which 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 are almost similar in principle.
For instance, in the UK a trader that has crossed across the vat threshold limit will have to turn into a vat registered trader before issuing any vat invoice. The following vat collected by 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 have to issue a faktura invoice, which essence is really a vat invoice however in Polish language, and pay vat to the relevant vat department in the country.
Since each country has adopted vat in a slightly different manner by applying varying vat rates to similar products, traders all across Europe usually need to hire a vat agent or vat consultant to assist file vat returns regularly. These agents have 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 is conversant with uk vat rules. If that trader imports goods from other vat european countries which have already charged vat on the same then the vat agent of this trader should be able to apply for vat refund in order to reclaim vat back. This method is quite lengthy but could help European traders recover vat amounts previously paid, which in turn can lower their costs and enhance their income.
The europa website attempts to educate all vat enabled eu countries to follow a standard system of vat in order to decrease friction among states due to varying vat rates on similar services or goods. Several countries in Europe too have come up with their very own amendments while they try 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 countries in Europe since they have witnessed higher revenue collections over time. However, in a bid to ensure better co-operation between member countries, vat eu directives and amendments from the European Commission are making constant efforts to further improve the system of collecting and refunding vat.