Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most European countries Http://www.vatcontrol.com
. in the future 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 means 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 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 thus to their respective vat departments.
Most eu countries including Denmark, Greece, Sweden, France, Italy, Poland, Germany, Spain, Ireland, Hungary, the UK, Portugal, and Austria, amongst others have opted to stay with vat while other countries around the world too have shifted to this process 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 although vat rates on similar items might differ.
Most eu countries including the UK have 3 basic vat rates which might be charged whenever services or goods are traded. The standard rate of vat ‘s what is usually 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 a few others fall into the zero vat rate category. There are also certain vat exempt products or 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 are looking to follow the vat system need to become vat registered traders in their country. This is often achieved by crossing the vat threshold limit set by their country. In this particular 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 services or goods 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 and even file regular vat returns. However, any vat paid in a foreign country could be claimed back by a trader by opting for vat refunds, which in turn would help avoid double taxation and provide a income boost for the trader?s business.
Vat continues to be openly welcomed by most eu countries like 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 also this unified system helps many traders in these countries to quickly recover previously paid taxes.