Introduced first in France in 1954, VAT or value added tax was slowly implemented in most European countries http://www.vatcontrol.com
. in the future years as well as in matters of tax eu countries have mostly chosen vat can be a taxation system that bypasses the possible risks with double taxation whilst ensuring better adherence to tax payments.
Most countries around the world usually been dependent 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 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 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 remain with vat while other countries around the globe too have shifted to this method of collecting taxes on products or 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 United kingdom has 3 basic vat rates which might be charged whenever goods or services are sold. The regular rate of vat is what is normally charged on most products or services, which range from 15-25%. Other goods and services fall under the reduced vat rate of 1-5%, while several others fall under 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 in line with their vat rates.
Traders that are looking to follow the vat system have to become 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 should appoint a vat agent with good understanding of eu vat and uk vat rules, particularly 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 may be claimed back by the trader by opting for vat refunds, which in turn would aid in avoiding double taxation and provide a income 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 on hand may also guide them during calculations and filing of vat returns in order to reclaim any previously paid vat. In matters of tax eu countries have mostly chosen vat and also this unified system has helped many traders in such countries to quickly recover previously paid taxes.