Most European Union countries have slowly switched over to VAT or value added tax on goods and services, and in order to abide by a common code all eu countries that follow vat need to follow vat eu directives. These directives are amended regularly in a bid to further fine tune the system so as to avoid tax leaks and make sure better co-operation among member countries in collecting and refunding vat.
The European Union through its website ec.europa.eu tries to educate member countries and vat registered traders in a variety of countries on a number of rules and 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 the system of vat tax in a bid to improve tax revenues and also to plug tax holes that were previously draining precious resources. Each vat enabled country has its own interpretation of european vat or europa vat rules that may vary slightly but they are almost similar in principle.
For instance, in the UK a trader that has crossed over the vat threshold limit will have to turn into a vat registered trader before issuing any vat vatvalidation.com/vat invoice. The subsequent vat collected from the trader is then 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 UK. Similarly, a trader in Poland would need 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 over Europe usually have to hire a vat agent or vat consultant to assist file vat returns regularly. These agents need to be experts in interpreting vat eu rules and vat rules applicable in their own country. For instance, a UK trader with vat registration needs to appoint a vat agent that is conversant with uk vat rules. In the event that trader imports goods from other vat countries in Europe which have already charged vat on the same then a vat agent of this trader will be able to file for vat refund in order to reclaim vat back. This method is pretty lengthy but can help European traders recover vat amounts previously paid, which inturn can lower their costs and enhance their income.
The europa website attempts to educate all vat enabled eu countries to adhere to a standard system of vat in order to decrease friction among member countries 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 as they have witnessed higher revenue collections over time. However, in a bid to make sure better co-operation between states, vat eu directives and amendments issued by the European Commission have made constant efforts to improve the system of collecting and refunding vat.