Most European Union countries have slowly switched to VAT or value added tax on services and goods, and in order to comply with a common code all eu countries that follow vat need to follow vat eu directives. These directives are amended regularly in a bid to help optimize the system so as to avoid tax leaks and make sure better co-operation among states in collecting and refunding vat.
The European Union through its website ec.europa.eu attempts to educate states and vat registered traders in a variety of countries on some of the 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 shifted to vat check the system of vat tax in a bid to raise tax revenues as well as plug tax holes which were previously draining precious resources. Each vat enabled country possesses its own interpretation of european vat or europa vat rules that might vary slightly but they are almost similar in principle.
For instance, in the United Kingdom a trader which has crossed across the vat threshold limit will have to turn into a vat registered trader before issuing any vat invoice. The subsequent vat collected from the trader is then adjusted against any vat paid as well as the difference is paid to HM Revenue and Customs or hmrc vat department that looks after all issues linked to customs duties, excise and vat in the UK. Similarly, a trader in Poland would have to issue a faktura invoice, which essence is 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 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 that have already charged vat on the same then the vat agent of this trader should be able to file for vat refund in order to reclaim vat back. This method is quite lengthy but can help European traders recover vat amounts previously paid, which in turn can lower their costs and improve their income.
The europa website tries to educate all vat enabled eu countries to adhere to a common system of vat so as to decrease friction among member countries due to varying vat rates on similar services or goods. Several European countries too have come with their own amendments while they attempt to adapt completely to eu vat directives for better vat compliance in their country and across borders too.
The move of shifting over to vat has benefited various countries in Europe as 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 issued by the EU Commission have made constant efforts to further improve the system of collecting and refunding vat.