In matters of tax eu countries have mostly opted for vat
Introduced first in France in 1954, VAT or value added tax was slowly implemented in most countries in Europe. Within the future years and in matters of tax eu countries have mostly chosen vat is a taxation system that bypasses the possible risks with double taxation whilst ensuring better adherence to tax payments.
Most countries around the world usually depended on traditional sales tax systems as a way of collecting revenues through taxes. However, the system was not perfect and goods along with services were taxed multiple times under this system. Vat is relevant every-time specified services or goods change hands and vat registered traders simply get back the paid amount of taxes 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 United Kingdom, Portugal, and Austria, amongst others have opted to remain vatregistrationnumber with vat while other countries around the world too have moved 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 goods or services are traded. The regular rate of vat is what is normally charged on many products or services, which range from 15-25%. Other goods and services fall into the lower vat rate of 1-5%, while several others fall under the zero vat rate category. Additionally, there are certain vat exempt products or services where no vat is charged and no vat can be claimed either. Each country possesses its own vat rate classifications where a large number of products or services are segregated according to their vat rates.
Traders that want to adhere to the vat system have 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 should 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. When a trader gets vat registration then a business will need to issue vat invoices mentioning vat rates clearly as well as file regular vat returns. However, any vat paid in another country may be claimed back by a trader by choosing vat refunds, which in turn would help avoid double taxation and give a income boost for the trader?s business.
Vat continues to be openly welcomed by most eu countries like the UK, and traders can quickly understand the system when they become vat registered traders. A professional vat agent readily available 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 helps many traders in these countries to quickly recover previously paid taxes.