Introduced first in France in 1954, VAT or value added tax was slowly implemented generally in most countries in Europe Http://vatcontrol.com
. Within the coming years and in matters of tax eu countries have mostly chosen 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 world usually depended on traditional sales tax systems as a way of collecting revenues through taxes. However, the system wasn’t perfect and goods as well as services were taxed multiple times under this system. Vat is applicable 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 ensure 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, among others have opted to remain with vat while other countries around the world too have shifted to this process of collecting taxes on products or services. Although vat rules differ slightly in various countries, the majority 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 traded. The standard rate of vat is what is usually charged on many products or services, which range from 15-25%. Other products or services fall under the reduced 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 could be claimed either. Each country possesses its own vat rate classifications where thousands of products or services are segregated in line with their vat rates.
Traders that want to adhere to 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 should appoint a vat agent with good understanding of eu vat and uk vat rules, particularly if they import goods or services from member eu countries to the UK. Once a trader gets vat registration then a business will have to issue vat invoices mentioning vat rates clearly as well as file regular vat returns. However, any vat paid in a foreign country could be claimed back by a trader by choosing vat refunds, which in turn would aid in avoiding double taxation and give 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 when they become vat registered traders. An expert vat agent on hand can 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 opted for vat and this unified system helps many traders in these countries to quickly recover previously paid taxes.