Most European Union countries have slowly switched over to VAT or value added tax on goods and services, along with order to abide by a standard 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 in order to avoid tax leaks and make sure better co-operation among member countries in collecting and refunding vat.
The European countries 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 the system of vat tax in a bid to improve tax revenues and also to plug tax holes which 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 across the vat threshold limit will need to turn into a vat registered trader before issuing any vat vatvalidation.com/vat invoice. The following vat collected by the trader will then be adjusted against any vat paid and 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 but 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 through the use of varying vat rates to similar products, traders all over Europe usually need to hire a vat agent or vat consultant to help 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 has to appoint a vat agent that is conversant with uk vat rules. If that trader imports goods from other vat countries in Europe which have already charged vat on the same then the vat agent of this trader will be able to file for vat refund so as to reclaim vat back. This process is quite lengthy but could help European traders recover vat amounts previously paid, which in turn can lower their costs and enhance their income.
The europa website tries to educate all vat enabled eu countries to follow a common system of vat so as to decrease friction among member countries due to varying vat rates on similar goods or services. Several European countries too have come up with their own amendments as they attempt 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 since they have witnessed higher revenue collections over the years. However, in a bid to make sure better co-operation between states, vat eu directives and amendments from the European Commission are making constant efforts to improve the system of collecting and refunding vat.