Most EU countries have slowly switched over to VAT or value added tax on goods and services, and in order to comply with a standard 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 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 raise tax revenues as well as plug tax holes www.vatvalidation.com/vat 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 are almost similar in principle.
For example, in the UK a trader which has crossed over the vat threshold limit will have to turn into a vat registered trader before issuing any vat invoice. The following vat collected from the trader will then be 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 United Kingdom. Similarly, a trader in Poland would need 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 across Europe usually need to hire a vat agent or vat consultant to help file vat returns regularly. These agents have 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 that trader should be able to file for vat refund so as 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 attempts to educate all vat enabled eu countries to follow a standard system of vat in order to decrease friction among member countries as a result of varying vat rates on similar services or goods. Several countries in Europe too have come up with their own amendments while they try to adapt completely to eu vat directives for better vat compliance in their own country and across borders too.
The move of shifting to vat has benefited various European countries since they have witnessed higher revenue collections over the years. However, in a bid to ensure better co-operation between states, vat eu directives and amendments from the European Commission have made constant efforts to improve the system of collecting and refunding vat.