Most EU 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 help optimize the system in order to avoid tax leaks and ensure 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 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 improve tax revenues as well as plug tax holes that were previously draining precious resources. Each vat enabled country possesses 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 which has crossed over the vat threshold limit will need to turn into a vat registered trader before issuing any vat invoice. The subsequent vat collected from 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 connected to customs duties, excise and vat in the UK. Similarly, a trader in Poland would have to issue a faktura invoice, which essence is really 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 have to hire a vat agent or vat consultant to assist 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 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 that trader will be able to apply for vat refund so as to reclaim vat back. This process is quite lengthy but can help European traders recover vat amounts previously paid, which inturn can lower their costs and improve their income.
The europa website tries to educate all vat enabled eu countries to follow a standard system of vat in order to decrease friction among states due to varying vat rates on similar goods or services. Several European countries too have come with their very own amendments while they try 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 European countries 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 further improve the system of collecting and refunding vat.