If you wish to start a new business in a European country you then should open up a small business inside a eu vat state to retain control over your costs. Vat, in principle avoids the pitfalls of double taxation and even if you do find yourself paying vat more often than once then you can also obtain a vat refund to recover your money.
Through the years many Countries in europe including Hungary, Germany, Greece, Spain, Italy, UK, Sweden, Poland, etc have shifted to vat or value added tax as being a way of collecting tax in a very transparent manner while also plugging tax leaks. The method has become largely successful and also this common way of charging tax on services and goods has also facilitated smooth imports and exports between countries that form section of the european vat system.
You can begin a new business in a eu vat state or country and begin importing goods to your own country. You will however pay the appropriate customs or excise duties and might need to pay import vat according to the classification of the goods. However, once your vat validation taxable sales cross the vat threshold limit set by the particular eu country then you may need vat registration to turn into a vat registered trader or dealer. This will clear the path to get your own vat no, charge appropriate vat rates as part of your vat invoice and also present regular vat returns to your tax authorities. You will now truly be part of your eu vat system.
However, there are several advantages of staying in the europa vat system. If you have imported goods from a member vat country where vat was already charged you’ll be able to simply fill out the necessary vat form to claim a vat refund. In case you or your staff have paid vat during trade shows or on some other services that attract vat then such vat rates can also be claimed back from that country provided all documentary proof is shown. As you might not be able to learn almost all about the latest eu vat rules it would be better when you allow a specialist vat agent to reclaim vat in your stead.
Your vat agent should also file your vat returns on time and also make sure that your vat refund applications are handled within the time limit. Most countries in Europe that have adopted vat normally have 3 vat rates. The very first is the standard vat rate of about 15 to 25% on most goods. The second is the lower vat rate of around 1 to 6% on specific goods while the third is products which are vat exempt. If you’ve paid vat in another country then this is probably large amounts, and recovering this amount can certainly lower costing and give a much-needed financial injection into your new business.
Vat is really a powerful way to ensure that tax leakage is reduced in a seamless manner. You too should go for starting a small business in a very vat friendly european country while also importing goods or services from a member country that also follows vat. By setting up a business in a eu vat state you can certainly retain control of your costs while plugging your own revenue leaks on services or goods where vat was already charged.