Most EU countries have slowly switched to VAT or value added tax on goods and services, and in order to abide by a standard code all eu countries that follow vat have 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 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 various 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 http://vatvalidation.com/vat which were previously draining precious resources. Each vat enabled country possesses its own interpretation of european vat or europa vat rules that might vary slightly but are almost similar in principle.
For example, in the UK a trader which has crossed across the vat threshold limit will need to turn into a vat registered trader before issuing any vat invoice. The following vat collected by 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 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 a vat invoice but in Polish language, and pay vat to the relevant vat department in that country.
Since each country has adopted vat in a slightly different manner by applying 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 need to be experts in interpreting vat eu rules and vat rules applicable in their 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 european countries that have already charged vat on the same then the vat agent of this trader will be able to apply for vat refund in order to reclaim vat back. This method is quite lengthy but could help European traders recover vat amounts previously paid, which inturn can lower their costs and improve their cash flow.
The europa website attempts to educate all vat enabled eu countries to adhere to a common system of vat in order to decrease friction among states as a result of varying vat rates on similar goods or services. Several European countries too have come with their own amendments while they attempt to adapt completely to eu vat directives for better vat compliance in their own country and across borders too.
The move of shifting over 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 further improve the system of collecting and refunding vat.