Most EU countries have slowly switched over to VAT or value added tax on services and goods, along with order to comply with a common code all eu countries that follow vat need to follow vat eu directives. These directives are amended regularly in a bid to help fine tune the system in order 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 attempts to educate states 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 shifted to the system of vat tax in a bid to raise 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 might vary slightly but they are almost similar in principle.
For example, in the United Kingdom a trader that has crossed over the vat threshold limit will have to turn into a vat registered trader before issuing any vat www.vatvalidation.com/vat invoice. The subsequent vat collected from the trader is then 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 United Kingdom. Similarly, a trader in Poland would have to issue a faktura invoice, which essence is really a vat invoice however 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 have 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 country. For example, a UK trader with vat registration has 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 in order to reclaim vat back. This method is pretty lengthy but could help European traders recover vat amounts previously paid, which in turn can lower their costs and improve their cash flow.
The europa website tries to educate all vat enabled eu countries to adhere to a standard system of vat so as to decrease friction among member countries as a result of varying vat rates on similar services or goods. Several European countries too have come up 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 countries in Europe as they have witnessed higher revenue collections over time. 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.