Introduced first in France in 1954, VAT or value added tax was slowly implemented in most countries in Europe. in the coming years and in matters of tax eu countries have mostly chosen vat is a taxation system that bypasses the perils of double taxation whilst ensuring better adherence to tax payments.
Most countries around the globe usually been dependent on traditional sales tax systems as a way of collecting revenues through taxes. However, the system was not perfect and goods as well as services were taxed multiple times under this system. Vat is applicable every-time specified services or goods change hands and vat registered traders simply get back the paid tax amount once they issue a vat invoice to their clients and collect the tax back. Regular vat returns ensure that traders provide all vat details to their respective vat departments.
Most eu countries including Denmark, Greece, Sweden, France, Italy, Poland, Germany, Spain, Ireland, Hungary, the UK, Portugal, and Austria, amongst others have opted to stay http://vatregistrationnumber.com with vat while other countries around the globe too have moved to this process of collecting taxes on products or services. Although vat rules differ slightly in a number of countries, most of them do remain similar in principle to other countries although vat rates on similar items might differ.
Most eu countries including the UK have 3 basic vat rates that are charged whenever goods or services are sold. The standard rate of vat ‘s what is usually charged on many goods and services, which range from 15-25%. Other goods and services fall into the reduced vat rate of 1-5%, while a few others fall under the zero vat rate category. Additionally, there are certain vat exempt products or services where no vat is charged and no vat can be claimed either. Each country has its own vat rate classifications where a large number of goods and services are segregated in line with their vat rates.
Traders that want to adhere to the vat system need to become vat registered traders in their country. This is often achieved by crossing the vat threshold limit set by their country. In this vat tax eu countries too have various threshold limits and traders should appoint a vat agent with good understanding of eu vat and uk vat rules, especially if they import goods or services from member eu countries to the UK. When a trader gets vat registration then a business will have to issue vat invoices mentioning vat rates clearly as well as file regular vat returns. However, any vat paid in another country may be claimed back by the trader by choosing vat refunds, which often would help avoid double taxation and provide a cash flow boost for the trader?s business.
Vat has been openly welcomed by most eu countries including the UK, and traders can quickly comprehend the system once they turn into vat registered traders. An expert vat agent on hand may also guide them during calculations and filing of vat returns in order to reclaim any previously paid vat. In matters of tax eu countries have mostly chosen vat and this unified system helps many traders in these countries to quickly recover previously paid taxes.