Most European Union countries have slowly switched to VAT or value added tax on services and goods, and in order to comply with a common code all eu countries that follow vat have to follow vat eu directives. These directives are amended regularly in a bid to help optimize the system so as to avoid tax leaks and ensure better co-operation among member countries in collecting and refunding vat.
The European Union through its website ec.europa.eu tries to educate member countries and vat registered traders in various countries on some of the 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 improve tax revenues and also to 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 that has crossed over the vat threshold limit will need to turn into a vat registered trader before issuing any vat http://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 a vat invoice however 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 by applying varying vat rates to similar products, traders all over 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 may be conversant with uk vat rules. If 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 file 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 in turn can lower their costs and enhance their cash flow.
The europa website attempts 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 services or goods. Several European countries too have come with their own amendments while they try to adapt completely to eu vat directives for better vat compliance in their own country and across borders too.
The move of shifting to vat has benefited various countries in Europe since 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 issued by the EU Commission are making constant efforts to improve the system of collecting and refunding vat.