Most European Union countries have slowly switched over to VAT or value added tax on services and goods, along with order to abide by 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 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 states and vat registered traders in various countries on a number of 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 vatvalidation.com/vat that were previously draining precious resources. Each vat enabled country has its own interpretation of european vat or europa vat rules that may vary slightly but are almost similar in principle.
For example, in the UK a trader that has crossed across the vat threshold limit will need to turn into a vat registered trader before issuing any vat invoice. The subsequent vat collected from the trader is then 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 really 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 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 has 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 should 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 inturn can lower their costs and enhance their cash flow.
The europa website tries to educate all vat enabled eu countries to follow a common system of vat so as to decrease friction among member countries as a result of varying vat rates on similar services or goods. Several countries in Europe too have come with their own amendments as 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 European countries as they have witnessed higher revenue collections over time. However, in a bid to make sure better co-operation between member countries, vat eu directives and amendments from the European Commission have made constant efforts to further improve the system of collecting and refunding vat.