Most European Union countries have slowly switched to VAT or value added tax on goods and services, 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 further fine tune the system in order to avoid tax leaks and make sure 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 moved to the system of vat tax in a bid to improve tax revenues as well as plug tax holes www.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 might vary slightly but are almost similar in principle.
For instance, 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 following vat collected by the trader will then be adjusted against any vat paid and the difference is paid to HM Revenue and Customs or hmrc vat department that looks after all issues linked to customs duties, excise and vat in the United Kingdom. Similarly, a trader in Poland would need 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 the country.
Since each country has adopted vat in a slightly different manner through the use of varying vat rates to similar products, traders all over 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 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 which have already charged vat on the same then the vat agent of this trader will be able to file for vat refund so as to reclaim vat back. This process is pretty lengthy but can help European traders recover vat amounts previously paid, which inturn can lower their costs and enhance their income.
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 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 try 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 EU Commission have made constant efforts to improve the system of collecting and refunding vat.