Most European Union countries have slowly switched to VAT or value added tax on services and goods, and in order to comply with a standard 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 tries to educate member countries and vat registered traders in various countries on some of the 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 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 they are almost similar in principle.
For instance, in the United Kingdom a trader which has crossed across the vat threshold limit will need to turn into a vat registered trader before issuing any vat www.vatvalidation.com/vat invoice. The following vat collected by the trader will then be 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 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 a vat invoice but 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 need 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 is conversant with uk vat rules. In the event that trader imports goods from other vat european countries which have already charged vat on the same then a vat agent of this trader will be able to file for vat refund in order to reclaim vat back. This method is pretty lengthy but can help European traders recover vat amounts previously paid, which in turn can lower their costs and enhance their income.
The europa website tries to educate all vat enabled eu countries to adhere to a common system of vat in order to decrease friction among member countries as a result of varying vat rates on similar goods or services. Several countries in Europe too have come with their very own amendments as they attempt 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 ensure better co-operation between member countries, vat eu directives and amendments from the EU Commission have made constant efforts to improve the system of collecting and refunding vat.