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 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 make sure better co-operation among states in collecting and refunding vat.
The European Union through its website ec.europa.eu tries to educate states and vat registered traders in a variety of 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 moved to http://vatcheck.com/vat the system of vat tax in a bid to raise tax revenues as well as plug tax holes which 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 which has crossed over the vat threshold limit will have to turn into a vat registered trader before issuing any vat invoice. The following 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 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 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 need 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 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 european countries which have already charged vat on the same then a vat agent of this trader should be able to apply for vat refund so as to reclaim vat back. This method is pretty lengthy but can help European traders recover vat amounts previously paid, which inturn can lower their costs and improve their cash flow.
The europa website tries to educate all vat enabled eu countries to follow a common system of vat in order 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 up with their very 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 since they have witnessed higher revenue collections over the years. However, in a bid to ensure better co-operation between member countries, vat eu directives and amendments issued by the EU Commission are making constant efforts to further improve the system of collecting and refunding vat.