Most EU countries have slowly switched over 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 need to follow vat eu directives. These directives are amended regularly in a bid to further optimize the system in order to avoid tax leaks and ensure better co-operation among member countries in collecting and refunding vat.
The European countries through its website ec.europa.eu attempts 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 the system of vat tax in a bid to improve tax revenues and also to plug tax holes www.vatvalidation.com/vat which 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 United Kingdom a trader that has crossed over the vat threshold limit will have to turn into a vat registered trader before issuing any vat invoice. The subsequent 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 have 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 by applying varying vat rates to similar products, traders all across Europe usually need to hire a vat agent or vat consultant to assist file vat returns regularly. These agents need 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. In the event that trader imports goods from other vat european countries that 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 process is pretty lengthy but can 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 in order to decrease friction among member countries due to varying vat rates on similar goods or services. Several European countries too have come up 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 over to vat has benefited various European countries since they have witnessed higher revenue collections over time. However, in a bid to ensure better co-operation between states, vat eu directives and amendments issued by the European Commission are making constant efforts to improve the system of collecting and refunding vat.