Follow all vat rules to enjoy all benefits of vat

If you have just turned into a VAT registered trader in any eu country that follows the system of vat or value added tax then you should follow all vat rules to enjoy all benefits of vat. Vat is essentially a consumption tax that is based on a fixed percentage of each taxable sale that you make and is ultimately borne by the end-consumer or customer.

Although vat was established in 1967, it was only in 1977 that the first set of uniform vat directives were issued to all eu member countries that had shifted over to this system of taxation. In 2007, a recast of the sixth vat directive was fine-tuned and issued again simply as the Vat directive, which made it easier for member countries to adapt to the mission of creating a single market within the entire European Union while also boosting tax revenues for respective governments.

Each country has to follow eu vat rules although they do have some flexibility in interpreting those rules to suit their own country. These rules specify that each member country needs to set the standard vat rate at a minimum of 15% and a maximum of 25%, and one or two reduced vat rates at 5%. However, some countries such as Ireland and the UK also have a zero vat rate. Each country usually also has its own vat threshold limit that ushers in a trader into the system of vat once taxable sales of that trader crosses that limit.

Although each country has different vat rates, the mode of applying vat on goods and services is still the same. Each vat registered trader has to issue a pre-formatted form of invoice known as a vat invoice that has to specify the goods or services sold along with the percentage of vat applicable on each product or services, along with corresponding vat rates and the final vat amount. The invoice also has to mention the vat number of the seller and in some cases even the vat number of the buyer, especially if the vat chain needs to be continued. Vat invoices are known by different names in various countries. For example, in Poland each trader needs to issue a faktura invoice, which is basically the same as a vat invoice issued by a trader in the UK.

You will also need to follow your own country’s vat rules while filing vat returns at the required periods, i.e. monthly, quarterly or yearly. You might also have to file a final vat return at the end of each accounting year. You will also have to follow these rules while filing for vat refunds on vat already paid in another country before being imported into your own country. If you are a trader in the UK then you will firstly need to follow uk vat while also adhering to eu vat at the same time. You could employ a vat accountant or agent to ensure that you do not break any rules.

The system of vat ensures transparency in sales while also allowing you to calculate the exact tax component in your business. This will help you to calculate your profits accurately while offering a better deal to your customers at the same time. However, in order to enjoy all benefits offered by the system of vat you will also need to follow all vat rules issued by the European Commission as well as your own country.