Most eu countries have shifted over to VAT or value added tax as a means of collecting taxes on goods and services, and all these eu countries have vat exemption rules for specific goods and services. This means that certain goods and services, especially those related to charities, health and education usually are totally exempt from payment or collection of any vat.
The European Commission that overseas all vat issues in eu countries such as Poland, Greece, Spain, Sweden, Portugal, the UK, Germany, Italy, Ireland, etc has issued several directives on the common path that needs to be followed to successfully implement and monitor the system of vat tax in each country. Such rules also help in easing imports and exports since vat rules between member eu countries are quite clear. However, most eu countries have set their own standard vat rates that range between 15 and 25% as per EC recommendations. On the other hand, each vat enabled eu country also has certain goods and services that are totally exempt from vat.
For example, in the UK there are several vat exemption goods and services specified by hmrc or HM Revenue and Customs department that handles all aspects of customs, excise and vat duties in that country. According to hmrc vat exempt services and goods include charitable activities, betting activities including lotteries and online betting, physical education and sports activities, sale of works or art and antiques, insurance services, loans and credit services, postal services and postage stamps, houseboat moorings and parking services including parking garages, education services, health services, and a few other specific services and goods. However, there are certain exceptions in vat exempt goods and services that vat registered traders and organizations should study since several related activities do fall under zero vat or reduced vat categories.
Each business or organization should certainly employ a capable vat agent to decipher all vat exemptions clearly so as to avoid confusion and ending up on the wrong side of vat laws in that particular country or even in another eu country in case of a vat reclaim on previously paid vat. Most vat exempt goods and services do not allow for any vat reclaim that otherwise is normally possible in reduced vat or standard vat classifications. This is especially important if a trader is trying for a vat refund for vat already paid on import of goods or services from another country. In such cases, an expert vat agent with thorough knowledge of eu vat and even uk vat rules could prove to be very useful if that trader or organization was located in the UK.
Although the European Commission lays down general guidelines to all eu countries that follow vat, each country exempts certain goods and services from the purview of vat based on their own discretions. Thus, traders and organizations that import or export goods or travel to various eu countries should know all about vat exempt rules and classifications since any error could be looked upon with a high level of contempt and suspicion by vat authorities. All eu countries have vat exemption rules for specific goods and services, and traders or organizations can surely reduce their costs or expenses by studying vat rates and exemptions in great detail before taking any action.