The European Union value added tax (or EU VAT) is a tax on the consumption of goods and services within the European Union (EU). The EU's institutions do not collect the tax, but EU member states are each required to adopt a value added tax that complies with the EU VAT code. Some of the VAT collected by member states is used to fund the European Union as part of the system of "own resources". The nature of VAT is to tax consumption where it occurs.
VAT that is charged by a business and paid by its customers is known as "output VAT" (that is, VAT on its output supplies). VAT that is paid by a business to other businesses on the supplies that it receives is known as "input VAT" (that is, VAT on its input supplies). A business is generally able to recover input VAT to the extent that the input VAT is attributable to (that is, used to make) its taxable outputs. Input VAT is recovered by setting it against the output VAT for which the business is required to account to the government, or, if there is an excess, by claiming a repayment from the government.
Different rates of VAT apply in different EU member states. The lowest standard rate of VAT throughout the EU is 15%, although member states can apply reduced rates of VAT to certain goods and services. Certain goods and services are required to be exempt from VAT (for example, postal services, medical care, lending, insurance, betting), and certain other goods and services to be exempt from VAT but subject to the ability of an EU member state to opt to charge VAT on those supplies (such as land and certain financial services). Input VAT that is attributable to exempt supplies is not recoverable.
Read more about European Union Value Added Tax: Authority and Scope of The Tax, History, Supply of Goods, Supply of Services, Importation of Goods, Legacy Derogations, Exemption From VAT, Eighth and 13th Directives, Impact, VAT Fraud, VAT Rates, EU VAT Area
Famous quotes containing the words european, union, added and/or tax:
“I can never suppose this country so far lost to all ideas of self-importance as to be willing to grant America independence; if that could ever be adopted I shall despair of this country being ever preserved from a state of inferiority and consequently falling into a very low class among the European States.”
—George III (1738–1820)
“My whole working philosophy is that the only stable happiness for mankind is that it shall live married in blessed union to woman-kind—intimacy, physical and psychical between a man and his wife. I wish to add that my state of bliss is by no means perfect.”
—D.H. (David Herbert)
““... In truth I find it ridiculous that a man of his intelligence suffer over this type of person, who is not even interesting, for she is said to be foolish”, she added with all the wisdom of people who are not in love, who find that a sensible man should only be unhappy over a person who is worthwhile; it is almost tantamount to being surprised that anyone deign having cholera for having been infected with a creature as small as the vibrio bacilla.”
—Marcel Proust (1871–1922)
“I find nothing healthful or exalting in the smooth conventions of society. I do not like the close air of saloons. I begin to suspect myself to be a prisoner, though treated with all this courtesy and luxury. I pay a destructive tax in my conformity.”
—Ralph Waldo Emerson (1803–1882)