Tuesday, January 04, 2011

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VAT is a European Union TAX

The history of VAT in the European Union

On 11 April 1967 the first two VAT Directives were adopted, establishing a general, multi-stage but non-cumulative turnover tax to replace all other turnover taxes in the Member States.

However, the first two VAT Directives laid down only the general structures of the system and left it to the Member States to determine the coverage of VAT and the rate structure.

It was not until 17 May 1977 that the Sixth VAT Directive was adopted which established a uniform VAT coverage.

On 1 January 2007, the Sixth Directive was replaced by the VAT Directive (Directive2006/112/EC). It brings together the various provisions into one piece of legislation, so gives a clearer overview of EU VAT legislation currently in force.

The VAT Directive guarantees that the VAT contributed by each of the Member States to the Community's own resources can be calculated.

It still however, allows Member States many possible exceptions and derogations from the standard VAT coverage. Moreover, it does not set out the rates of VAT to be applied in Member States, only a minimum rate of 15% fixed until 31 December 2010.

Welcome to 2011
VAT is European Union TAX


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