VAT, or Value Added Tax, is a consumption tax levied on goods and services at each stage of production and distribution. Here's a quick overview:
What is VAT? 📚
- Definition: A tax added to the price of goods and services at each stage of value creation.
- Purpose: To generate revenue for governments while reducing the tax burden on businesses.
- Symbol: 🧾 (Tax invoice)
VAT Rates 📊
- Standard Rate: Typically around 20% in many European countries.
- Reduced Rates: Vary by country; e.g., 10% for food in some regions.
- Zero Rate: Applies to certain essential goods/services like books or medical supplies.
How to Calculate VAT ⚙️
- Determine the taxable amount (price before tax).
- Apply the applicable VAT rate.
- Add the calculated tax to the original price.
Compliance Tips 📌
- Keep accurate records of all transactions.
- Register for VAT if your turnover exceeds the threshold.
- Use official tools for tax calculations: Tax Guide