VAT is a "tax on the value added to a product at every stage of the manufacturing process, from raw materials to finished product. Value Added Tax is also recognized in different countries as IVA, GST, MWST, TVA, MOMS. It is paid on every transaction, but eventually VAT is bearded by the final consumer and the role of businesses is to collect the VAT for the tax administration. VAT systems have "grown to be a preferred basis of indirect taxation in more than 140 countries. Over the past ten years, legislative changes in the national tax systems of EU, Europe, Canada, Japan and South Korea allow the most non-resident business entities worldwide to refund VAT.
A VAT registered business therefore has to charge VAT on sales, but can reclaim VAT on purchases made from other VAT registered businesses. If the VAT amount paid on purchases exceeds VAT collected on sales, the resulting VAT credit can be reclaimed. This standard procedure is applicable to all European countries. You want to make business in Europe your company has no permanent establishment in the EU, and in this case you should require a fiscal representative, who will get registered for you, and will surrogate to your company for all the European tax obligations.
You have to submit a return to the VAT office (a VAT Return) after the end of every three months informing how much VAT you have charged and how much you are reclaiming. The difference must be paid by you or if you have claimed more than you charged, the difference will be paid to you by VAT office. Generally VAT is charged at 17.5% (reduced to 15% temporarily between 1.12.08-30.11.09 to boost the economy) but you don’t have to charge VAT where a sale can be either “zero rated” but you can reclaim it, or “exempt” in which case you can neither charge nor reclaim VAT.
A business must register for VAT once the sales exceed £61000 (as of 1st April 2006) in a year, or else you can make a voluntary registration even before hitting this threshold.
There different kinds expensed upon which VAT can be charged. Some of the most commonly recovered travel expenses include those for hotel charges, meals, car rentals, fuel and parking, transportation/taxi, telecommunications, entertainment, marketing/advertising, professional fees and conferences and trade shows.
In countries where VAT is applied, foreign travelers can typically reclaim all or part of the tax from the governing body within one year
In France, the standard VAT rate on goods and services is 19.6%, calculated on the net price: if net price= 100€ then Price VAT included = 119,60€ (Euros). Reduced rates apply to a number of cases, such as foods, certain farm products( 5.5%), drugs (5.5% or 2.1%), books, hotels, newspapers and magazines, certain leisure activities. Although the same principles apply across Europe, VAT rates differ from a European country to another Harmonization of rates is on the way.