Calculating net vat is critical to know your actual costs

Let's say you sell services or goods in the United Kingdom or import them from other countries before selling them then calculating net VAT is very important to know your actual costs. This vat amount represents the actual vat paid or collected over the actual product or service and definately will need to be shown separately in your vat invoice as well as your vat returns.

Several eu countries including Germany, Italy, France, Poland, Sweden, etc have shifted over to vat or value added tax as a system of taxing products and services in a bid to avoid multiple taxation on goods and services. Vat also vatcontrol.com/vat prevents tax evasion to a degree compared to earlier systems. However, if you're a trader or manufacturer that buys and sells goods within the vat system you then should certainly know of the tax component within your final costing of the products or services.

It is thus important to calculate the net vat on each product or service so that you will arrive at accurate costs as well as calculate your profits correctly. Each eu state or country has different vat rate slabs that attract different percentages of vat. For example, in case your organization is situated in the UK then you might be subject to a regular vat rate of 17.5% that may change to 20% after January 4, 2011. There's also a reduced vat rate of 5% on certain goods and services while many goods or services are either vat exempt or attract zero vat. The hmrc vat department or hm revenue and customs department has provided for 14,000 classifications that will ultimately decide on the actual vat amount on each service or product.

In case you have sold an item for ?100 excluding vat then you'll have to add 17.5% vat provided the product attracts the standard vat rate. Your net vat rate will be ?17.50 while your gross amount including vat will be ?117.50. The net rate of vat will need to be specified in your vat invoice as well as your vat returns too. However, to be able to charge and collect vat you'll have to get your own unique vat number that will have to be displayed on each vat document. You can turn into a vat registered trader by filling in an appropriate application vat form after your taxable sales have touched ?70,000 in the past Twelve months.

You may also claim the exact amount of vat paid on imported services or goods if they have been recently paid in the country of origin. You should utilize the services of a competent vat, customs and excise duties agent or consultant who has complete knowledge of uk vat and eu vat rules, especially when you import goods and services from member eu countries that follow the system of vat. Although vat rates might differ in each country, the net vat rate will always be in accordance with the actual percentage of vat on the products or services.

It is very important to know about each factor that contributes towards cost of your products or services. This will enable you to generate the maximum amount of profits and also keep a strict eye on direct and indirect expenses that affect your business. Calculating net vat is definitely essential to understand your actual costs to be able to sell your product or service and services at optimum prices.