Calculating net vat is very important to understand your actual costs

If you sell goods or services in the UK or import them from other countries before selling them then calculating net VAT is essential to understand your actual costs. This vat amount represents the actual vat paid or collected on the actual service or product and definately will need to be shown separately in your vat invoice together with your vat returns.

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

It is thus important to calculate the net vat on each products or services so that you will come to accurate costs and also calculate your profits correctly. Each eu state or country has different vat rate slabs that attract different percentages of vat. For instance, if your business is located in the United Kingdom then you could be governed by a regular vat rate of 17.5% that may change to 20% after January 4, 2011. There is also a reduced vat rate of 5% on certain products or services while some goods or services are generally vat exempt or attract zero vat. The hmrc vat department or hm revenue and customs department has provided for 14,000 classifications that could ultimately decide on the actual vat amount on each service or product.

If you have sold an item for ?100 excluding vat then you will need 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 likely be ?117.50. The net rate of vat will have to be specified by your vat invoice along with your vat returns too. However, in order to charge and collect vat you will have to get your own unique vat number which will need to be displayed on each vat document. It is possible to turn into a vat registered trader by filling out an appropriate application vat form after your taxable sales have touched ?70,000 in the past 12 months.

You may also claim the exact amount of vat paid on imported goods or services if they have already been paid in the nation of origin. You should utilize the services of a qualified vat, customs and excise duties agent or consultant that 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 understand each component that contributes towards cost of your product or service. This may allow you to generate the maximum level of profits as well as keep a strict eye on indirect and direct expenses affecting your enterprise. Calculating net vat is indeed essential to know your actual costs so that you can sell your products and services at optimum prices.