Value Added Tax (VAT) is an indirect tax levied on your foreign business expenses and raising the cost on the average of 20% depending on VAT rate applied in the particular country. Generally the cost is ultimately borne by the final consumer and there for VAT is neutral to the companies taking part in different stages of economic chain of supply. However the process is not automatic and companies will not incurred foreign VAT unless they go through the effort to recover their foreign VAT costs. In the early 90s the European legislation was modified enabling businesses to claim back VAT paid on expenses incurred while doing business in member states. VAT is refunded from the EU under the 8th Directive and the 13th Directive, last changes were made at the end of 2009.

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