4. Pre-tax credit deduction
Pre-tax credit deduction
In the European VAT system, a system called a pre-stage deduction is used. As in the case of Japanese consumption tax, "tax incurred on purchase" and "tax collected at the time of sales" are offset, and as a result, when there are many taxes collected at the time of sale, the taxation office of the relevant member country Value added) Tax will be paid. On the other hand, if there are a lot of taxes paid (tax paid), we refund from the tax office of the applicable member country. This system is called the pre-stage tax credit system.
[Case A] Pre-tax credit deductionUK company A sold a mobile phone to UK individuals in the UK for £200. This British company A purchased a mobile phone from the company B in the UK for £100. Since the tax rate in the UK is 20%, £40 which was collected at the time of sale and £20 which it took at the time of purchase can be offset. Therefore, the value-added tax to be paid by the UK company A to the UK tax authorities is £20.
