What is VAT or Value Added Tax Content provided by Microsoft Retired KB Content Disclaimer This article was written about products for which Microsoft no longer offers support. Therefore, this article is offered "as is" and will no longer be updated. TechKnowledge Content SUMMARY This article describes VAT or Value Added Tax.MORE INFORMATION Value Added Tax or VAT is the tax is levied on the value that is added to the goods or services in question at each stage in the production and distribution process. This is achieved by levying tax at each point en route as ownership passes from one person to another. The tax liability at each stage is based on the difference between the value of the outputs and the value of the inputs, hence `added value`.There are fourteen different countries in Europe that assess VAT. The conditions for registration to the VAT system vary from country to country. For each country VAT has exceptions, exemptions, variable rates, special rules on exports and imports, special rules if you are within the European Union (EU) or notThe following example will give you an overview of how VAT functions from the retailer`s point of view.A purchase transaction by the retailer contains VAT or the input tax which is DM16. His sales transaction also includes VAT or the output tax which is DM24. The company has to calculate the amount due to the taxing authority (output tax minus input tax) for a specific financial period (monthly, quarterly or yearly). In this example the retailer has to pay DM8. If the amount of the input tax exceeds the amount of the output tax, the company will receive this surplus back from the taxing authority.This article was TechKnowledge Document ID: 8068DISCLAIMER MICROSOFT AND/OR ITS SUPPLIERS MAKE NO REPRESENTATIONS OR WARRANTIES ABOUT THE SUITABILITY, THE RELIABILITY OR THE ACCURACY OF THE INFORMATION THAT IS CONTAINED IN THE DOCUMENTS AND THE RELATED GRAPHICS PUBLISHED ON THIS WEB SITE (THE “MATERIALS”) FOR ANY PURPOSE. THE MATERIALS MAY INCLUDE TECHNICAL INACCURACIES OR TYPOGRAPHICAL ERRORS AND MAY BE REVISED AT ANY TIME WITHOUT NOTICE. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, MICROSOFT AND/OR ITS SUPPLIERS DISCLAIM AND EXCLUDE ALL REPRESENTATIONS, WARRANTIES, AND CONDITIONS WHETHER EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO REPRESENTATIONS, WARRANTIES, OR CONDITIONS OF TITLE, NON-INFRINGEMENT, SATISFACTORY CONDITION OR QUALITY, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE MATERIALS. Last Updated: 8/03/2017 Was this information helpful? Yes No Tell us what we can do to improve the article Submit Thanks! Your feedback will help us improve the support experience.