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VAT is imposed on all sales in a supply chain involving the production and the distribution of goods, and the provision of services for consumption within the territory of the EU. Hence, both goods and services are subject to VAT, and where there is consumption of these in the EU, there is a business (irrespective of the place of principal seat) liable to charge VAT.
In a supply chain VAT can never accumulate and paying VAT over VAT is prohibited. The ‘end user’ pays VAT
and the business charging it acts as the collector. Since a business cannot be considered as an end user, businesses can reclaim VAT paid on purchases. On one hand, a business that is liable for VAT should pay VAT collected from end users to the tax authority, and on the other hand a business can reclaim any VAT paid to suppliers and on import of goods at the same time. In other words, VAT should not create a cost of doing business.
In other words, you will charge and collect VAT from your customers, but will reclaim the VAT paid to the warehouse.
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