VAT is the acronym for value added tax, which is the main consumption tax in force today in the European Union.
VAT is the best example of Community tax harmonization, as it is the only tax whose application and regulatory mechanism is substantially identical in all member countries.
VAT has the following fundamental characteristics:
- * proportionality, in the sense that VAT affects the added value with differentiated rates (4, 10 and 22 per cent);
- * neutrality, in the sense that - at the same final price - it affects the consumer regardless of the number of steps the goods undergo throughout the production and distribution process;
- * transparency, since in each step of the production process it is possible to distinguish the taxable amount of VAT from the actual tax.
