Tax fundamentals. Concept of added value

As its name suggests, VAT, by comparing the initial and final values ​​of products, taxes the increase in value that goods and services experience as a result of their passage through each of the stages of the production and distribution process until they reach the final consumer.

Business owners and professionals pass on to the purchasers of goods or services the amount resulting from applying the tax rate and can, in turn, deduct the VAT paid on the acquisition of goods and services that they incorporate into their business or professional activity. This facilitates tax compliance monitoring, as businesses will be more interested in requesting invoices for their purchases to prove their deductions.

VAT is a tax that applies to all countries of the European Union and is harmonized within its scope.