For global sellers eyeing the EU market, the first thing to do is have a valid VAT number. It is not just about VAT compliance but your golden ticket to selling your products smoothly across 27 EU countries and regions.

So, what is the VAT number meaning exactly? Why is it so important? And how can you get one? These questions can be confusing for many starters. If you are one of them, this article will answer all your questions about the VAT identification number in detail and help you successfully navigate the European market.

What is VAT Number?

A VAT number, assigned by EU tax administrations, is a tax ID for recognizing businesses registered for VAT. It is essential for any business, big or small, to do business within the EU and surpass a certain sales threshold.

For example, when making transactions in Germany, VAT numbers are typically required to be included on invoices. This allows the tax authorities to verify your transaction details and ensure your VAT compliance. Additionally, when you import goods into an EU country, customs will also require a VAT number to determine your identity and tax obligations.

Why Do You Need a VAT Number?

As previously mentioned, a valid VAT number is a key pass to the EU market. It is an essential identifier for complying with tax obligations. It is necessary to get a valid VAT number, if you are under the below circumstances.

• If a company is registered in an EU member state and its annual sales exceed the specific threshold set by that country, the company must register for VAT in that country.
• For sellers who store goods in an EU country or the UK, you must register for VAT, file returns, and pay VAT in the country where the goods are stored.
• If a seller enrolls in Pan-EU program (Amazon's Pan-European program), they must provide tax numbers for the relevant warehouses. That is to say, they must register, declare, and pay VAT in all 7 involved countries.

Without the VAT number, it would be tough to expand your business here, and you could face potential troubles, for instance:

• Unable to Legally Sell Goods: Without a VAT number, you can not issue valid VAT invoices. This means you can not legally sell goods to consumers in European countries or regions.
• No Access to Tax Benefits: Some EU countries offer VAT benefits for eligible businesses, but holding a VAT identification number is an essential requirement.
• Customs Clearance Challenges: Customs may detain your goods and require you to provide the correct VAT number and complete the necessary tax procedures. This can delay deliveries and incur additional costs such as storage fees.
• Store Closure: Many e-commerce platforms like Amazon and eBay, may shut down your store if you fail to provide a valid VAT number.
• Hefty Fines: It is illegal to engage in commercial activities without VAT registration. Tax authorities will impose heavy fines for failure to file and pay VAT as required. In serious cases, you may also face legal action.

How to Obtain a VAT Number?

If you need a registration number for VAT, you may wonder how to get one? This section will show you how.

Required Documents

While the specific documents required for European VAT registration number vary by country, here are some common documents:

• VAT registration certificate in your home country/region. Typically, it should be original and recently issued.
• Original Company Registration Certificate that shows all the details about your company.
• Copy of the Articles of Association.
• Taxable transaction proofs, such as contracts, purchase orders, invoices, or similar documents.
• Authorization letter with signature for your appointed local tax agent or fiscal representative.
• Rental agreement, if you have rented office space or warehouse within the EU.
• Photocopy of legal representative's ID or passport.

Detailed Steps to Apply for a VAT Number

1. Determine the countries for VAT registration.
2. Get the required documents and information ready.
3. Access the tax authority's official site to fill out the application form.
4. Upload the necessary documents required for VAT registration.
5. Verify all the information you have entered and submit it.
6. Your application will be reviewed in 2-8 weeks. The exact time may vary depending on the country/region you are applying for. Once approved, the tax authority will issue you a unique VAT number via email or post.

Afterward, please ensure timely and accurate declarations of sales and pay the tax amount. It's also crucial to keep your VAT number valid at all times. Otherwise, you may encounter issues, including restricted sales permission, tax penalties, and legal risks.

For this reason, we could say VAT compliance is essential for running your store in accordance with regulations. To make compliance easier and more efficient for your business, VATAi VAT Services can be your best partner. VATAi can help you understand VAT obligations, streamline the compliance process, and maintain compliance. Reach out to VATAi today for expert assistance on VAT compliance.

How to Check VAT Number?

You can check your VAT identification number on the registration certificate or an official notice from the tax authorities. If you want to verify others, here are common ways to do so:

1. Check the invoice or contract provided by the company.
2. Visit the company's website to find the information.
3. Contact the company directly.
4. Via VATAi VAT Number Validation Tool.
5. Use the VIES (VAT Information Exchange System) from the official website of the European Union.
6. For UK VAT number verification, go ask for help from the HMRC online checker or call the HMRC VAT helpline on 0300 200 3700.

Additionally, it should be noted that some people may provide a false VAT number to avoid paying consumption tax on their purchases. Therefore, it is important to verify others' VAT numbers to prevent VAT fraud during transactions.

Is the VAT Number the Same for All EU Countries?

No. Every EU country has its unique VAT number system. So, if you want to sell stuff in multiple EU countries, you will need a VAT number for each one.

These numbers typically have a bunch of numbers and letters. Start with the 2-digit country code, and then follow by 2-13 additional characters. For example, the sample VAT registration number for a UK company is GB123456789, while a German company's would be DE123456789.

EU VAT Number Format Examples

VAT Number VS EORI Number, What's the Difference?

Definition

A VAT number is an identification number businesses use to collect and pay Value Added Tax (VAT) in the EU/UK. It proves that a business is registered for VAT, allowing them to charge VAT on sales, pay VAT on purchases, and claim import VAT refunds where eligible. Each country has its own format for VAT numbers.

An EORI Number (Economic Operators Registration and Identification Number) is a unique ID needed for customs clearance in EU cross-border trade. It simplifies the customs process and ensures that trade is legal and transparent, thus helping businesses and individuals to manage imports and exports.

Application

Businesses engaging in taxable activities, such as selling goods or services, or operating in e-commerce, need a VAT number if they meet certain sales thresholds. This applies both locally and for cross-border transactions.

An EORI Number is required for customs clearance across the EU, helping with import/export declarations, VAT procedures, and ensuring secure and compliant international trade.

Registration

Businesses can usually register for a VAT Number through a tax agent, but in some countries, it's possible to apply directly on official websites.

An EORI Number is often obtained at the same time as a VAT Number, with the tax agent managing both applications.

Universality

VAT numbers are country-specific. Businesses that operate in multiple EU countries or the UK must register in each country where they meet VAT obligations. After Brexit, UK VAT numbers are separate from the EU VAT system.

An EORI Number works across all EU countries for customs clearance.

Relationship with Customs

A VAT number is essential for customs processing, especially in cross-border trade. It helps with VAT collection, exemptions, and refunds, ensuring compliance with local tax rules when goods are imported or exported.

An EORI Number is essential for customs clearance, serving to identify and track businesses engaged in import and export activities.

Do US Companies Need a VAT Number?

No. The United States does not support a VAT system, with no need for a VAT number. Instead, companies apply for a Sales Tax Permit to collect and pay state sales tax. Therefore, there is no need to worry about VAT registration when exporting or importing goods to the United States.

However, US businesses selling products to consumers in European Union countries should pay attention to VAT. Once sales exceed the VAT registration threshold in a specific EU country, you must register for a VAT number in that country and file VAT returns.

Final Words

This article has discussed everything you need to know about VAT numbers, along with some frequently asked questions. If you are planning to expand into the European market, we sincerely hope this article offers practical help to you. Also, please feel free to share it so that more people can benefit.

Still have questions about VAT numbers or related matters? VATAi experts are ready to help! Please don't hesitate to contact our professional team for one-on-one, real-time consultation. Our VAT specialists are here to provide you with comprehensive support and assistance.