What Is a VAT Number? Everything You Need to Know

What Is a VAT Number?

The VAT number, known as the VAT registration number (VRN) or VAT identification number, is a unique number that businesses obtain from HMRC at the time of VAT registration processing. This number identifies the taxable person or the company.

VAT numbers are issued by the tax authorities of each EU member state. In some cases, the tax authorities might issue two numbers.

1. Local tax number – Business professionals use this number to communicate with tax authorities and local transactions.

2. Foreign or intra-community VAT number – Business owners use this number for EU VAT purposes.

What Does a VAT Number Look Like?

After defining a VAT number’s meaning, we now focus on its look. The format of the company VAT number depends on the country, but a general structure is a country code followed by numerical digits serial number.

For example, let’s assume the following VAT number:

GB 123 456 789

Here the first two letters represent the country code which is for the UK. The other 9 numbers are the series.

Various EU VAT ID Number Formats

Now let’s explore various VAT number formats of different countries in this tabular form.

When do Companies need to Register for an EU VAT Number?

Companies need EU VAT number registration under the following conditions:

Exceeding Turnover

VAT registration is required if the turnover of the business exceeds the £85,000 threshold or professionals expect a turnover beyond £85,000 in the next 30 days.

Offering Digital Services to Consumers

Under the EU’s VAT Mini One Stop Shop (MOSS) scheme, companies that offer digital services to EU consumers must register for VAT.

Involved in intra-EU Trade

VAT registration is required when the registration threshold is exceeded during a B2B scenario, where a business sells goods or services to other businesses within the EU.

How to Issue Invoices from the VAT Number in the EU?

Mentioning the VAT registration number on the invoice is essential for effective operation. However, many professionals are unclear on how to send invoices from the VAT number.

The simple approach is to mention the VAT number below the other business details in the invoice. This represents clarity while enhancing professionalism.

You are registered in one country, that’s fine. But what about when you are registered in two or more countries? In this case, you need to be careful and use a VAT registration number that belongs to the specific country.

For instance, if you are issuing different invoices for Germany and France, then you must use the German VAT serial number for the German transaction and the French VAT serial number when invoicing for France.

How to Get a VAT Number?

VAT registration is mandatory in some regions of Europe. Professionals need to follow a systematic process to get a company VAT number. They need to register with the national tax authorities through an online tax portal, available on the government site. Once you enter the portal, you need to fill in the details:

• Business name
• Business location
• Other financial data

You must be aware of the local tax laws and regulations when registering for the VAT number.

If you are running an online business, you must follow the below steps to get a VAT number:

1. Mention the EU countries where you have a physical presence. You also need to register with the country if you sell any physical goods.
2. Make registration through an online portal – a One-Stop Shop or VAT OSS.
3. Add details of the company and bank account.
4. Further, add personal contact information.
5. Mention the company’s VAT history that showcases your past VAT registrations. Also, mention the current status.
6. Review all the details once you get an overview of the details from the portal and submit the form.

What Documents Are Required for Getting VAT Number?

• Documents related to power of attorney
• Complete filled VAT registration form(s) in the local language
• VAT certificate
• Excerpt from the commercial register
• A certified copy of the articles of association
• Evidence of operations within the relevant country’s territory

What Is the Value of VAT Number in the USA?

The VAT system is inapplicable in the United States and the region has not a single person or business registered for VAT.

However, it doesn’t mean that the country follows a non-taxation policy. The Internal Revenue Service (IRS) issues a nine-digit Employer Identification Number (EIN) or a Taxpayer Identification Number (TIN). Each business has a unique tax ID for a specific state, as sales tax is regulated at the state level and differs from one state to another.

What Is the Time Duration of Getting a VAT Number?

Every country has a different VAT processing so businesses always get VAT numbers on the basis of their region. The average duration of the process is a few weeks to two months. Many tax authorities have shortened this duration while adopting new technologies to make the process quick.

How to Check a VAT Number?

Checking a valid company VAT number is essential when you are dealing with a new client. An invalid VAT number does not allow you to claim VAT on purchased goods and services. Also, a wrong VAT number reflects VAT fraud.

There are multiple methods available to check a company’s VAT number which are as follows:

1. Use VIES System

The European Commission provides an online service known as the VAT Information Exchange System (VIES). The portal enables customers to check their VAT numbers through the following steps:

1. Visit the VIES website
2. Choose the country code of the Value Added Tax number you want to verify
3. Fill in the VAT number
4. Click the Verify button to check its validity
5. It will confirm the business name and registration details if the number is valid

2. Using Third-Party Verification Tools

Many platforms offer global VAT number validation services that might cover non-EU countries.

• Vatstack
• Avalara VATlive
• Global VAT compliance services

3. Check With National Tax Authorities

If VIES is unable to verify it or the VAT number is outside the EU, then the simple method is visiting the official website of the tax authority. Alternatively, you can look for a VAT validation tool.

4. Checking Invoices

The other method of checking VAT numbers is to check invoices. Still, you must ensure that it follows the correct country format.

Is it Required to Have a Separate Account for Foreign VAT Number?

No, it is not necessary to have a separate account for the foreign VAT number. You must have an output VAT account for charging VAT on sales. Similarly, input VAT accounts are required for incurring VAT on purchases.

You must disclose your input VAT and output VAT at the periodic VAT return VAT return submission time.

The number of input and output VAT accounts will be according to the number of VAT numbers you have. It means that if you have two VAT numbers, you need two input and output VAT accounts.

Final Remark

VAT registration and getting a VAT registration number is essential for those businesses that are operating in value-added tax system countries. Unlike European countries, the USA has a different tax structure. So you need to rely on a Taxpayer Identification Number (TIN) or Employer Identification Number (EIN) if you operate a US business.

What is a VAT number? We hope this is not a big query for you. Our words have presented enough information about it.

Frequently Asked Questions