In economic globalization, cross-border trade has become increasingly frequent, and the VAT number plays a crucial role as a key tax identification. Whether it’s an enterprise’s import and export trade or an individual’s cross-border e-commerce operation, understanding the VAT number is necessary to ensure business compliance. In this article, we will provide an in-depth analysis of the definition of the VAT number, the differences in the format of each country, the applicable scenarios, the registration process, and its impact on business operations.
Definition and function of a VAT number
A VAT number (VATIN, or simply VAT) is a unique tax identification code the government assigns to a business or taxpayer. It is equivalent to a business’s ‘tax ID card’ in countries that have implemented a VAT system. Its main functions include
- Identifying the tax status of a business and ensuring tax compliance;
- Tracking the flow of goods and services to prevent tax loss;
- Facilitating tax administration in cross-border transactions, such as applying zero-rate tax in intra-EU trade.
VAT number formats in different countries
The format of VAT numbers varies from country to country, mainly in terms of the length, structure, and prefix of the number:
EU countries:
- France: various formats (e.g., 12345678901, X1234567890), the first two digits may contain letters;
- Germany: fixed 9 digits, e.g. 123456789;
- Netherlands: 12 characters, the 10th character is always a ‘B’ (e.g. 123456789B01).
Non-EU countries:
- Switzerland: Format 123.456.789, suffix varies depending on language area (MWST, TVA, IVA);
- United Kingdom: 9 digits before Brexit, changes after Brexit;
- United States: A TIN or EIN is used for tax identification instead of a VAT number.
Scenarios and necessity of VAT numbers
VAT numbers are widely used in international trade and service transactions, mainly in the following ways:
- Import and export business: Enterprises trading between EU countries must provide a valid VAT number to ensure tax compliance.
- Tax declaration: When selling VAT-taxable goods or services, enterprises need to use a VAT number to make a declaration.
- Customs clearance and invoices: Not having a valid VAT number may result in blocked customs clearance, affecting the delivery of goods and trade transactions.
For example, Chinese companies exporting electronic products to Germany need a valid VAT number; otherwise, customs clearance and VAT refund applications may be affected.
How do I apply for a VAT number?
The usual steps for applying for a VAT number for a business are as follows:
- Determine the country of registration: select the country where you need to register for a VAT number based on the scope of your business;
- Prepare application materials, including business registration certificate, tax registration certificate, business contract, etc.;
- Apply through the official website of the tax authority or by entrusting a professional tax agent to apply;
- Approval and review usually take 2-8 weeks, during which additional materials may need to be submitted, or a tax audit may be conducted.
Note: Some countries require applications to be submitted in the local language to avoid delays caused by translation errors.
VAT number FAQ
How can I verify the authenticity of the VAT number?
EU companies can verify it online via the VIES official website, while non-EU countries must contact local tax authorities.
What are the obligations after registration?
- Submit VAT returns on time (usually quarterly/monthly).
- Keep transaction records for at least 6-10 years (requirements vary by country).
- Pay the tax due or apply for a tax refund.
What are the risks of not registering a VAT number?
- Delays in customs clearance of goods
- High fines (e.g., up to 10,000 euros in Germany)
- Freezing of the e-commerce account
