What is a VAT number?

VAT  – Value-added tax is a consumption tax charged on the value added of goods and services as they move through the supply chain. This tax in different countries has different names for example GST – goods and service tax. Businesses registered for VAT  must collect the consumption tax at each stage of the supply chain, although it is ultimately paid by the end consumer. Collecting the tax on behalf of the government is a requirement for these businesses. The main difference from the sale tax is that VAT is charged at each stage of a sale and sales tax is only at the last stage where consumption takes place.

Filing regular tax returns and making payments based on the amount of tax collected is required for businesses registered for Value Added Tax or sales tax in most countries. The VAT number is used to identify the business on tax invoices and payments, ensuring the correct amount of tax is paid.

The purpose of VAT

The main goal of a VAT number is to identify and monitor businesses that have registered for VAT with the tax authorities. Businesses without a valid VAT number or those that are not registered for VAT may face penalties and fines.

Regular VAT returns are submitted to tax authorities, detailing collected and paid VAT within a timeframe. Identifying businesses on returns, ensuring correct VAT collection and payment, and tracking payments and refunds is the role of the VAT number. It is important to differentiate between Tax ID and VAT number  – tax ID means that a business is registered with a specific tax authority for direct taxes. Usually, companies need additional application forms to obtain VAT registration and VAT certificate.

Find a company VAT number

To ensure compliance with varying VAT rules, businesses trading within the European Union (EU) need to check the VAT status of their trading partners. A VAT number is critical in this process.

Obtain VAT

To obtain a VAT number, a business must follow these 4 steps:

1. Determine whether registration as a VAT payer is required based on turnover and economic activity of the company  (for example, revenue is more than a country threshold). In some countries, voluntary registration is also possible;
2. Collect the necessary information: the name of the organization, address, tax identification number, and other documents;
3. Fill out and submit registration forms to the tax office;
4. Get a VAT certificate.

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The format of VAT number

Usually, the number in the VAT certificate consists of numbers but when a company uses it for international transactions they need to add two letters as a sign of the country of origin. For intra-EU trade, the format of VAT numbers generally follows a standard pattern, consisting of two letters followed by a series of numbers. The initial two letters signify the country in which the business is registered, while the subsequent numbers constitute a unique identification code for the business. For instance, VAT number assigned in France might be formatted as follows:

FR 123456789

The format of VAT numbers in the United Kingdom differs for the Northern Ireland region – these companies need to add XI at the beginning of their number when they trade with the EU.

Countries where VAT is implemented:

The data is updated on 28.04.2023