Validation of EU VAT numbers

EU VAT number validation is critical for companies engaged in cross-border trade. CDQ's validation service integrates official EU databases and applies consistent logic to verify number structures, registration statuses, and country-specific requirements. When one participant validates an EU VAT number, that confirmation can feed into the shared knowledge base, helping other organizations verify the same partner faster and with higher confidence.

Why validating EU VAT numbers

• Regulatory Requirements: Many businesses across the EU and beyond are required by law to validate their suppliers' and customers' VAT numbers, ensure they are VAT registered, and verify linked bank accounts to prevent fraud and ensure compliance.
• Cross-Border Transactions: With the complexity of VAT compliance across borders, businesses need to ensure that they are accurately accounting for VAT in each transaction. Incorrect VAT handling can lead to fines, penalties, or a loss of tax refunds.
• Risk Mitigation & Due Diligence: Businesses must ensure they aren't transacting with non-compliant or fraudulent partners, especially with EU regulations like the EU VAT Quick Fixes and DAC7 that require more stringent due diligence on business partners.
• Automation Needs: Large organizations, in particular, need to automate these checks as they deal with high volumes of transactions. Manual checks are not feasible, especially when compliance risks are high and errors can be costly.

Legal Framework for Intra-Community Deliveries in the EU

Deliveries of goods and services to other EU countries by German companies are generally exempt from VAT as intra-community deliveries, according to § 6a of the German VAT Act (UStG). This tax exemption applies to the supply of goods and services between EU member states, as long as certain conditions are met. One key requirement is that the delivering company must provide evidence of the transaction's eligibility for exemption. Specifically, the company must verify and record the buyer's foreign VAT identification number (VAT-ID), which must be valid at the time the invoice is issued. If this proof is not provided or the VAT-ID is not valid, the delivery of goods or the invoice cannot be treated as tax-exempt.

In addition to these rules, German companies must ensure that the goods are physically transported from Germany to another EU member state. The supplier must keep documentation proving the shipment, such as transport or shipping documents, in order to maintain the VAT exemption status. If these conditions are not fulfilled, the German tax authorities may retroactively charge VAT on the transaction.

EU-Wide Application

This legal framework is not unique to Germany but is consistent with the principles outlined in the EU VAT Directive, which governs the VAT system across the European Union. The VAT Directive provides the foundation for intra-community supplies, stating that VAT exemptions for goods and services delivered between EU member states are available under certain conditions. These conditions are broadly similar across EU countries, though the exact implementation may vary slightly depending on national VAT laws. In most EU member states, the tax exemption for intra-community supplies of goods also depends on verifying the buyer’s valid VAT-ID and ensuring that the goods are transported out of the seller’s country and into another EU country. If these requirements are not met, the seller may be held liable for the VAT that should have been charged. Therefore, businesses in every EU member state must ensure they properly verify the VAT-ID of their EU-based customers and maintain adequate documentation of the transport and transaction. Businesses face significant challenges in verifying the VAT status and bank account details of their partners across different countries. Inaccurate or fraudulent information can lead to severe financial and legal repercussions, including the inability to reclaim VAT or being held liable for a partner’s unpaid VAT.

On September 1, 2019, the Polish tax authorities introduced the so-called "White List of Taxpayers," an electronic registry containing detailed information about VAT taxpayers in Poland. This list also includes companies based abroad that are liable for VAT in Poland. In addition to registered VAT IDs and address details, the list displays the bank account numbers provided during the company's registration or VAT registration process. As of January 1, 2020, taxpayers making payments for transactions exceeding 15,000 PLN or its equivalent must transfer the funds to the bank account listed on the White List for their business partner. Failure to comply with this requirement makes the payer jointly liable for any unpaid VAT debts of their business partner.

Following the amendment to the Czech VAT Act, the Czech finance administration has introduced a new system involving "unreliable taxpayers" and "reliable bank accounts." VAT payers who have breached VAT regulations will be classified as unreliable, and customers purchasing from these unreliable VAT payers will be held responsible for any unpaid VAT on those transactions. This system is a measure aimed at combating VAT evasion and fraud.

Strict Compliance Requirements

Due to the strict handling of VAT regulations by tax authorities throughout the EU, businesses are strongly advised to conduct careful due diligence when making any intra-community supplies. This includes regularly verifying the VAT-IDs of their trade partners for every chargeable service or delivery within the EU, as even minor errors in compliance can lead to significant financial liabilities, such as having to retroactively pay VAT, penalties, and interest. The European Commission provides an online VAT-ID verification service (VIES) that companies can use to check the validity of their customer’s VAT numbers.

The Quick Fixes for the EU value-added tax reform, effective since January 1, 2020, impose strict requirements on businesses to accurately record the EU VAT identification numbers of their customers. This compliance is essential for the tax exemption of intra-community supplies. Failure to record a valid EU VAT ID of the recipient can result in the intra-community supply becoming subject to tax, leading to significant financial implications.

Minimizing Liability Risk

To minimize liability risks, companies across the EU are encouraged to implement internal processes that ensure the verification of VAT-IDs and the retention of all relevant documentation (such as invoices, contracts, and proof of transportation). By doing so, companies can safeguard their transactions from VAT audits and reduce the risk of financial penalties that could arise from non-compliance with the VAT exemption rules for intra-community deliveries.

Impact

Non-compliance with these VAT requirements can result in severe penalties, additional tax liabilities, and increased administrative burdens. Businesses may face delays in invoicing and payment processing, which can disrupt cash flow and overall operational efficiency. Ensuring accurate and compliant VAT data is critical to maintaining smooth and cost-effective cross-border trade within the EU.

Example: Verification of a Slovenian VAT number

What is a Slovenian EU VAT number

A Slovenian VAT number is issued to businesses registered for VAT purposes in Slovenia. It consists of the country code SI followed by 8 digits (e.g., SI12345678). This number is required for businesses to conduct VAT-free cross-border trade within the EU under certain conditions, such as intra-community supply of goods and services.

Verification options

1. Use the European Commission's VIES system

• Visit the VIES website.
• Select "SI-Slovenia" from the country list.
• Enter the VAT number (without the country code).
• Click "Verify".

2. Use CDQ Tax Guard

For more robust and comprehensive VAT validation, you can use the CDQ Tax Guard. CDQ’s solution not only checks the formal validity of a VAT number but also verifies additional VAT-related details such as business registration status, VAT payer status, and linked bank account information. This provides deeper insight into the legitimacy of a Slovenian business partner, reduces the risk of fraudulent activities, and helps ensure full compliance with EU VAT regulations.

Key benefits of the CDQ Tax Guard

• Tax identifier verification: Performs rigorous checks of direct and indirect tax identifiers worldwide, ensuring compliance with syntax rules, check digits, and official database references.
• Tax identifier qualification: Supports compliance with the EU VAT Quick Fixes by verifying business names and addresses against authoritative public registers.
• Transactional mode: Enables real-time tax compliance checks during transactions, providing instant validation and verification of VAT numbers.
• Monitoring mode: Allows continuous monitoring and validation of tax identifiers, ensuring ongoing compliance and audit readiness.
• Reference data lookup: Gives access to detailed background information linked to any VAT or tax identifier, helping to confirm the accuracy and authenticity of business records.
• Headless API integration: Offers seamless backend integration into existing ERP or compliance systems, without requiring a dedicated user interface.

3. Use the Slovenian tax authority (FURS)

You can also verify VAT numbers through the Financial Administration of the Republic of Slovenia (FURS), the national tax authority. This adds another layer of verification to ensure the number is correctly registered in Slovenia.

4. Contact the business directly

If the VAT number cannot be verified through online systems or third-party tools like CDQ's Tax Guard, contact the business directly to confirm their VAT registration details. Ensure that the information provided matches official records.

Common issues

• Inactive VAT number (registration not renewed)
• Incorrect formatting
• Outdated business information

EU VAT Numbers

Data Quality Rule	Country	Name
EU_VAT_ID_AT (AT - VAT identification number)	AT (Austria)	Umsatzsteuer-Identifikationsnummer (de) Value added tax identification number (en)
EU_VAT_ID_BE (BE - VAT identification number)	BE (Belgium)	Belasting op toegevoegde waarde (nl) Mehrwertsteuer-Identifikationsnummer (de) Taxe sur la valeur ajoutée (fr) Value added tax identification number (en)
EU_VAT_ID_BG (BG - VAT identification number)	BG (Bulgaria)	Идентификационен номер по ДДС (bg) Value added tax identification number (en)
EU_VAT_ID_CZ (CZ - VAT identification number)	CZ (Czechia)	Identifikační číslo pro DPH (cs) Value added tax identification number (en)
EU_VAT_ID_DE (DE - VAT identification number)	DE (Germany)	Umsatzsteuer-Identifikationsnummer (de) Value added tax identification number (en)
EU_VAT_ID_DK (DK - VAT identification number)	DK (Denmark)	Momsregistreringsnummer (da) Value added tax identification number (en)
EU_VAT_ID_EE (EE - VAT identification number)	EE (Estonia)	Käibemaksukohustuslase number (et) Value added tax identification number (en)
EU_VAT_ID_EL (EL - VAT identification number)	GR (Greece)	Αριθμός Φόρου Προστιθέμενης Αξίας (el) Value added tax identification number (en)
EU_VAT_ID_ES (ES - VAT identification number)	ES (Spain)	Número de Identificación Fiscal (es) Value added tax identification number (en)
EU_VAT_ID_FI (FI - VAT identification number)	FI (Finland)	Arvonlisäverotunnus (fi) Momsregistreringsnummer (sv) Value added tax identification number (en)
EU_VAT_ID_FR (FR - VAT identification number)	FR (France)	Taxe sur la Valeur Ajoutée (fr) Value added tax identification number (en)
EU_VAT_ID_HR (HR - VAT identification number)	HR (Croatia)	PDV (hr) Value added tax identification number (en)
EU_VAT_ID_HU (HU - VAT identification number)	HU (Hungary)	Általános Forgalmi Adóazonosító (hu) Value added tax identification number (en)
EU_VAT_ID_IE (IE - VAT identification number)	IE (Ireland)	Uimhir Cánach ar an Mheasúnacht Bhreisluacha (ga) Value added tax identification number (en)
EU_VAT_ID_IT (IT - VAT identification number)	IT (Italy)	Partita IVA (it) Value added tax identification number (en)
EU_VAT_ID_LT (LT - VAT identification number)	LT (Lithuania)	Pridėtinės Vertės Mokestis (lt) Value added tax identification number (en)
EU_VAT_ID_LU (LU - VAT identification number)	LU (Luxembourg)	Nummer vun der TVA (lb) Mehrwertsteuer-Identifikationsnummer (de) Numéro d'Identification à la TVA (fr) Value added tax identification number (en)
EU_VAT_ID_LV (LV - VAT identification number)	LV (Latvia)	Pievienotās vērtības nodoklis (lv) Value added tax identification number (en)
EU_VAT_ID_MT (MT - VAT identification number)	MT (Malta)	Numru ta' Indentifikazzjoni għat-Taxxa fuq il-Valur Miżjud (mt) VAT Identification Number (en)
EU_VAT_ID_NL (NL - VAT identification number)	NL (Netherlands)	Omzetbelastingnummer (nl) Value added tax identification number (en)
EU_VAT_ID_PL (PL - VAT identification number)	PL (Poland)	Numer Identyfikacji Podatkowej (pl) Value added tax identification number (en)
EU_VAT_ID_PT (PT - VAT identification number)	PT (Portugal)	Número de Identificação Fiscal (pt) Value added tax identification number (en)
EU_VAT_ID_RO (RO - VAT identification number)	RO (Romania)	axa pe Valoarea Adăugată (ro) Value added tax identification number (en)
EU_VAT_ID_SE (SE - VAT identification number)	SE (Sweden)	Momsregistreringsnummer (sv) Value added tax identification number (en)
EU_VAT_ID_SI (SI - VAT identification number)	SI (Slovenia)	Davčna številka (sl) Value added tax identification number (en)
EU_VAT_ID_SK (SK - VAT identification number)	SK (the Slovak Republic)	Identifikačné číslo pre DPH (sk) Value added tax identification number (en)

Frequently asked questions (FAQ)

Verifying VAT numbers can be complex because each EU member state has specific formats and data sources. The questions below summarize the most important points for maintaining compliance and accuracy.

How often should I verify VAT numbers?

You should verify VAT numbers regularly, ideally before every cross-border transaction. This ensures that all trading partners remain properly registered and compliant with EU VAT requirements.

Is it mandatory to verify VAT numbers?

Yes. Verification is required to maintain VAT exemption for intra-community supplies. The supplier must confirm that the customer’s VAT identification number is valid at the time of invoicing.

What happens if a VAT number is invalid?

If a VAT number is invalid, the transaction may lose its VAT-exempt status, which can lead to tax liabilities and penalties. If a Slovenian VAT number (or any EU VAT number) is invalid:

• Contact the business to confirm the number.
• Request an updated VAT number if it was entered incorrectly.
• Avoid processing any transactions until the VAT number is verified.

Where can I check a VAT number?

You can verify VAT numbers for all EU countries on the European Commission’s VIES website. For more comprehensive verification, CDQ Tax Guard checks not only VAT validity but also registration status, payer classification, and linked bank accounts.

What are common issues when verifying VAT numbers?

Common issues include:

• Inactive VAT number (registration not renewed).
• Incorrect formatting (missing or misplaced digits, country code errors).
• Outdated information (business re-registered or restructured).

What should I do if verification fails?

If verification fails, first review the number’s format and confirm that you selected the correct country. Then contact your business partner to verify their registration details. Avoid processing any transactions until a valid VAT number is confirmed.