With the rise of the digital economy and international exchange of goods and services, we are witnessing that more and more non-EU businesses are selling goods and services to customers in the EU. However, when selling digital services to non-taxable persons (B2C) in the Member States, companies without a permanent establishment must obtain an EU VAT number.
How To Obtain The EU VAT Number If Your Business Is Not Established In The EU?
Each Member State has its independent VAT system, which allocates VAT numbers specific to that Member State. All EU member states have a fixed format for their VAT numbers, which includes the ISO code of the country and a string of digits. For example, in Italy, it includes 11 digits and the prefix IT (e.g., IT 123456789 10 11).
To get an EU VAT number, businesses should first register for EU VAT MOSS. We already covered what is MOSS and who can use it, so you can find more information about MOSS there. For the purpose of this article, we will assume that you would like to obtain a Dutch VAT number and register the Netherlands as the Member State of identification. To get a Dutch VAT number, you should first send a registration request to authorities. There, you will need to leave some basic information about your business (name, address, IBAN, etc.) and services you will supply to customers in Member States. Once the request has been approved, you will receive your Dutch VAT number.
What To Do When You Got A VAT Number?
Once you obtain your EU VAT number, depending on the type of the transaction, you may need to apply value-added tax on a transaction.
- B2B transactions - you don’t need to apply the VAT, but in that case, you need to use a reverse charge mechanism (your business customer needs to calculate and pay the VAT on a particular transaction)
- B2C transactions - you need to apply the VAT rate applicable in the Member State of the customer. This is a tricky part since each Member State has a different VAT rate. For a list of applicable VAT rates by EU Member State, please visit this page.
As explained in our article, you will need to submit VAT returns and pay VAT due on a quarterly basis.
How To Check Whether Your VAT Number Is Activated?
If you want to check whether your VAT number is activated, you can visit a VIES. There, you can also check the validity of the VAT number of your business customer. However, we already wrote about VIES and its limitations, so if you want to make sure that your business customer entered a valid VAT number, you can use Fonoa Lookup.
Fonoa Lookup is connected directly to databases of various governments and provides accurate and up to date information.