Why Is VIES Not Always The Best Solution to Verify European VAT Numbers?

Why Is VIES Not Always The Best Solution to Verify European VAT Numbers?

If you’ve ever wanted to check the VAT number of a company you are working with, you’ve probably heard about VIES (VAT Information Exchange System). The European Commission introduced VIES to make international transactions more transparent and safe. With VIES, you can verify a VAT number, as well as additional business information, such as the company’s name and registered address.

VIES database doesn't include all valid VAT number in the EU

However, this system has one major limitation that you need to be aware of when checking VAT numbers: the VIES database doesn’t include all valid VAT numbers in the EU.

In fact, only numbers activated by local tax authorities will appear in the database. And while some EU countries activate all issued VAT numbers in their country for VIES purposes, many EU countries do not, resulting in an incomplete overview and potentially misleading information about the VAT status of the business you are working with.

Let’s assume that your business “Company-X” is in Germany, and you are working with another German business named “Company-Y.” Company-Y has only domestic customers and doesn’t need to register for cross-border/intra-EU transactions. In that case, “Company-Y” will not be visible in VIES, and you won’t be able to verify its existence.

For that reason, we developed Fonoa Lookup, a solution that can validate tax identification numbers directly with the tax authorities in different countries in the world; for a complete overview and more accurate validation.

Find out why it is essential to check the VAT ID of your customers before a transaction takes place in our article on the topic.

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Know whether to charge sales tax, VAT or GST by validating the tax IDs of your suppliers and business customers.