In this post (Part 3 of our series on validating tax IDs), we explore why tax IDs may not be for life.

One key concept to understand about tax IDs is that they aren’t always static. They can change over time for a variety of reasons. Understanding these reasons underscores why continuous revalidation is necessary:

Key reasons tax IDs change

1. Business lifecycle changes

Companies deregister from VAT/GST or other indirect taxes when their circumstances change. A common case is falling below the mandatory registration threshold (for example, a UK business whose taxable turnover drops below the deregistration threshold can cancel its VAT registration). Similarly, if a business ceases trading, it will deregister and its VAT number becomes invalid. 

These changes might not be communicated to all counterparties, so a vendor could vanish from the VAT register without suppliers/customers realizing it until a validation check fails.

2. Restructuring, mergers, and acquisitions

Corporate structural changes often lead to new tax registrations. 

If a business is acquired or merges into a new entity, the old VAT/GST number may be replaced by the buyer’s number or a newly issued number. In some jurisdictions, a change in legal entity type (say, sole proprietor to a company) could require a new tax ID. For instance, when companies join a VAT group registration, their individual numbers might be supplanted by a single group VAT number for external transactions. 

These transitions create points where old numbers turn defunct and new numbers must be propagated in all systems.

3. Tax scheme transitions

Businesses sometimes move to special VAT/GST schemes or lose eligibility, prompting registration changes. For example, a small business might initially operate under a VAT exemption (not registered because sales are below threshold). If its sales increase above the threshold, it must register and obtain a VAT number. Conversely, a company might voluntarily deregister if it switches to making only exempt supplies (no longer required to be in the VAT system). 

Some countries have graduated systems. For example, businesses under a “small supplier” regime might use a different identifier or no VAT at all until they cross into the normal regime. These status shifts mean the tax ID landscape for a counterparty can change from one year to the next.

4. Government action: Compliance and fraud

Tax authorities will suspend or cancel registrations if a business fails to comply with filing or payment obligations. For instance, if a VAT vendor doesn’t file returns for a period, the authority might invalidate their VAT number (sometimes temporarily). 

South Africa’s SARS was noted to remove a vendor from the online VAT database if their registration was suspended for any reason. Even though the vendor might still be legally registered (just under review), it effectively appears invalid to anyone doing a lookup. In extreme cases, authorities cancel VAT numbers to combat fraud (e.g., shutting down missing trader fraud chains). 

A number that was valid last month could be void today because the company was caught in fraud or non-compliance. Without revalidation, suppliers might keep selling to an invalid VAT number, jeopardizing their own position.

5. Data errors and updates

Sometimes the “change” is simply correcting an error. 

A business might have initially given you an incorrect tax ID (typo or miscommunication). Or they changed their name/address, and the tax authority issued a new format ID or updated their records. For example, in some countries when a business changes its legal name, it may be required to get an updated certificate, and some parts of the tax number might change (like a check digit recalculation). 

Additionally, consider businesses operating in multiple jurisdictions (like EU OSS registration for e-commerce). They may register in one central country for all EU VAT through OSS, and thus provide a different VAT number than before (their domestic one might no longer be used for cross-border sales). 

These scenarios mean that a tax ID you have on file can become outdated unintentionally. The onus is on your company to stay updated on your counterparties’ current registrations.

Frequency of changes

While not every business changes its tax ID frequently, in a large customer/vendor base the aggregate frequency of changes is significant. If you have thousands of partners globally, chances are that every month a few of them will have new or lapsed registrations. 

One commentary noted that even with one-time onboarding checks, vendor names or VAT statuses “may subsequently change” over time. Therefore, a periodic sweep (e.g. quarterly or semi-annually) will catch these routine changes. 

Some SaaS billing platforms have adopted a rule: if an invoice is more than 6 months after the last validation of that customer’s VAT number, automatically re-validate it before billing. This kind of policy acknowledges that half a year is enough time for a small but non-trivial portion of tax IDs to turn stale. This is in line with Germany’s Federal Tax Court position requiring suppliers to verify customer VAT IDs not only at the start of a relationship but also periodically. Failing to do so means the seller cannot claim good-faith protection and will owe back VAT.

To illustrate this potential risk, we performed a multi-country analysis on TINs, and compared the change in tax status within 1 year. In summary, the change rates are from 4-14%: 

• 13% of TINs in France changed over the course of 1 year
• 14% in Brazil
• 4-5% in South Korea, UK and Australia

Summary: Regular checks keep your database up to date

In summary, indirect tax IDs are dynamic data. Business circumstances evolve, and tax registrations come and go accordingly. Relying on a tax number collected at onboarding without ever checking it again is risky. The reasons above illustrate that churn: whether due to growth, decline, restructuring, or authority action, tax IDs can change or lose validity. Regular revalidation is the safety net that catches these changes, ensuring you’re always using a current and valid number for tax compliance purposes.

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