What is a VAT number?

Updated on June 1, 2022

Value-added tax (VAT) systems employ a registered tax identification number known as a VAT number (VAT). This identity is given to you when you register for VAT in a single nation. In the part that follows, we’ll go over some specific applications.

This is not the same as a local tax number or a tax ID. Please read this carefully. A VAT number can only be used in conjunction with the Value-Added Tax system.

What does a VAT number look like?

In general, there is one thing that all VAT numbers have in common: they all start with a zero. It might have anywhere from four to fifteen digits. There are 2-13 characters after the two-digit country code (e.g., DE for Germany, IT for Italy).

What is a VAT number for?

For tracking your business’ input & output VAT

In some countries, you or your firm are given a tax ID when you register for VAT taxation. It’s a tool for keeping track of the taxes your company owes and earns on its purchases and sales (expenses and revenue). Input and output VAT are two terms for these amounts.
Tax receipts and invoices should include your tax identification number.

For selling B2B

A VAT number will be provided to you if you sell to a VAT-registered business. Then, you may be able to take use of the reverse charge mechanism.

As a result of the reverse-charge process, it is the purchaser who bears the burden of paying VAT, rather than the supplier. As a result, you don’t need to include VAT in these transactions.
Providing false identification is a type of tax fraud, so make sure the VAT number you receive is genuine in the country you are dealing with.

For filing VAT returns

If you’re filing VAT returns, you use the number and your invoice records to establish how much your business owes the government, or vice versa! If your annual revenue exceeds a certain threshold, you may be required to file VAT reports on a monthly or annually basis.
To prevent late costs, you should always file your taxes on time. It’s possible that you’ll get a refund as well!

What is Value-Added Tax (VAT)?

I’m happy you asked! Consumption taxes, such as VAT, are levied on the sale of both goods and services.

The consumption tax is collected at each stage of the production process using VAT. It is expected that the value of the commodity or service increases at each level. Taxes are levied on the rise in “value added.” However, as a business owner, you are entitled to a refund of whatever VAT you have paid in the chain. The only one who bears the financial burden is the final user.

There are several countries throughout the world that levy a Value-Added Tax in addition to the European Union.


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Do I need a VAT number?

In order to register for VAT in a certain nation, your sales must exceed the tax registration level. Depending on the type of product you’re selling, the threshold amount is different.

In this article, you’ll learn how to obtain an EU VAT number even if your company doesn’t have a physical presence in Europe.

Once registered for VAT, Quaderno can help you comply with VAT laws anywhere in the world.

Sales tax, VAT, and GST are all taken care of by Quaderno, a tax software for internet businesses. Automatic tax calculation, VAT number verification, tax receipts and invoices delivery, and fast multi-channel reporting are all features of Quaderno.

Begin your risk-free journey right now!

At Quaderno we love giving helpful information and best practices concerning taxes, but we are not licensed tax advisors. For further help, or if you are ever in doubt, please visit a competent tax advisor or accountant.