How to Get a VAT Number if Your Business Isn’t Based in the EU

Updated on May 28, 2022

How to Get a VAT Number if Your Business Isn't Based in the EU

EU VAT is likely to be required if you wish to sell your digital goods in the EU. The time to register for EU VAT is running out if you’re already doing business in the EU. There you go.)

Good news: The process of registering for the VAT is rather straightforward. How do you keep track of the many VAT rates and apply the correct one to each sale once you have a VAT number?

Let’s start with how to get an EU VAT number, and then we’ll talk about how to fix the rest of the problems. If your company isn’t headquartered in the European Union, read on to learn how to obtain a VAT number.

Does your company need an EU VAT number?

VAT registration and VAT taxation may be necessary if you offer digital products to EU customers.

Even if you don’t satisfy the qualifications, you can still register voluntarily. We’ll talk about the advantages of registering in a moment.

To begin, let’s clarify what a VAT number is and why having one is so critical in the VAT world.

The EU and the rest of the world refer to “value-added tax” as VAT. Each stage of the product’s journey to market incurs an incremental consumption tax based on the value contributed at that particular point in time. It is a destination-based tax in the EU, which means that the actual tax rate is determined by the buyer’s location.

VAT affects both businesses and consumers.

To begin with, consumers in the EU pay taxes when they buy goods or services. Invoices and receipts include a distinct line item for VAT tax. (This is necessary by law!) It is at this point that a seller takes VAT from the buyer, and keeps it until tax season, at which point the seller pays the relevant tax agency.

 how to create legal invoices and tax receipts.

VAT is also imposed on input goods and services that a firm purchases for use in its operations. Taxpayers can claim a credit for VAT taxes they have already paid when they complete their tax returns. As a result, the company’s tax burden is reduced. The reverse-charge mechanism is a specific tax arrangement for B2B transactions between VAT-registered enterprises.

However, in order to take advantage of these tax savings, enterprises must first obtain a VAT number.

Governments can track registered enterprises’ VAT activity by using a VAT number, which is a value-added tax identification number. Included in these activities are VAT taxes collected from customers, VAT tax payments, and tax credits.

The ISO 3166-1 alpha-2 country code is followed by two or more characters, up to a maximum of thirteen characters, for VAT numbers. Some western countries have VAT numbers that include letters in addition to the standard numeric digits. A VAT number that begins with “EU” may also be used by nations outside of the European Union.

VAT Number

[Free Guide] How To Get A VAT Number If Your Company Isn’t Based in the EU

Use this simple, step-by-step guide to help you register for a VAT number and set up your OSS if your company is based outside of the EU.

Requirements for a VAT Number

In order to determine if your business must register for EU VAT, it is necessary to determine if you sell to businesses or individuals.

You do not have to register for EU VAT if you simply sell digital goods in B2B transactions.
Register and acquire your VAT number if you ever sell digital products B2C in Europe, even once!
Having a VAT number has numerous advantages. In light of the following information, you may decide to register your business for EU VAT!

Top benefits of applying for a VAT number as a non-EU business

Having a VAT number has numerous advantages. It’s a good idea to get a VAT number and begin charging VAT tax if any of the following apply to you.

Avoid financial penalties

It’s not unusual for a small business’s taxable turnover to rise above the VAT threshold on a quarterly basis. If this happens to you and you don’t know it, you’ll be slapped with fines and penalties. You should apply for a VAT number before you need it, rather than wait until you need.

Increase your company profile

If you own a small business in the United States, you might be interested in selling your products abroad. Your US-based company may be pondering whether or not to obtain an EU VAT number. Many worldwide firms aren’t interested in doing business with small, non-VAT-compliant businesses. Applying for a VAT number will validate your firm and offer the impression of scale to your customers. If you’re seeking for how to get a VAT number in the United States, this page is also relevant.

Receive EU VAT refunds!

Goods and services purchased by VAT-registered enterprises may be reclaimed from the government for VAT tax purposes. This lowers the taxable income of your firm in the EU, saving you money.

How to Get a Business VAT Number in the EU if You’re a Foreign Company

Each EU country has a different VAT scheme. VAT numbers generated by each of these systems cover sales made outside of the country in which your business is based.

Our example of how to get a VAT number in Ireland helps you better understand how the process works.

Decide on an EU country and use their national VAT OSS to set up your account. Many multinational companies prefer the Irish VAT OSS because it is written entirely in English and has an intuitive interface. You can register in any one of the 27 member countries. ) It’s possible to register in Spain, where all resources are published in Spanish, if your firm is located in South America. OSS portals in other nations may be more sophisticated than in the United States.)

Add your business name and bank account information.

Then, fill in your personal details.

Afterwards, you’ll be questioned about your business’s VAT history.

Finally, you’ll see a summary of all the information you’ve submitted on this page. Ensure that everything is in order!

The final step is to submit your work. It’s done!

That’s all there is to it. Your company’s VAT number will be delivered to you electronically or by postal mail. That’s how you receive a VAT number if you don’t have a business in the European Union!

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VAT Number

What happens after you get a Business VAT Number?

Non-EU businesses must obtain a VAT number in order to conduct business in any of the 27 member states of the European Union.

As a result, make sure you understand how VAT works and how to obtain a VAT number, and then follow the example above to apply for your number.

Upon receiving your VAT number, what do you need to do next? Now that you’re a legally recognised firm, you’ll have to start charging customers for sales tax. Whether a transaction is B2B or B2C, there are specific standards to follow. The most complicated component is that each country has its unique VAT rate. So if you sell to a Hungarian customer, you must use the Hungarian VAT rate, and so on. In addition, you’ll have to actively monitor any changes in VAT rates.

Many details must be remembered. Managing a small business on your own can be difficult, but there are ways to alleviate some of the stress (such as Quaderno, our tax automation software). See What You Must Know About VAT if You Have European Customers if you want to know exactly how to handle EU VAT once you’re all registered.

Remember to come back to Ireland’s VAT OSS if you decide to register for VAT in Ireland! The following is an overview of what you can expect.

* At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or accountant.