What is a VAT Number and How to Get It?
Getting an VAT number means obtaining a tax identification number in a foreign country to carry out trading taxable activities.
14 May, 2020
You should not confuse getting a VAT number with setting up a branch (permanent establishment) or incorporating a subsidiary. You get a VAT number when you do not have physical presence in the country but you still have trading activities in that territory. For example, in order to buy goods in Germany from a local supplier and sell them to a local German customer directly (goods do not leave the German territory) you will need a German VAT number even if you do not have any German physical presence. Having a VAT number means that you only have VAT obligations, you will not have corporate tax or other direct tax implications if you do not have physical presence in that country.
If you sell goods or services online, read our dedicated article on VAT rules for online sellers.
What is a VAT number?
VAT stands for Value Added Tax. Only those countries with a VAT system will require businesses to have a VAT number. A VAT number is an identification number for all VAT purposes in the country where such number was issued.
Very often the VAT number will be the only tax identification number in the relevant country. However, sometimes, tax authorities may issue two numbers: a local tax number for local transactions and communications with the tax authorities; and an foreign or intra-Community VAT number for EU VAT purposes. You can read more about two examples of this distinction in our article ´Difference between SIREN and SIRET’ in France and ´Difference between steuernummer and VATid numbers´ in Germany.
When do I need a VAT number in the EU?
Put simply, you need a VAT number in a foreign EU country when you make taxable activities in that country. Not all trading activities fall under the category of “taxable activities”.
This article provides a list of transactions and examples of taxable activities. You should contact Marosa to confirm if you fall in any of these categories.
How do I get a VAT number?
You must get help to apply for a VAT number. An application must be submitted to the local tax authority using the right registration forms. This application should include documentation about your business, evidence of the authority of the legal representative and detailed information about your planned activities.
Once the application is submitted, it is important to follow up closely until a positive response is received from the local tax authorities. Sometimes, additional queries will be raised and these should be replied promptly.
What documents do you need to get an EU VAT number
Registering for VAT number in a country can be a cumbersome and time consuming activity. We help your company putting together all documentation and filing registration forms around Europe. The documents required for such registration vary from one country to another, however, there are some certificates and PoAs that are usually required and that you can start putting together before contacting us:
- VAT certificate in your home country: This document proves that your company is register for VAT number in its country of establishment. Normally, it must be original and recently issued by the local tax authorities, so we suggest requesting as many certificates as countries of registration.
- Certificate of incorporation or Excerpt of the trade Register with all details about the company´s incorporation in its home country.
Articles of Association issued as part of the incorporation process in its home country.
- Proof of taxable transactions: This can be a challenging requirement as it is not always easy to prove that you intend to perform taxable supplies. Some examples include contracts, purchase orders, invoices or similar documents.
- Proof of signature: This is a document proving that the person signing the registration form is entitled to represent the company. One example can be the Articles of Association where the signatory is appointed as a Director of the company.
You also need to consider language requirements. Most countries oblige you to submit all documents in their local language. Our network of domestic translators will be ready to help with this requirement.
How long does it take to get a VAT number?
It usually takes from 4 to 6 weeks from the moment a correct application is submitted to get a VAT number in a European country. This period changes from one country to another. At Marosa we have extensive experience on successfully applying for VAT numbers in any European country.
Contact our VAT registrations team if you need help with a new or existing application. We specialise in urgent VAT number applications using our network of local contacts in each tax authority.
How do I issue invoices from my VAT number in the EU?
Once you are VAT registered, you must configure your billing system to produce invoices related to the activities in the country of registration using a new serial invoice number and stating the VAT number obtained from the tax authorities.
For example, if you are UK business who got a VAT number in Germany to make local sales to German clients as from 1 January. All your invoices for German sales as from 1 January should state the German VAT number provided by the German tax authority (and not your UK VAT number). The invoice number of these invoices should start a new series that is consistent for all your German sales.
What are the accounting obligations on my foreign VAT number?
You will not require a separate set of accounts if you have a foreign VAT number. You will only need to open an additional ´output VAT account ´ for your sales where you charge VAT and an additional ´input VAT account´ for purchases where you incurred VAT. Every time you submit a VAT return, you will net off your foreign input VAT and output VAT as you normally do with your periodic VAT return in your home country.
If you have more than one foreign VAT number, you will add as many additional output and input VAT accounts as foreign VAT numbers. We recommend naming these accounts with the country to which they relate to.
What additional obligations do I have on my foreign EU VAT number?
Getting a foreign VAT number comes with additional administrative obligations. You will always need to submit VAT returns, either monthly or quarterly (sometimes, also annual returns are allowed). Some jurisdictions will require transactions reports like SAF-T returns, Control reports or sales listings.
You may also need to submit Intrastat returns and ECSL returns if you make intra-Community transactions in that country.
As explained above, invoices must be issued in compliance with local regulations. You should keep a book of invoices issued and received as this information may be required by the tax authorities in the course of an audit.
Marosa specialises on VAT compliance in any European country. Our team will help you with any question on your VAT obligations abroad. Request a call from our team and we will get in touch shortly.
Why it is so important to get it right?
Very often, you will have activities in a foreign country but such activity will not require a VAT registration because it does not qualify as “taxable activity” as explained above under section ´When do I need a VAT number in the EU?´.
If you need to recover input VAT that has been charged by your supplier, it is important that you evaluate if you should get this VAT amounts back via your VAT return (VAT registration required) or via the 8th and 13th Directive (VAT registration not required). We explain the difference in our dedicated article How to get VAT refunds in the EU.
Do you need a fiscal representative?
If you are a non-EU business, you will be required to appoint a fiscal representative in some countries where you are applying for a VAT number. You can check which countries require this representation in our Overview on fiscal representation in the EU.
A fiscal representative is a local individual or business who will interact with the tax authorities on your behalf. Very often, this representative is jointly liable for your tax debts. This liability extends to VAT payments, penalties and any other tax obligation in the country where you are VAT registered.
How can Marosa help you with your getting a VAT number?
Our VAT registrations team will help you getting a VAT number with a simple and quick process in any European country. We will assist you with the assessment on the need to register for VAT in a given country, the documents and information required and the steps for completion and submission of these documents.
Our VAT registration team rely on technology to accelerate the work and mitigate any error risk. Our VAT registration wizard will collect all documents and information from you and archive all forms to make them available at any time by your team.
We have experience with urgent and complex VAT registrations. Our team will use a dedicated network of local delegates and contacts at the tax authorities to process your application with priority.