What is a VAT number and how can I get one?
Getting a 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 a 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.
Table of contents
- What is a VAT number?
- When do you need an EU VAT Number?
- How do I get a VAT number?
- What documents do you need to get an EU VAT number?
- How long does it take to get a VAT number?
- How do I issue invoices from my VAT number in the EU?
- What are the accounting obligations on my foreign VAT number?
- Do you need a fiscal representative?
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 a 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 VAT ID numbers in Germany.
When do you need an EU VAT Number?
As a general rule, you need to register for VAT in a country when you are performing taxable transactions in that territory. There are special VAT rules for e-commerce businesses which you can read in our article VAT on dropshipping and E-commerce. For every other business without a permanent establishment, these are some of the transactions that will oblige you to register for VAT in a country:
- Exports: Exporting goods will also oblige you to register and comply with all documentation requirements in order to zero rate your supply.
- Domestic sales of goods: Selling goods within a country would normally oblige you to register and pay VAT to the tax authorities on those sales. However, foreign companies need to consider reverse charge rules. When reverse charge applies, you do not charge VAT on the supply and the customer manually calculates the VAT in his or her VAT return. In those cases, a domestic sale of goods does not require you to register.
- Intra-Community movements: When you supply goods from one EU country to another or when you receive goods sent from another EU country, you need to get a VAT number. You also need to get registered in the VIES system, which is automatic in some countries but it can take time and effort in other Member States.
- Imports may also give rise to an obligation to get a VAT number. Some countries allow a light-VAT registration if only imports followed by sales where VAT is not charged are made. There are also simplifications around importation and VAT, but as a general rule, you will need a VAT number if you want to import goods and sell them in any given EU country.
Transactions that do not (usually) oblige you to get a EU VAT number
For the avoidance of doubt, the below transactions do not normally require a non-established company to get a VAT number. As it often happens with VAT, there are exceptions to the rule.
- Supplies of services: If you are supplying services from your home country to someone abroad, you do not have to register in the country of the customer. B2B rules will normally apply. Exceptionally, you will need to register and charge VAT on services related to immoveable property. Exceptions also apply to short term leasing, passenger transport services, catering services, use and enjoyment, and others.
- Domestic purchases of goods do not oblige you to register for VAT in any EU country. In a few countries, you still need to register for VAT due to purchases of goods when the domestic reverse charge applies.
If you are incurring VAT, recovering these amounts have different procedures depending on whether you are VAT registered or not. We explain the difference in our EU VAT refund article.
Examples: When do I need a VAT number in the EU?
A company buys goods in Poland and moves them to a processing plant in Germany. This company will need to get a VAT number in Poland due to the movement of these goods to another Member State (intra-Community supply). This same movement will require a VAT number in Germany (intra-Community acquisition). Although this is not a sale and the title of the goods remains within the same company, the transfer of goods between Member States follows the same VAT rules as the sale of goods.
Let's take now the example of a Spanish company leasing automotive machinery to a client in France. The machinery is purchased from a local French supplier and placed in the premises of the final customer, also French. Purchases of goods do not require a VAT registration. Leasing is a B2B service that is reverse charged by the customer and does not require a VAT registration either. The leasing business will not be allowed to get a French VAT number. Regarding the VAT incurred on the domestic purchase, this will be recovered through the VAT Refund Directive.
And what about EU VAT registration thresholds?
If you are a foreign company not established in a country, registration thresholds do not apply. These thresholds are only applicable to small established businesses. Non-established companies need to register as soon as they make the first taxable transaction.
On top of this, you need to consider all the administrative obligations such as invoicing, bookkeeping, return preparation and ERP requirements. Feel free to contact us if you need any help with your VAT registrations or VAT obligations in any European country.
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 authorities 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 to 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 can help your company put together all documentation and filing registration forms around Europe. The documents required for such registrations 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 registered for a 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 from 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 between 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 specialize 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 authorities (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 declare 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.
Contact us now to get help receiving a VAT number in any European country.
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 case of an audit.
Marosa specializes in 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 amount 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.
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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 registrations team relies 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.