What is VIES the VAT Information Exchange System?
Put simply, VIES is a Value Added Tax (VAT) number checker service that enables you to determine if companies have completed their VAT registrations and whether they are permitted to conduct cross-border business within the European Union.
What is VIES and what does it do?
The VIES (VAT Information Exchange System) is a search engine run by the European Commission that allows the exchange of tax data and information between the Member States of the European Union.
Created to combat tax fraud, evasion, and avoidance, the VIES tool enables traders within the European Union to automatically check vat numbers belonging to customers residing in the EU. VIES is essentially a VAT checker, letting businesses operating in the European Union electronically confirm whether a customer has a valid VAT number as assigned by one of 27 EU countries.
Any business/person VAT registered in an EU member state that carries out business, art, or professional activities, or has established a permanent establishment there, is obliged to register with VIES. In most countries, registration is automatic once you have received your EU VAT number, although there are some exceptions including Germany, Italy, and Spain.
One of the major advantages with the introduction of VIES has been the reduction in paperwork and administration costs for businesses. Since its implementation, for example, some 60 million fewer customs documents have been produced each year.
How does the VIES VAT checker work?
According to EU law, when an intra-community transaction takes place (where goods or services are traded between one taxable entity and another inside the EU), VAT only needs to be paid in the country where the buyer is living.
Suppliers can quickly and easily verify the validity of the VAT indentification numbers provided by buyers thanks to the VIES check system. Therefore, no VAT is applied to an intra-community transaction provided both the buyer and the supplier are listed in the VIES EU VAT system and are registered as taxable individuals in their home countries.
The VAT validation system is able to verify a VAT number by sending the details of a customer’s tax ID through VIES. This is safely transmitted to the customer's appropriate national database, which will determine if the VAT number is "valid" or "invalid."
The United Kingdom has a similar system in place for anyone who wants to validate the UK VAT registration number of a business. To check a UK VAT number, simply head over to the VAT information exchange system UK.
How do I use the VIES VAT number checker?
The process of VAT validation is straightforward. You can find out if the VAT number is valid or invalid by accessing the VIES VAT Validation Tool and following the instructions below.
- Enter the VAT number you want to check.
- Select the relevant Member State from the drop-down menu.
- Click the Verify button.
If the response is 'valid', the EU VAT information will be displayed in the VIES checker tool. Whereas if the response is ‘invalid’, it means the VAT number you entered is not registered in the relevant national database. This could be because the VAT number doesn’t exist, it hasn’t been activated for intra-EU transactions, or the registration has not yet been finalized.
The UK VAT information checker works in much the same way, confirming whether an entity claiming to be a UK VAT registered business is 'valid' or 'invalid'.
Bear in mind that it can take time for changes made in the national VAT databases to be updated on VIES Europe and UK. If a VIES VAT number identification check shows up as invalid and it’s not clear why, have the customer contact their local tax office.
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