How to check if a company is VAT registered

This article was originally published on the Quaderno blog. Click here to see the original one.

Checking VAT numbers is a crucial step of tax compliance when selling B2B. Read on to learn how this impacts your business and how to check if a company is VAT registered.

Why do I need to check VAT numbers?

Unfortunately there’s a problem of VAT fraud, wherein people provide false business IDs so they can avoid paying consumption tax on their purchases. In places that are cracking down on fraud, such as the EU, it’s your responsibility to verify that these business tax IDs are valid.

If you don’t check the validity of customers’ VAT numbers, and if you apply the reverse-charge mechanism to a sale where the buyer has a fake VAT ID, then the consumption tax will come out of your own pocket!

VAT number example

A VAT number has between 4 and 15 digits, starting with the two-digit country code. For example, VAT numbers in Germany start with “DE” and those in Italy start with “IT.”

The country code is followed by 2–13 other characters, usually numeral digits.

Here’s everything you need to know about what a VAT number is and how it functions.

VAT number USA

Actually there are no VAT numbers in the USA! In the States, there’s a different consumption tax system called sales tax.

Instead of a VAT number USA businesses receive a sales tax permit, or seller’s permit, along with a business tax ID. And since sales tax operates on a state level (not the national level), businesses have a different tax ID for each state where they’re registered.

You should still check these tax IDs if the business buying from you claims to be tax-exempt.

How to use VAT Number Lookup service

Most countries provide a VAT number lookup tool on their public tax agency website. This is a very manual process. You must visit the website, find the VAT verification service, type in the tax ID of your customer, and complete the search. Of course, you must repeat this for each customer buying from you!

In some cases, in order to use a country’s VAT number lookup service, you will need to provide your own business VAT ID in that country as well. Be sure to have it handy before you begin.

How do I check an EU VAT number?

If you’re selling in the EU, the VAT number lookup is provided through the European Commission’s official validation system, VIES.

1. Go to the VIES VAT number validation tool.
2. In the first field, choose the origin country of the business in question.
3. In the second field, enter the business’ VAT registration number.
4. In the last two fields, enter your own EU VAT information.
5. Click “Verify” and the results will appear on the page.

How do I check a UK VAT number?

1. Go to the HMRC’s page to check a UK VAT number.
2. Click “Start now” to access the lookup tool.
3. Enter the UK VAT number of the business in question.
4. Click the box if you want to record legal proof that you’ve checked the number.
5. Click “Search” and the results will appear on the page.

How do I check a VAT number in South Africa?

1. Go to the free service provided by South Africa’s SARS eFiling system.
2. You’ll see the VAT Vendor Search page, and can choose from several options.
3. Provide the VAT registration number and the VAT trading name of the business in question.
4. You can print or save your search results. This might be worthwhile to keep in your tax records.

Check VAT numbers automatically

It can be hard to know how to check if a company is VAT registered. It’s not always as straightforward as the VAT number lookup tools in the examples above. And even then, the process is extremely manual.

That’s why it’s best to use a tax compliance tool that checks tax IDs for you automatically.

Quaderno will automatically verify EU VAT numbers through our integration with the Commission’s verification service, VIES. If the tax ID is invalid, then the sale will not go through. This protects you from any consumption tax fraud, and ensures you won’t have to pay extra money out of pocket.

Quaderno is a tax compliance automation software that’s built to keep your business tax-compliant as you grow. In addition to verifying VAT numbers, Quaderno will also automatically apply the reverse-charge method to valid B2B sales, calculate the correct VAT on all B2C sales, and send beautiful tax-compliant receipts that are customized to your brand.

When tax deadlines roll around, you can file VAT returns in just a few minutes using Quaderno’s instant tax reports. The reports display exactly how much VAT you’ve collected (and paid) in each jurisdiction where you’re registered. Filling out tax returns becomes a matter of data entry!

Start a risk-free trial today. No credit card, no obligation. Just a quick setup to integrate your other business platforms, and we’ll start automating VAT, GST, & sales tax for you.

* 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.