Since 1 January 2020, the Value Added Tax identification number ( VAT -ID) has increased importance in intra-European trade in goods. The so-called Quick Fixes (we have reported on this here, among others) require the trader to VAT -customer's ID.
Only if the VAT ID is valid at the time of the transaction, the conditions for the tax exemption of the transaction are met (intra-Community delivery).
This also applies to intra-Community movements under FBA or other programmes. In this article, we'll show you exactly what this means and how Taxdoo can help you do that.
The audit of VAT -IDs will be a focal point of Value Added Tax -be special audits and audits in the coming months and years in online commerce.
What is the VAT Id?
The Value Added Tax is intended to burden the private end customer, not the supplying entrepreneur. Within the same country, the entrepreneur can simply Value Added Tax to suppliers as a pre-tax tax to the tax office.
In intra-European trade in goods, the principle that only the end customer should be charged should be maintained. For this purpose, there are VAT -IDs. With this, a customer identifies himself as an entrepreneur and is therefore no longer a private end customer. In this case, the delivery is tax-free (there are local peculiarities and exceptions). The customer in the country of destination is taxed on an acquisition for which he can regularly claim a deduction.
The awarding of the VAT ID is provided by the national tax authorities, in Germany this is the Federal Central Tax Office. The VAT ID always starts with the country abbreviation (for Germany DE), followed by a combination of numbers and letters.
Why and how often you should VAT -Check ID?
The Value Added Tax is the highest-income tax type in most countries and prone to fraud. Therefore, the tax exemption of transactions is subject to high conditions. As a supplier of the goods, you, as a distributor, have a duty to prove that you have really delivered to an entrepreneur, not to a private end customer. You must prove that at the time of the transaction the recipient of your goods was an entrepreneur. In the case of a regular business relationship, you should VAT -Check ID for validity every month.
Special features of the VAT -ID at FBA
As part of the "Fulfillment by Amazon" (FBA) program, you as a retailer have the opportunity to store your goods in department Amazonstores in many EU countries and have them shipped from there to your customers. As Amazon soon as you start to send the goods from a German warehouse to a foreign warehouse, this is to be considered for VAT purposes as a sale to another entrepreneur (in this case to yourself, but in another EU country). In this case you must be able to prove your own entrepreneurial status in the country of destination of the goods.
Before you Amazon activate the storage option, you should be registered for VAT in the respective country and will receive a VAT-ID from that country. If you do not do this, the transfer of the goods must be recorded Amazon as a taxable delivery. You Value Added Tax owe the corresponding amount.
How to VAT -Check ID?
The examination of the VAT -ID can be done online. The Federal Central Tax Office has provided a form for German entrepreneurs. After entering your own VAT -ID you can click here to VAT -Check your customer's ID. You should also check the address of the supplier here. You can also have a written confirmation of the query sent to you by post at no additional cost.
A second option is examination of VIES, a portal of the European Union. VIES itself does not have a database, but requests the information from the respective national authorities. ViES does not currently have the option to send you the proof of verification by post.
How does Taxdoo check the VAT Id?
Taxdoo is the compliance platform for the digital economy. This means that with the help of technology, we automate as many compliance steps as possible, making it easy, safe and affordable to follow rules.
When examining VAT ID we make no exception. All VAT -IDs that we import via one of our numerous interfaces or our API are automatically checked for validity via the VIES interface. At the same time, we also check the validity of the company address, if it is available from Taxdoo.
Taxdoo thus performs a so-called qualified query. This is important because a VAT ID can also be misused. Fraudsters often use a VAT ID, which does not belong to them, and can thus be delivered goods tax-free.
With the help of Taxdoo, everything is transparent, comprehensible and documented even in the context of a downstream audit.
Our checks are storedby us together with the result, date and time. Each inspection process receives a unique number and thus remains comprehensible in the future.
This check process is automatically repeated every month. This ensures that the validity of a VAT identification number can also be tracked over a longer period of time. This is particularly important for a longer business relationship.
Only if a VAT ID was valid at the time of the transaction, the conditions for a tax exemption of the transaction are met. This result is then automatically included in the valuation of the transaction.
Thus, Taxdoo only convicts verified and valid VAT -IDs in Financial Accounting as part of our partnership with DATEV.
Invoice correction may be necessary
Taxdoo itself does not create invoices. Your invoices are usually created automatically by a third-party tool or your ERP software. If your billing software VAT ID is not also checked, it may happen that an invoice is Value Added Tax is created, even though the VAT ID was not valid at the time of the transaction. In this case, you need to correct the invoice.
Preview: VAT -Check IDs via the Taxdoo API
In the course of the year, we will make it possible for third-party providers to VAT -Check IDs in real time directly via our API. This could allow your billing tool, ERP or shop system to reduce the validity of VAT -Check IDs before creating an invoice. If you are the provider of one of the above systems, please contact firstname.lastname@example.org.
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