VAT numbers in Germany: What entrepreneurs, self-employed people, and founders need to know

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  1. Inleiding
  2. What is a VAT number?
  3. What is the format of a VAT number?
  4. Who needs a VAT number and who doesn’t?
    1. Exceptions and special provisions
  5. VAT number requirement for reverse charges within the EU
  6. How do you apply for a VAT number?
  7. How do you verify a business’s VAT number?

Entrepreneurs, self-employed people, and founders face several challenges, including navigating compliance with tax regulations. One of these regulations relates to VAT, also known as value-added tax or sales tax. Find out what a VAT number is, its significance, how to apply for a VAT number, and how to verify a business’s VAT number in the European Union.

What’s in this article?

  • What is a VAT number?
  • What is the format of a VAT number?
  • Who needs a VAT number and who doesn’t?
  • VAT number requirement for reverse charges within the EU
  • How do you apply for a VAT number?
  • How do you verify a business’s VAT number?

What is a VAT number?

VAT number is short for value-added tax number. In Germany, it’s also known as an Umsatzsteuer-Identifikationsnummer (USt-ID). Its purpose is to clearly identify businesses within the European Union for tax purposes. VAT numbers are required specifically for trade between businesses within the EU to ensure that the correct amount of VAT is levied and paid on transactions.

Note that the VAT number is not the same as a business’s tax number. A tax number is issued by the national tax authorities and is used to identify a business based on national tax legislation. A VAT number, in contrast, can be used for cross-border transactions within the EU and is therefore specifically designed for European Union VAT regulations.

VAT numbers are very important for businesses that operate in the EU, as they ensure that VAT is levied correctly and that no double taxation takes place. Businesses that provide cross-border services or deliver goods to other European Union countries must generally apply for a VAT number and provide this on their invoices.

What is the format of a VAT number?

VAT numbers vary in length and structure from country to country. In Germany, VAT numbers consist of the country code DE and a combination of nine digits—for example, DE123456789. In Great Britain, VAT numbers also consist of nine digits. In other European Union countries, VAT numbers are different lengths and structures. The VAT number must be stated on all sales invoices.

Overview of identification numbers in the European Union

LAND
CODE
SUFFIX
Oostenrijk AT 9, het eerste teken moet de letter "U" zijn
België BE 10 cijfers
Bulgarije BG 9 of 10 cijfers
Kroatië HR 11 cijfers
Cyprus CY 9, het laatste teken moet een letter zijn
Tsjechië CZ 8, 9 of 10 cijfers
Denemarken DK 8 cijfers
Estland EE 9 cijfers
Finland FI 8 cijfers
Frankrijk FR 11 tekens, het eerste en/of het tweede teken mag een letter zijn
Duitsland DE 9 cijfers
Griekenland EL 9 cijfers
Hongarije HU 8 cijfers
Ierland IE 8 of 9 tekens, met letters en cijfers
Italië IT 11 cijfers
Letland LV 11 cijfers
Litouwen LT 9 of 12 cijfers
Luxemburg LU 8 cijfers
Malta MT 8 cijfers
Nederland NL 12 tekens, met letters en cijfers
Polen PL 10 cijfers
Portugal PT 9 cijfers
Roemenië RO 10 cijfers
Slowakije SK 10 cijfers
Slovenië SI 8 cijfers
Spanje ES 9, het eerste en/of het laatste teken mag een letter zijn
Zweden SE 12 cijfers met “01” altijd als de laatste twee tekens

Who needs a VAT number and who doesn’t?

Several factors determine whether a VAT number is needed. These include what the business does, the type of transactions it makes, and the countries where it operates. In general, businesses operating within the European Union need a VAT number—especially if they provide cross-border services, deliver goods to other European Union countries, and serve other business customers.

Exceptions and special provisions

But there are also some exceptions and special provisions, based on the specific circumstances and national tax laws of each European Union country. For example:

  • Small scale entrepreneur rule: In some countries, there are special provisions for small scale entrepreneurs who may be exempt from requiring a VAT number if their turnover does not exceed certain thresholds.
  • Certain services: Certain services can be exempt from requiring a VAT number, depending on national laws and specific VAT regulations of each country.
  • Country-specific regulations: VAT number requirements vary from country to country, so it’s important to check the specific provisions of the country in which the business operates.

VAT number requirement for reverse charges within the EU

The reverse charge procedure is a mechanism for invoicing VAT on cross-border services or deliveries of goods within the European Union. This transfers the responsibility for paying VAT from the seller to the buyer. The VAT number must be provided for this so that the reverse charge can be carried out correctly.

If both businesses have a VAT number and the reverse charge procedure applies, the VAT is paid not by the seller, but by the buyer in the country in which it is based. This facilitates commerce between European Union countries and reduces the bureaucratic hurdles for businesses operating across national borders.

How do you apply for a VAT number?

To get a VAT number, you will generally need to contact the local tax office or authority in your country. The process of applying for a VAT number differs from country to country. To get a VAT number in Germany, these are the steps you will usually have to take:

  • Prepare the necessary documentation: Make sure you have all the required documents and information before you begin the application. This often includes information about your business, such as the business name, address, business registration number (if applicable), and this may also include information about your business activities.
  • Contact the local tax office: Find out which tax office is responsible for handling VAT number applications in your area. You can find contact information for the tax office on your country’s tax authority’s website, or you can call the tax office to inquire.
  • Complete the application: Fill out the relevant VAT number application form. You can get this form either on the website or directly from the tax office itself. Make sure to provide all the required information correctly and in full.
  • Submit the application: Send the completed application online to the local tax office. Depending on the rules in your country, you may also be able to submit your application to the tax office in person.
  • Processing and assignment of a VAT number: Once you have submitted your application, the tax office will check it and—where appropriate—assign you a VAT number. This process can take a varying amount of time depending on the country you are in and the tax office’s workload.
  • Receive your VAT number: Once your VAT number has been assigned, you will receive written confirmation or notification from the tax office. This confirmation will contain your VAT number and any other relevant information on the use and validity of the number.

How do you verify a business’s VAT number?

To verify a business’s VAT number on the European Commission’s website, follow these steps:

  • Navigate to the European Commission’s official webpage for verifying VAT numbers.
  • There is a form on the VAT number verification page. Enter the VAT number of the business you want to check in the field provided and select the country the business is based in. You must also provide your country and your own VAT number. Note that the VAT numbers must be entered without the initial country code.
  • Click the button to perform the check. The website will process the provided VAT number to verify its validity.
  • The result appears once the verification is complete. Usually, you will receive either confirmation that the VAT number is valid, or an error message if the VAT number is invalid or could not be found.
  • If the VAT number is valid, additional information may be shown such as the business’s name or additional details on its registration.

Note: The availability and functionality of the VAT number verification website may vary between countries. Some countries may have their own websites or databases for verifying VAT numbers, which are operated independently of the European Commission. You should always follow the instructions and procedures provided by the relevant authority to verify the validity of VAT numbers.

Businesses may use the services of certified payment-service providers for questions on VAT numbers. These offer automated processes, based on smart computation programs, as well as vastly reduced error rates—including entering VAT numbers correctly. If you’d like to learn more, start now with Stripe.

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