Valid Customer VAT number - EU VAT Quick Fixes
- Dec 28, 2019 | Richard Asquith
The fourth of four EU VAT quick fixes concerns obtain a customer’s VAT number for zero-rating cross-border transactions. A number of conditions must be met in order to qualify for a VAT exemption when goods are sold within the EU on a B2B cross-border basis. The fourth fix confirms that obtaining the customer’s VAT number is a requirement for the seller before applying zero-rated VAT.
Current position – VAT number not required
A common misconception on zero-rating intra-community supplies was that the supplier had to obtain and verify the VAT number of its customer in another EU state.
The European Court of Justice has ruled several times stating that this is not a substantive requirement for zero-rating.
Rather, it is only a formal requirement. Therefore, zero-rating could still be applied if the substantive tests (e.g. proof of transport) were alone met.
What’s changing on 1 January 2020
Suppliers will be required to obtain customers’ VAT numbers and include them on their sales invoice as a substantive step for a VAT exemption.
The new rules do not specifically oblige the supplier to verify the validity of the number, for example, via VIES. However, tax authorities may reason that the supplier should take any reasonable steps to avoid becoming involved in any VAT evasion, and so may insist on this control. A supplier should therefore take all practical measures to verify its counter-parties’ VAT numbers.
Note: in a limited number of countries, e.g. Spain, resident VAT registered businesses are not automatically included on VIES. In this case, the customer can provide a tax-office certified VAT certificate as proof for zero-rating.
Additionally, it is also a further substantive requirement that the sale be included in the supplier’s EC Sales Listing.