What Is a VAT Number?

  • Print this article

VAT number refers to a number used to identify a company that conducts business in areas over which the European Union has taxing authority. VAT stands for value added tax; the tax includes both a general tax and a consumption tax based on a percentage of a given transaction. Each VAT number encodes a wide set of information and includes a set of characters that identifies the company to whom the number was issued.

  1. Format

    • VAT numbers follow a standard format that allows for variation by country. All VAT numbers begin with an identifier code that indicates the country that issued the number. The identifier codes are based on the internationally-recognized country codes established by the ISO (International Organization for Standardization). After the identifier code, a VAT number can have as many as 10 more characters, depending on which country issued the number. Some countries allow for the inclusion of letters as well as numbers in the character string. The information associated with each character or set of characters in the string varies by country, but each country provides a key that indicates what information each character encodes.

    Applicable Areas

    • Businesses that conduct business in certain parts of the world are required to have a VAT number. The area for which the requirement is applicable includes all European Union member countries, the Isle of Man and Monaco. The European Union maintains a current list of its member countries at its official website, as membership may change.

    Uses

    • A VAT number allows the European Union to maintain records of the business activities of businesses that import or export goods in the applicable areas. This information allows for the calculation of the value added tax that a business must pay when doing business. The precise amount of the tax varies by country. In any transaction where the value added tax is gathered, the buyer pays the tax to the seller, just as with other forms of imposed taxes, and the seller is obliged to forward the payment to the corresponding tax collecting entity.

    Benefits

    • A VAT number allows companies to conduct business in areas where the European Union imposes a value added tax. Corporations that regularly conduct business in those areas are required to have a VAT number even if they are not located in the area. Moreover, if a buyer and seller apply the tax to a transaction in the regular course of business, but the tax is not applicable for some reason, the information associated with the VAT number allows the taxing entity to identify the appropriate entity to which a refund is due.

    History

    • The earliest implementation of the VAT number was in 1967, when the European Union issued the first directives relating to the value added tax system. The European Union in 1993 made fundamental changes to the way in which the tax functioned. At that time, the European Union proposed a new system of imposing and gathering taxes and set in place a transitional VAT system to allow member countries to move gradually to the new system.

Related Searches

References

Resources

Comments

You May Also Like

  • How to Apply for a VAT Number

    A VAT registration number is a unique identifier given to businesses within the European Union. If a business is selling non-VAT exempt...

  • What Is a VAT Code?

    A VAT number is a "Value Added Tax" number used by the European Union to raise revenue from goods and services. This......

  • How to Find a VAT Registration Number

    Overview A value-added tax, or VAT, is a levy that customers pay when buying goods or services throughout Europe as well as...

  • How to Check a VAT Number

    A "VAT" number is a "value added tax" ID number that is used for taxation purposes by countries that are in the...

  • How to Check VAT Registration

    A VAT number is a "Value Added Tax" number used by the European Union to raise revenue from goods and ... The...

  • How to Pay VAT on US Cars

    The Value Added Tax (VAT) is a broad-based sales tax on goods and services in the European Union ... What Is a...

  • What Is a VAT?

    What Is a VAT Number? VAT number refers to a number used to identify a company that conducts business in areas over...

  • VAT Tax Regulations in Germany

    Any person or business enterprise conducting business in Germany is required to register for a tax reference number. This number applies to...

  • How to Verify a VAT Number

    The European Union utilizes a value added tax (VAT) to raise revenue from the sale of goods within EU member states. The...

  • How to Find a VAT Number for a Company

    A Value Added Tax (VAT) number used by businesses to collect VAT (a type of sales tax). The number is issued to...

  • How to Obtain a VAT Number

    Value Added Tax (VAT) is a graduated tax system used in the 27 European Union countries, the Isle of Man and Monaco....

  • How to Complete a VAT Return

    The VAT (Value Added Tax) ... The Definition of VAT Return. ... How to Check a Company's VAT Number. Featured. 6 Ways...

  • What is a VATS Medical Procedure?

    Michigan had VAT from 1975,... Thoracic Surgery Definition. ... The value added tax (VAT) ... What Is a VAT Number?

  • How to Check a Valid VAT Number

    A Value Added Tax (VAT) number used by businesses to collect VAT (a type of sales tax). ... What Is a VAT...

  • What Is a VAT Invoice?

    Value added tax (VAT) is a consumption tax on taxable goods and services in Europe. Her Majesty's Revenue and Customs (HMRC ......

  • How to Find a VAT TIN Number

    Value Added Tax, or VAT, is the European equivalent of sales tax in the United States. A certain percentage is added to...

  • How to Search for a TIN Number

    A Taxpayer Identification Number (TIN) ... How to Find a VAT TIN Number. Value Added Tax, or VAT, is the European equivalent...

  • What Is VAT Exempt?

    The government exempts a number of goods and services from the payment of VAT.

  • What Is the VAT Registration Threshold?

    How to Find a VAT Registration Number. Overview A value-added tax, or VAT, ... Value Added Tax is a consumption tax on...

  • What Is the VAT in Italy?

    Value Added Tax (VAT) is added to goods and services in the UK just like a sales tax. ... What Is a...

Related Ads

Featured
View Mobile Site