For companies operating across the European Union (EU), there may be a requirement to register their business with a VAT number in another EU country. The requirements for this vary from country to country, but are based on the EU’s VAT Directive, which should be implemented into local legislation by each member state.
As part of efforts to harmonise the European VAT system, and support the drive towards an EU single market for goods and services, the requirements to register for a VAT number should be the same in each country. Typical instances where a foreign trader is required to register for a local VAT number include:
The requirements above apply equally to companies from within EU, and non-EU companies.
Generally, non-resident companies must register for VAT immediately. Resident companies’ VAT registration thresholds are here. Another exception is e-commerce companies which have a special distance selling VAT registration threshold regime.
Once the obligation to VAT register has been established, the process can begin. As a basic, companies must be VAT (EU companies) or tax (non-EU companies) registered. They will then be required to complete and submit a local VAT registration form, along with supporting documentation. The application form will more often than not be in the local language. EU countries have become increasingly reluctant to provide document translations as this can create misunderstandings.
Typically, a company will be required to provide the following supporting documentation:
Each country will have various other documents that should be supplied. For example, Spain requires a statement confirming that the company does not have a permanent establishment in Spain.
Following the submission of the application, it will take 2-8 weeks to receive a VAT number, depending on the country. The tax authorities may well ask further questions, specifically to try to prevent VAT fraud.
Foreign companies looking for a VAT number may face additional requirements in certain countries. They may be given a local tax number, which only permits VAT transactions on local transactions. This is not registered on the VIES system – see our VIES briefing – and so therefore does not permit intra-community trade.
In this case, additional correspondence is required to get a full VAT number.
Once the company has received the VAT number, it is free to start trading and charging VAT on its foreign transactions. Each country has its own number formats, and you can review them in our EU VAT Number Format briefing.