VAT Identification Number: Purpose and Tips

In this article we examine what function the VAT ID serves. We also address the question of whether you should apply for this number, and explain how the application process works. With regard to the tax implications, we recommend consulting your tax adviser!

The rules of the EU single market are designed to facilitate transactions between businesses from different member states. VAT plays a central role: the EU uses a harmonised procedure to ensure smooth business dealings.

In many cases, goods and services are taxed in the recipient's country, provided the transaction is a B2B deal between standard taxpayers: accordingly, the supplier does not show VAT on the invoice. This system only works, however, if tax authorities can reliably prevent abuse — and the uniform allocation of VAT identification numbers ensures that this is possible.

The relevant invoices must show the VAT ID of both the supplier and the recipient. These details allow tax officials to verify that the correct tax treatment has been applied.

The VAT ID is mandatory for all business relationships between companies from different EU countries. This applies equally to the supply of goods and the provision of services. The precise tax rules depend on the nature of the transaction — your tax adviser will provide you with all the information you need.

State your VAT ID on these invoices. It consists of a country code (Germany = DE) followed by nine digits. For intra-Community supplies and cross-border services, also include the recipient's VAT ID where the recipient is responsible for accounting for the tax.

Are you subject to VAT and earn money from goods or services within Germany? If so, you have two options:

- Add your VAT ID to your invoices.

- Alternatively, state your standard tax number.

For small amounts up to 250 euros, the tax office requires neither a VAT ID nor a tax number.

If you make use of the small-business (Kleinunternehmer) scheme, you do not charge VAT and therefore do not need to state a VAT ID. In transactions with businesses from other EU countries, however, quoting a VAT ID may still prove necessary or advisable. Your Guhr Steuerberatung adviser will explain the details! Even as a Kleinunternehmer, you can apply for a VAT ID free of charge.

You now know what the VAT identification number is for. But how do you obtain your individual number? And what do you need to bear in mind when using it? We answer these questions below.

When setting up a business, you send your tax office the questionnaire for tax registration (Fragebogen zur steuerlichen Erfassung). In this document you indicate, for example, whether you wish to make use of the small-business scheme. You can also apply for a VAT ID at the same time — ideally, take advantage of this convenient option! You will receive your VAT ID within a few weeks and will then be optimally prepared for EU-wide transactions with other businesses.

If you already run a business, you can apply for a VAT ID retrospectively. You submit this application directly to the Federal Central Tax Office (Bundeszentralamt für Steuern). The simplest method is to use the online application form. In this form you will need to state, among other things, the competent tax office. You will subsequently receive your VAT ID by post. The process is free of charge.

When conducting business with other companies in the EU, you must state your VAT ID clearly on the invoice. It is not sufficient to include the VAT ID in the letterhead — insert the number within the body of the invoice document.

Where you also need to include your business partner's VAT ID on the invoice, this requires verification. It is your responsibility to ensure the accuracy of this information. The Federal Central Tax Office provides an EU-wide lookup tool for this purpose. Have the accuracy confirmed in writing, or take a screenshot!

Applying for a VAT ID is straightforward; EU VAT rules, on the other hand, are complex. Do not hesitate to draw on the expertise of your Guhr Steuerberatung team in Berlin if you have any questions on this topic!

Free initial consultation

Taxes not your thing? Then they're ours.

Guhr Steuerberatung handles your bookkeeping, tax returns and tax planning – so you can focus on your business.

Request a consultation