Apply for a VAT Number [GUIDE]:
Instructions, Deadlines & more

The VAT number is a must for most European online sellers. Often even one application is not enough and VAT IDs have to be applied for in other countries as well. In this article you see when this is the case, what you need to know about registering for VAT and how it works.

IMPORTANT: Since the beginning of 2020, the UK is no longer part of the EU. However, all VAT, tax and trading agreements with EU member states stay the same until 31.12.2020. >Read More<

What is VAT?

The value added tax, VAT, is a Europe-wide consumption tax that is assessed on the value of all products and services which are sol in the EU. There are different rates of this tax which 1. apply for different product categories/services and 2. can be set by each member state individually as long as the standard VAT rate is at least 15%.

Find out more about VAT IDs in Europe

VAT IDs – An Overview

The VAT (identification) number is a mandatory identification of companies for trade within the EU. On the one hand, it serves to identify companies that are active in the European Union and, on the other hand, it is of course used for the collection and payment of VAT.

Who has to apply for a VAT number?

In principle, anyone trading across borders in Europe – whether physical products or services – must have at least one VAT number. In most cases a registration in the “country of origin” is sufficient.

Note: Only sellers/service providers who sell B2B are subject to VAT.

Beyond that there are still further reasons, which make a registration necessary and so it can be also quite possible that one needs additionally still further value added tax (VAT) number.

So what leads to the obligation to pay VAT in other EU countries? There are 2 main points to consider: Storage of goods and reaching the delivery threshold for distance selling.

Storing Goods

Anyone who stores goods in an EU country must also register for VAT there. This also applies, for example, to Amazon sellers who store their goods in the various Amazon fulfillment centers through FBA.

Example: Amazon’s Central Europe Program allows storage in Germany, Poland and the Czech Republic. Therefore, Amazon sellers who use this service must be registered for VAT in Poland and the Czech Republic as well as in Germany. This also means that regular pre-registrations, Intrastat reports, VAT returns etc. must be taken care of.

Reaching the VAT Registration Threshold

If you are exporting from one EU country to another, and the annual EU-wide delivery threshold is reached, then you must also apply for a VAT ID in all countries you deliver to. This rule applies unless the seller is registered for the One-Stop-Shop.

>Here you find more about VAT, VAT rates and Thresholds in the UK<

When can I apply for it?

There are 2 possibilities, or rather points in time, when one can apply for a VAT number: directly at the foundation of the company or afterwards.

If you need a VAT ID when you start your business activity, you have to indicate this when you start up – and usually this can be roughly estimated at this stage. So you just have to check one more box in the application form and you will automatically be assigned a VAT ID.

If you decide on a VAT ID only later, you can apply for it at any time at the responsible tax office.

In this context, it is worth mentioning that the timing of the application 1. has an impact on the duration until issuance, and 2. some economic actors are forced to take care of it when starting their business activities!

How to apply for a VAT number?

The application for a VAT number can be submitted in most EU countries either online or in writing by post. The requirements are similar or the same in most countries, but in some cases there may be country-specific peculiarities – especially for “follow-up” tasks, such as submitting reports or advance returns.

Where do I register for VAT?

As already mentioned, VAT numbers can be applied for online or by mail. In both cases, the point of contact is the HMRC (UK), the Federal Central Tax Office (Germany) or the respective responsible tax office. Especially if you decide to apply for a VAT ID at the time of founding, it makes more sense to apply directly to the local tax office.

How to register for VAT

When deciding to register for VAT in the United Kingdom, there are basically two ways to apply for a VAT identification number: in paper form by post or online.

Apply for a VAT number online

Most people apply for a VAT number online. This can be at a local tax office, at the HMRC or with service providers like hellotax.

Without Government Gateway ID:

• Visit the HMRC,
• Select the right option and click “next” until you reach the final page
• There, select “Create an account for me”
• Enter your details to create your Government Gateway ID
• Go to the sign-in page and use the information above
• Go to “Get another tax, duty or scheme”
• Select VAT
• Follow the final steps and your VAT registration application is complete!

With Government Gateway ID:

• Visit the HMRC,
• Select the right option and click “next” until you reach the final page
• There, select “I have an account – login”
• Enter your Government Gateway details.
• Go to “Get another tax, duty or scheme”
• Select VAT
• Follow the final steps and your VAT registration application is complete!

What information is required for the online application?

• National Insurance (NI) number or ‘tax identifier’ – a unique taxpayer’s reference
• Certificate of incorporation/incorporation details
• Details of all associated businesses within the last two years
• Business bank account details
• Details of the business that has been transferred (acquired), if appropriate

The HMRC may contact applicants for supplementary information.

Apply for a VAT number in paper form

In the past, when there was no online possibility to apply for a VAT number, it was necessary to send the application form by post. This is almost no longer the case today.

To whom must the written application be sent?

Continuing the example of the UK, foreign businesses which are not established in the UK should submit their VAT registration application to:

HMRC Non Established Taxable Persons Unit (NETPU)

HM Revenue & Customs
Ruby House
8 Ruby Place
Aberdeen
Scotland
AB10 1ZP

As non-EU businesses are required to appoint a fiscal representative/tax agent to take care of handling taxes. If so, registering for VAT at a local VAT registration unit is also possible.

VAT Schemes to choose from

In the UK there are different categories of VAT which should be investigated before starting to apply for a VAT registration online. The most commonly used ones are the Annual Accounting VAT Scheme and the VAT Flat Rate Scheme. There are also other schemes but the mentioned ones are the most important ones.

Annual Accounting VAT Scheme

The Annual Accounting VAT Scheme is a payment method for VAT which means that there are quarterly/monthly VAT payments being made and one annual VAT return. Depending on the amount paid before the annual report and depending on the amount exempt from VAT, a refund or an additional payment can be the consequence.

Requirements: Registered for VAT; Estimated taxable turnover of under £1.35 million

VAT Flat Rate Scheme

The VAT Flat Rate Scheme means that a fixed percentage of the annual turnover is paid by a business. This shall mainly simplify the VAT return process for small businesses.

Requirement: Registered for VAT, Annual turnover of under £150,000 (excluding VAT)

How long does the application take?

After the submission of the VAT registration form, it usually takes 4-6 weeks until you receive your UK VAT identfication number.

Format of the British VAT number

The format of the VAT identification number in the UK is similar to the format of VAT IDs in all other member states. Usually there is a prefix which indicates the country followed by a unique sequence of numbers.

VAT ID FORMAT UK: GB123123123

In the UK, the prefix is “GB” followed by a sequence of 9 digits.

TAX number vs VAT number

Tax number or VAT number? Since experience has shown that some (online) sellers often had difficulties distinguishing between these two numbers in the past, here is a clarification:

Tax number: All natural and legal persons who are liable to tax are assigned a tax number by the tax office. This number is necessary for the administration within the tax authorities and so, for example, natural persons are automatically assigned a tax number at birth, which will not change during their whole life.

VAT number: The VAT number, on the other hand, is primarily relevant for players in intra-European trade and only active economic players need it.

Thus, a legal entity, let’s say an independent online seller, can have only one tax number, but possibly various VAT IDs throughout Europe. Even if you are engaged in several business activities, you only have ONE tax number!

Checking VAT IDs

If you want to check your own VAT number, or that of a potential business partner, you should use the European Commission’s VAT Information Exchange System (VIES).

As a rule, traders and service providers check the VAT number of potential business partners, especially if there are doubts or problems have already arisen in the past.

Checking the VAT identification numbers of customers within the EU can also be useful. The effort involved is more than manageable and with more and more online platform operators asking for proper VAT registrations, make sure that your business partners are also registered properly.

FAQs