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Stay clear of tax hurdles: Why validating European VAT Numbers is key for your business

Product Manager
Tax ID hurdles

Why do valid European VAT Numbers matter?

In order to qualify for the zero VAT rate when selling goods to a business located in another EU member state, a company must demonstrate that the goods have been transported to that location. To meet this requirement, the company must first obtain and verify the customer's VAT identification number and also submit a proper EU Sales Listing. This process is necessary for applying the zero VAT rate.

There are severe consequences when data management fails!

Incorrect VAT application: Companies may apply the wrong VAT rate or fail to correctly apply the zero VAT rate for intra-Community supplies, which may lead to non-compliance and potential penalties.

Inability to reclaim VAT: If the company's customer provides an invalid VAT identification number, the company may not be able to reclaim the VAT paid on that transaction.

Increased audit risk: Failure to validate VAT identification numbers may result in an increased risk of being audited by tax authorities, which can lead to additional costs and administrative burdens.

Data managers, how to stay clean?

  • Companies need to include all VAT identification numbers of their customers in their ERP systems!
  • Validate VAT identification numbers at least periodically or before each shipment and properly document these controls! Even better is to continuous monitor the VAT registrations of all customers in the system
  • Ensure with your actions that the submission of recapitulative statements (EU Sales Listing) is done with correct information to apply the zero VAT rate

Ensure EU VAT Compliance with CDQ!

If you are tired of struggling with inaccurate or outdated EU VAT identifiers the CDQ Cloud Suite for Business Partners can help! We at CDQ created a solution for supporting you with validating EU VAT identifiers in real-time, ensuring that your system is always up-to-date and in compliance with the regulations. We offer the following features to say goodbye to the headache of managing EU VAT identifiers manually:

  • Cloud based, allowing for integration with existing systems via API
  • Dediated Data Quality App
  • Real-time validation of EU VAT Numbers of all member states for accuracy and compliance
  • Batch processing
  • Customizable settings for specific business needs: Direct access to the EU VAT Information Exchange System (VIES) and local tax authorities
  • Audit proof: EU confirmation code for all validated EU tax identifiers
  • Automated alerts for non-compliant VAT and business identifiers by our smart update monitoring
  • Search for ready to use business partner data including valid EU VAT Numbers
  • Global validation of VAT and tax identifiers beyond just EU VAT Numbers (including validation of VAT and tax identifiers in UK and Brazil)

Bulletproof your tax compliance with CDQ


Easy software solution for managing and improving tax compliance for your business:

Global validation of VAT and tax identifiers


***This article was originally published on LinkedIn. Follow Simon for more insights on data quality!***

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