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Paying VAT in Europe: What is VIES and How Does it Apply To Business Transactions?

What is VIES?

It works as an electronic method of VAT number validation for economic operators in the EU region.

 

What is it used for?

The VIES validation system means that suppliers can easily and quickly check that the VAT numbers provided by purchasers are valid. Therefore, if both the customer and supplier are registered as taxable persons in their own country and show up in the VIES platform, no VAT is charged on an intra-community transaction.

VIES also enables VAT administrations within member states to detect all kinds of irregularities along with monitoring and controlling the flow of intra-community trading.

How does it work?

The verification of a VAT number works by sending a request through VIES with the details of your customer’s tax ID. This is securely transmitted to the relevant national database for the customer and will confirm if the VAT number is ‘valid’ or ‘invalid’.

You may also be able to see the name and address linked to this VAT number if the member state allows it under their data protection regulations. It is only possible to verify one VAT number at a time and this must be done in the present, meaning verification cannot be applied to past transactions.

Using VIES

If you are already listed on the VIES, and your customer VAT number check is returned from VIES as valid, then you would be able to consider the operation as intra-community trading and not include VAT in the exempt or reverse charge operation.

However, if the customer is not registered for VAT, or shows up as invalid in the VIES platform, then the tax must be included on an invoice at the same rates for transactions within Spain.

Need more help?

If your business needs further guidance on using VIES in Spain, contact the team at Lawants to schedule a consultation.

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Call-Off Stock in Spain: The Procedure and Differences Compared to Consignment Stock

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