Procurement Glossary
VAT ID check: Validation of the VAT identification number in Procurement
November 19, 2025
The VAT ID check is an essential validation process for checking the VAT identification number of suppliers and business partners. This check ensures tax compliance and minimizes risks in cross-border business transactions. Find out below what the VAT ID check involves, what methods are available and how you can effectively integrate it into your procurement process.
Key Facts
- Legally required validation of the VAT identification number for EU-wide transactions
- Automated verification via the VIES system (VAT Information Exchange System) of the EU
- Reduces tax risks and prevents fraud through invalid or falsified VAT IDs
- Documentation required for compliance and audit purposes
- Integration into supplier qualification and onboarding processes
Contents
Definition: VAT ID check
The VAT ID check refers to the systematic validation of the VAT identification number of business partners to ensure tax compliance.
Basics of VAT ID validation
The VAT ID check is carried out by comparing the specified number with the official EU databases. The format, validity and current registration are checked.
- Formal syntax check according to country-specific standards
- Online validation via VIES database
- Checking the registration status
- Comparison with company data of the business partner
VAT ID check vs. credit check
While the supplier credit check evaluates financial performance, the VAT ID check focuses exclusively on tax validation. Both processes complement each other in the context of supplier qualification.
Importance of the VAT ID check in Procurement
In procurement, the VAT ID check is indispensable for legally compliant business transactions. It enables the correct application of the reverse charge rule and prevents additional tax claims. Integration into supplier management ensures continuous compliance.
Methods and procedures
The VAT ID check can be carried out using various methods, from manual validation to fully automated systems.
Manual VIES query
The direct query via the European VIES portal enables the immediate validation of individual VAT IDs. This method is suitable for occasional checks of new suppliers.
- Entering the VAT ID in the VIES portal
- Immediate feedback on validity
- Documentation of the test result
Automated API integration
Modern supplier portals integrate VAT ID checks directly into the registration process. API interfaces enable real-time validation and automatic documentation.
Batch processing of existing data
Batch processing is ideal for checking large supplier databases. This systematically validates all stored VAT IDs and identifies discrepancies. This method effectively supports supplier master data maintenance.
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Key figures for controlling VAT ID checks
Effective key figures enable the monitoring and continuous improvement of VAT ID validation processes in Procurement.
Validation rate and success rate
The validation rate measures the proportion of verified VAT IDs among all registered suppliers. A high rate of over 95% shows systematic process coverage.
- Share of validated VAT IDs in the total stock
- Success rate of automated checks
- Duration until complete validation
Error detection rate
This key figure records the proportion of identified invalid or problematic VAT IDs. Values between 2-5% are considered normal and show the effectiveness of the checking processes.
Compliance coverage
Compliance coverage evaluates the complete documentation of all VAT ID checks for audit purposes. 100% coverage is required for legal certainty. This key figure supports the Supplier Scorecard in the holistic supplier evaluation.
Risk factors and controls for VAT ID checks
Inadequate VAT ID validation can lead to significant tax and legal consequences that must be systematically addressed.
Additional tax claims
Invalid or unverified VAT IDs lead to the refusal of reverse charge application by tax authorities. This results in subsequent VAT payments and interest claims.
- Subsequent payment of VAT not originally paid
- Interest and possible late payment penalties
- Time-consuming correction of bookkeeping
Fraud risks due to falsified VAT IDs
Criminals use fake or stolen VAT IDs for fraudulent transactions. Regular validation as part of the supplier assessment minimizes these risks.
Compliance violations and audit problems
Missing documentation of VAT ID checks leads to compliance violations during tax audits. Integration in quality audits and systematic archiving create the necessary legal certainty for the company.
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Practical example
A medium-sized mechanical engineering company implements automated VAT ID checks in its supplier portal. When registering new EU suppliers, the VAT ID provided is automatically validated via VIES. An Italian component manufacturer enters an invalid VAT ID, which is recognized immediately. The system blocks the registration and requests a correction. After successful validation, the supplier is released and all verification steps are documented.
- Automatic real-time validation prevents incorrect registrations
- Seamless documentation creates audit security
- Reduced manual testing effort through system integration
Current developments and effects
Digitalization and stricter compliance requirements are shaping the development of VAT ID verification in modern Procurement.
AI-supported validation systems
Artificial intelligence is revolutionizing VAT ID verification through advanced plausibility checks and pattern recognition. AI systems automatically identify suspicious patterns and potential cases of fraud.
- Automatic anomaly detection
- Predictive analytics for risk assessment
- Continuous learning algorithms
Blockchain-based verification
Blockchain technology enables unalterable documentation of VAT ID checks and creates transparent audit trails. This innovation strengthens trust in supplier relationships.
Extended compliance integration
Modern systems combine VAT ID checks with comprehensive risk management processes. Integration into Supplier Risk Management enables holistic compliance monitoring and proactive risk management.
Conclusion
The VAT ID check is an indispensable building block for legally compliant procurement processes in the EU. Automated validation systems reduce manual effort and minimize compliance risks considerably. Integration into existing supplier management processes creates lasting legal certainty. Companies should see VAT ID checks as a strategic tool for minimizing risk and optimizing processes.
FAQ
What is a VAT ID and when is it required?
The VAT ID (Value Added Tax Identification Number) is a unique VAT identification number for companies in the EU. It is mandatory for cross-border transactions within the EU in order to be able to apply the reverse charge rule and avoid double taxation.
How often should VAT IDs be checked?
VAT IDs should be validated when business is first initiated and checked again at least once a year. For critical suppliers or high transaction volumes, a quarterly check is recommended, as the registration status may change.
What happens if the supplier's VAT ID is invalid?
If the VAT ID is invalid, the reverse charge rule cannot be applied, which means that the purchasing company is obliged to pay VAT. This leads to additional costs and possible additional tax claims by the tax authorities.
What documentation is required for VAT ID checks?
Companies must document all VAT ID checks with the date, result and test method used. This evidence must be kept for at least ten years for tax audits and compliance audits and should be archived digitally.
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