Glossary VAT ID Number

VAT identification number (VAT ID, USt-IdNr.) is a unique identifier for businesses within the European Union used to process intra-EU supplies of goods and services. It serves to identify parties in cross-border transactions within the EU and enables the application of special VAT rules under the German VAT Act (UStG).

When do you need a VAT ID?

The VAT ID is particularly relevant if you, as an entrepreneur,

• deliver goods to businesses in other EU Member States (intra-EU supply),
• provide services to businesses in other EU Member States and the reverse-charge mechanism applies,
• regularly operate across borders within the EU, or
• need to verify the supplier’s VAT ID as a VAT-liable recipient.

For purely domestic supplies the VAT ID is not strictly required; in Germany the tax number or the personal tax identification number is usually sufficient. However, for many B2B transactions within the EU the VAT ID is a prerequisite to treat supplies as VAT-exempt.

Application in accounting

Correct handling of the VAT ID is crucial in financial accounting and invoicing to avoid tax disadvantages.

Invoicing

For VAT-exempt intra-EU supplies and where the tax liability is shifted (reverse-charge), the invoice should include the VAT ID of both the supplier and the recipient. Common mandatory information includes:

• Your VAT ID (e.g. DE123456789)
• Customer’s VAT ID (for B2B within the EU)
• Reference to the VAT exemption or reverse-charge (e.g. “Intra‑EU supply, 0% VAT” or “Tax liability of the recipient”)

Booking practice

Typical accounting treatments in practice:

• Intra‑EU supply: record the sale net, VAT 0%; report the turnover in the recapitulative statement (ZM).
• Reverse-charge for services: do not show VAT on the supplier’s incoming invoice; as the recipient, account for VAT and input VAT in your VAT return (if entitled to deduct input VAT).
• If the VAT ID is missing or invalid, the supply may be treated as a domestic taxable supply and German VAT may be charged.

Meldungen und Nachweise

For intra‑EU supplies you are required to report the transactions in the ZM. It is also advisable to check the validity of the customer’s VAT ID before issuing a 0% invoice and to retain the verification evidence (e.g. VIES printout) to have proof in case of an audit.

Application and verification

The VAT ID in Germany is issued by the Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt). The application is made online via the BZSt portal. Prerequisites typically include registration with the tax office and a valid tax number.

• Application: online application at the BZSt or by form.
• Verification: via the EU-wide VIES (VAT Information Exchange System) or via the BZSt verification service.
• Format: begins with the country code (DE) followed by 9 digits, e.g. DE123456789.

Practical tips and common mistakes

Avoid typical errors to minimise tax risks:

• Check first: Verify your trading partner’s VAT ID before issuing a VAT-exempt invoice (VIES check).
• Secure evidence: Archive verification reports and dispatch proofs for intra‑EU supplies.
• Small business owners: Small business owners (Kleinunternehmer) can also have a VAT ID. However, if they apply the small business scheme they must not charge VAT on invoices.
• Consequences of errors: If a valid VAT ID is missing, German VAT may be due; additional assessments and interest may also apply.

Conclusion: The VAT ID is a central instrument for cross-border B2B transactions within the EU. As a freelancer or small business owner you should apply for the number correctly, check it regularly and document it carefully in your accounting records to benefit from VAT exemptions and the reverse-charge mechanism.