Companies registered in the European Union can share information regarding the VAT registration
electronically through the VAT Information Exchange System (VIES)
The validity of VAT numbers is easier to check using this system. According to European Union provisions, VAT has to be paid whenever goods or services are acquired within the EU. The VAT has to be paid only in the EU member state of the purchaser, thus the supplier must check the purchaser’s VAT number. The VIES system offers an easy way to validate this specific number.
How the VIES works
The new VAT control system for the intra-community trade was introduced in 1993. This measure reduced the administrative procedures that companies were required to comply with and the number of necessary customs documents was reduced significantly.
The computerized VAT Information Exchange System was set up in order to unite all the data regarding VAT payers across international frontiers.
When trading within the EU, suppliers and purchasers must be able to check if their business partners have a valid VAT number. Suppliers of goods do not need to make VAT payments in the member state from which the goods are forwarded. Only the company that receives the goods in another member state must pay the necessary VAT for the respective goods. Therefore, companies that trade within the EU must make sure that the company receiving the goods is a taxpayer with a valid VAT number.
The advantages of the VIES
The VAT Information Exchange System offers benefits both for the companies (the ones purchasing goods and the ones supplying goods) and the authorities responsible for VAT monitoring.
The VIES allows companies to quickly access a database and confirm the VAT number of their trading partners. Likewise, VAT administrators have a tool for monitoring and controlling the intra-Community trade in order to detect any kinds of irregularities.
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