What is USt-IDNr? The German VAT ID explained

VAT ID in Germany: Basics

VAT ID is short for value-added tax identification number 💬Umsatzsteuer-Identifikationsnummer. You might also see it abbreviated as USt-ID, USt-IdNr. or UID (in Austria).

Based on its VAT ID, every company in the European Union can be uniquely identified. The VAT ID is mainly used for B2B transactions within the EU.

Who needs a VAT ID?

Entrepreneurs who participate in the trade of goods and services between EU member states need a VAT number, except for companies that use the small business regulation 💬Kleinunternehmerregelung.

What does the USt-IdNr. look like?

In Germany, the VAT ID number begins with the abbreviation DE, followed by nine digits. It, therefore, has the structure DE123456789.

The structure is similar in other EU member states. The VAT number begins with the EU country code, followed by up to twelve alphanumeric characters, depending on the country.

Where can you apply for a VAT ID?

In Germany, you can apply for your VAT registration number free of charge at the federal central tax office. You can submit this application online. Before the tax office issues a VAT registration number to a small business, it requires the approval known as Sondersignal of your local tax office.

Where does the USt-IdNr appear?

The VAT-ID number must appear on invoices and in the imprint or legal disclosure of a company’s homepage. On invoices, it is usually found below the address and telephone number or email address of the person invoicing. However, it can appear elsewhere. It must be complete, correct, and recognisable as a VAT ID.

An invoice for an intra-community acquisition must state both the VAT ID number of the supplier and that of the recipient. If one of the numbers is missing, the proof required for an intra-Community supply (§ 17c UStDV) for claiming VAT exemption is deemed not to have been provided. In addition, this invoice must contain the note “tax-exempt intra-community supply” or “tax-exempt according to § 4 no. 1b in conjunction with § 6 a UStDV. V. m. § 6 a UStG”.

What is intra-Community acquisition?

Intra-community acquisition 💬innergemeinschaftlicher Erwerb is governed the VAT act. The following conditions must be met for an intra-community supply or service to exist:

1. The goods must physically reach another EU member state.
The exemption only applies if the items are actually transported into the destination country.

2. The buyer must be a business.
To prove this, the buyer provides a valid VAT ID. This confirms that they are purchasing the goods for business purposes.

3. The seller cannot be a small business.
Under the small business regulation, businesses do not charge VAT—therefore they cannot apply VAT exemption.

4. The goods or services must be part of the seller’s regular business activity.
This is usually shown by properly issuing a VAT-exempt invoice and recording the buyer’s VAT number.

Delivering goods intra-community

Supplying to another EU country is VAT-exempt if the recipient is an enterprise and the item is for business purposes. The delivered goods must physically reach the country of destination. In Germany, a confirmation of arrival 💬Gelangensbestätigung serves as proof of this. The VAT ID proves that the recipient is a business.

Delivering services intra-community

The same applies to services as to the supply of goods. The recipient of the service proves it is a business by using this VAT identification number. The service is taxed where the recipient’s VAT ID was issued. This procedure is also called reverse charge and means the reversal of tax liability (§ 13 UStG). In this case, the invoice must state:

Steuerschuldnerschaft des Leistungsempfängers or something similar.

FAQ

How can I check a VAT ID?

The invoicing party must ensure that their customers’ VAT IDs are valid. At the same time, you should document the check as proof and keep it in a traceable manner in case of discrepancies!

To check a VAT ID, there is a confirmation procedure available on the German central tax office’s website.

1. Enter your own VAT ID.
2. Select the country.
3. Enter your customers’ ID .

A alternative confirmation procedure is offered by the European Commission under the name VIES, short for VAT Information Exchange System.

What happens if the VAT number is wrong?

If the recipient of your invoice has provided an incorrect VAT ID number, you may have to pay the VAT instead. The worst case scenario is that you could even be prosecuted for using unauthorised tax benefits.

As a vendor or supplier, you can’t claim that you simply trusted the accuracy of your customer’s information. The standard here is the due diligence of a prudent merchant. This duty of care is seen as not being met if you fail to check the corresponding VAT identification number in advance. This is why you should be able to prove that you have checked it in advance. This is the only way you can convince the tax office that you’ve done your due diligence.

Can foreign entities check a German VAT ID with the confirmation procedure?

No, the federal central tax office only offers verification services for German businesses.

Are private individuals in the EU exempt from VAT?

Generally, there are no VAT exemptions, but there are exceptions to this rule. The mail-order regulation 💬Versandhandelsregelung under § 3c UStG affects businesses that sell and ship goods across borders to private customers.

If an online shop delivers goods to private individuals in other EU countries, VAT is no longer paid in Germany. Instead, the VAT must be paid in the customer’s country. To do this correctly, the business must register for VAT in each destination country once it exceeds that country’s delivery threshold.

Each EU member state sets its own threshold, and once your annual deliveries into that country surpass it, the VAT obligation shifts to you as the supplier.

Who is liable for VAT?

The tax liability arises when the invoice is issued but no later than in the month following the purchase (§ 15 (1) UStG). However, it is not the seller but the buyer who bears the VAT liability. The buyer taxes the delivery or service as an intra-community acquisition and pays the VAT on the purchasing price to the competent tax office. Then the buyer can then deduct this again as input tax.

Why do I need a recapitulative statement?

If you carry out intra-community transactions, whether as a seller or buyer, you must submit a recapitulative statement 💬Zusammenfassende Mitteilung or ZM on these transactions with the advance VAT return 💬Umsatzsteuervoranmeldung. The ZM is submitted electronically via ELSTER. Unlike the deadline for submitting the advance VAT return, there is a reporting deadline of the 25th of the following month.

What is a one-stop shop for electronic services?

Businesses now no longer have to register for VAT in all the EU Member States, where they have customers to file their returns and declarations. Instead, they can use the One Stop Shop (OSS) regulation. You can register for the MOSS procedure free of charge on the central tax office portal and submit your tax returns and declarations under this special scheme in Germany.

Examples of how to use the VAT ID

The following examples are intended to illustrate how the VAT ID number is handled in practice.

Delivery of goods to a French company

Suppose you deliver computers to a company in Paris. You and your Parisian customer each have a domestic VAT number from Germany and France, respectively.

The delivery is tax-free in Germany as an intra-community delivery—if the following conditions are met:

• Your VAT registration number and the French VAT ID of the customer are stated on the invoice.
• The invoice contains a note about the tax-free intra-community delivery. In non-German-speaking countries, you would make this note in the national language of the service recipient, i.e. French. Corresponding translations are provided by the chamber of industry and commerce online.
• You enter the assessment basis (net remuneration) in line 20 of the advance VAT return and column 2 of the recapitulative statement.

For confirmation, archive the invoice, the customer’s confirmation of receipt and a forwarding agent’s certificate or the consignment note.

Providing services to a client in Austria

You are a management consultant and advise a client in Austria. In this case, your service is also an intra-community, tax-exempt service. Things proceed as follows:

• On your invoice, you list your own VAT-ID number and the verified VAT-ID number of your client.
• The invoice contains the note “Steuerschuldnerschaft des Leistungsempfängers” tax liability of the service recipient” or “Reverse Charge.”
• Upon completion of the transaction, the service is deemed to be rendered in Austria and taxable. You cannot show a confirmation of receipt here; this is only available for physical goods.
• For proof, archive the invoice.