Validation of VAT Registration Numbers for EU Invoices

This document explains the validation of customer VAT registration numbers within the EU and how to activate the process to automatically validate VAT registration numbers.
A supplier that sells goods or services to a customer in another EU country do not have to add VAT on an invoice if the VAT registration number of the customer is proven valid. If the VAT registration number is not valid, VAT should on the other hand be added on the EU invoice. The validation support two validation methods with automatic validation, BZST and VIES, and user-defined validation method 80-99 with manual validation. BZST is used for validation of VAT registration numbers in Germany and VIES is used for validation of VAT registration numbers in all other EU countries. User-defined validation methods allow customers to use other validation tools. The validation status of a VAT registration number is not updated automatically, but can be changed manually.
Note: The functionality to validate customer VAT registration numbers within the EU, defined in 'Validation Policy. Open' (TXS003), is the preferred validation method within the EU. If a check digit method for VAT registration numbers is selected in 'Country. Open' (CRS045), this needs to be removed before defining the policy for the country in (TXS003).

VAT registration numbers

All VAT registration numbers are updated in 'VAT Registration Number. Open' (TXS070) together with customer name and address information.

All new or changed VAT registration numbers on customers or customer addresses are automatically updated in (TXS070). The VAT registration numbers are added with status 00-'New' and updated with name and address information from the customer master or address table. The name is replaced with the name returned from VIES, unless the field 'M3 Name' in (TXS003) is selected.

Existing VAT registration numbers must be added manually before the automatic validation functionality can be used.

Existing VAT registration numbers

Before existing VAT registration numbers can be validated, they must be added to 'VAT Registration Number. Open' (TXS070). This is done with the batch operation 01-'Add VAT registration number' in 'VAT Registration Number. Sel Operation' (TXS160).

The operation 'Add VAT registration number' will update 'VAT Registration Number. Open' (TXS070) with the VAT registration numbers connected to customers and customer addresses. The VAT registration numbers are added with the status 00-'New' and updated with name and address information from the customer master or address table respectively.

VAT validation policy

The validation policy for a country is defined in 'VAT Reg Number Validation Policy. Open' (TXS003). In (TXS003), these validation policy attributes are defined:
  • The validation method
  • How often a VAT registration number should be validated
  • If VAT should be added on an EU customer invoice without a valid VAT registration number
  • The responsible user for a VAT registration number
  • When applicable, how addresses should be validated in the German BZST portal
  • If the name in the customer master or address should be replaced with the name returned from VIES.

VAT on invoices with invalid VAT registration numbers

The field 'Add VAT' in (TXS003) indicates if VAT should be added on an EU invoice that does not have a valid VAT registration number. It is also possible to define local exceptions for 'Add VAT' in 'Validation Policy. Open Local Exception' (TXS011). These are the available alternatives:
  • 0-'No, VAT is not added'
  • 1-'Yes, VAT is added'

The parameter 'Add VAT' in the validation policy for the base country is checked at invoicing. VAT will be added on EU invoices with an invalid VAT registration number when the parameter is set to 1-'Yes, VAT is added'.

Validation status

The validation status and validation date of each VAT registration number is updated in 'VAT Reg No. Display Validation Status' (TXS071) every time a VAT registration number is validated. The information is displayed per validation method, since a VAT registration number can be validated in both BZST, VIES, and other tools when user-defined validation methods are used. An error code together with a description is displayed for VAT registration numbers where the automatic validation failed. The expiration date of a validation is also displayed, indicating when a new validation is required. You can manually change the validation status and in that case the field 'Manually changed' check box will be selected.

The validation status, validation reference, error code, and expiration date are not automatically updated for user-defined validation methods. For these methods, the fields should be updated manually.

Validation log

Whenever information is changed in (TXS070) or (TXS071), a transaction is automatically created in 'VAT Reg Number. Display Validation Log' (TXS072) so that you can track, for example, manual changes.

Follow these steps

  1. Open (TXS003) and define VAT registration number policies for the countries where validation of VAT registration numbers should be done. The VAT registration policy is valid for all divisions in a company.
  2. Optionally, open (TXS011) to define policy exemptions. You can 'Add VAT' exemptions for a VAT responsible, if VAT should be added on an EU invoice with an invalid VAT registration number. To make the exemption valid for all countries in a division, the country code is left blank.
  3. Open (TXS160) and select 'VAT reg no batch operation' 01-'Add VAT registration number' to update the VAT registration number master with all VAT registration numbers on customers and customer addresses. The tables OCUSMA, OCUSAD, OOADRE and ACUORA are scanned. The VAT registration numbers are added with status 00-'New' in (TXS070) and (TXS071).
    Note: The add VAT batch job can be performance demanding and time consuming. Consider splitting the job by selecting a limited number of countries for each batch job.
  4. Open (TXS160) and select 'VAT reg no batch operation' 02-'Validate' to validate and update the status on all VAT registration numbers in (TXS071). The VAT registration numbers will be validated in both the VIES and BZST at the same time if there is a policy for both portals in (TXS003).
    Note: User-defined validation policies are not included in the automatic validation selected in (TXS160).
  5. It is recommended to schedule a job for the VAT registration number batch operation 02-'Validate VAT registration number' in 'VAT Registration Number. Select Operation' (TXS160). To define a scheduled job, open 'Job Schedule Function. Open' (SHS030). This job will automatically validate all VAT registration numbers with status 00-'New', 05-'Invalid' and 20-'Valid' but with and expired validation date.
    Note: It is not recommended to schedule a job for 'VAT reg no batch operation' 01-'Add' as all new VAT registration numbers are updated in the VAT registration number master when entered in the customer master, on a customer address or a customer order address.