Validating VAT numbers is crucial for demonstrating tax exemptions on intra-community supplies, managing tax systems, and preventing fraud.
A 0% tax rate (exemption) applies to goods sold from one EU Member State to another but requires a valid VAT number from the buyer's Member State. Without this number, the seller must charge local VAT, which can be as high as 27% in some countries. If this procedure is not followed, local tax authorities may challenge the exemption, leading to demands for VAT payment. In such cases, tax authorities will assess the VAT amount due from the supplier and may impose penalties, potentially resulting in negative profit margins.
To mitigate this risk, it is vital to establish a procedure for periodically verifying VAT numbers and maintaining records of these checks, similar to the requirements for transport proof.
The KGT SAP add-on automates VAT numbers' validation when entered in the customer or vendor master data. It creates a real-time link to the VIES (VAT Information Exchange System) to verify the entered VAT number. Regular validation is critical since VAT numbers can expire or change due to modifications in the legal status of customers or vendors.
This validation process can be fully automated through scheduled batch jobs, such as running on the last Sunday of each month to validate all VAT numbers in the customer and vendor master data.
As a recognized leader and long-standing official 'SAP Build partner', KGT specializes in developing SAP add-ons for VAT reporting, EC listing, e-invoicing, and SAF-T reporting. Our solutions support a company's tax control framework and include features such as Intrastat reporting, VAT number validation, and VAT data analytics.
KGT is a SAP partner for PE services and SAP Build partner, and to become an SAP partner, strict due diligence requirements must be met, including having certified SAP consultants. You can find us at: https://partnerfinder.sap.com/profile/0001925409
