VAT number dictionary

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VAT number dictionary

What is Value added tax (VAT)?
VAT is a consumption tax that is charged on most business transactions. The seller add VAT to the price they charge when they provide goods and services to the business customers or to the end customers.

What is VAT identification number (VATIN)?
Value added tax identification number is a unique reference number that means the tax subject is registered in local tax authority for VAT purposes.

VAT number registration
A tax subject is usally liable to register for VAT in its country if the income earned from supplying goods or services exceeds the specified limit. Applying for a VAT registration number must be done through the local tax authorities. This can be a complicated procedure, it depends from country and often has to be in the local language.

VAT number check and validation
The "VAT countries" usally allow to check VAT number, if it is valid or whether it is correctly associated with a specified trader name and/or address. You can verify online a VAT number with our service.

VAT tax refund
To get any VAT refund, your purchase has to be above a certain amount — ranging from about $30 to several hundred dollars, depending on the country. Also the details on how to get a refund vary per country. Generally you'll need to follow the same basic steps:

  • Bring your passport along. You'll likely be asked to present your passport when you make the purchase, in order to start the refund process.
  • Shop at stores that know the rules about VAT refund. Retailers can choose whether to participate in the VAT tax refund scheme. Most tourist-oriented stores do.
  • Get the necessary refund documents. When you make your purchase, have the merchant fill out the necessary refund document, often called a "cheque."
  • Bring your VAT paperwork and purchases to the airport or border crossing
  • Get your documents stamped at customs office, before checking in.
  • Collect the cash from a merchant who works with a refund service such as Global Blue or Premier Tax Free. Find their offices inside the airport, present your stamped documents, and they'll likely give you your refund in cash. They can take a cut of your refund (about 4 percent).

Difference between VAT tax and sales tax
VAT and sales tax are two different forms of consumption taxes, but they are different in the methods in which they are levied on consumers. The value added to any product is calculated as the sales price minus the cost of supply and the other taxable items.

VAT is a form of indirect tax which is imposed on products or services at different stages of manufacturing. The tax is paid to the government directly by the producer, and the cost is passed on to the consumer. It is the consumer who has to finally pay for VAT.

Sales tax is levied at the time of the purchase of the products or services. The tax is easily calculated, and the consumer knows very well how much he is going to pay for the tax. The amount of sales tax may be calculated as a percentage of the taxable price of the sale. The tax is collected from the consumer by the seller at the time of purchase.


  Value added tax Sales tax
lieved on producer and consumer end consumer
accounting tricky simple
applied at various stages of production total value of purchase
avoids evasion yes no