Tax Number Validation by VIES

Background

How can I know if my European customer has a valid VAT number? This is a question you might ask yourself a lot, and it is an important one, too!

Indeed, in order to correctly invoice your customers and comply with the European legislation, you need to make sure that their tax registration number is a valid one. This will also allow you to apply an intra-community tax code for your european customers, as well as issue accurate tax reports (EU Sales Tax Report, Intrastat…).

Fortunately, the Website VIES offers a quick solution to this problem. VIES (VAT Information Exchange System) is a search engine owned by the European Commission that allows you to check the validity of a company’s tax registration number. The data used to control the numbers is retrieved from national VAT databases when a search is made from the VIES tool.

Functionalities

Currently, in NetSuite, a manual solution exists that consists of a link that indicates the validity of the VAT Number with a pop-up. This pop-up alert is also automatically generated when you enter an invalid tax registration number in the Tax Reg. Number field.

The reasons why a VAT number is not valid can be multiple:

• Presence of “.” or “-” or “/” or space
• Prefix of the country is missing
• Number not complete 

However, the response of the VIES check is just informative, it does not change anything to the number that has been entered in NetSuite’s field. By clicking OK, the user can validate a tax registration number that is not compliant with EC legislation, and which will in turn cause discrepancies in legal reports.

Novutech’s Custom Solution

In order to make that control more efficient, we have built a solution that facilitates the life of the users and can save a lot of time. This optimisation script works in two stages:

1. Update the VAT Number
   
   The first step consists in checking how the VAT Number is formatted and to adjust it to make it eligible for the VIES check. First, the script deletes every character that does not belong in a VAT Number (. – /).  Then, we check if the prefix of the Country is present. If not, the script updates the VAT Number with the prefix of the customer’s country. 
   
   Example for a belgian customer: 088.090-15 becomes BE08809015.
   
   
2. Send the transformed VAT Number to VIES
   
   The new VAT number is then sent to VIES to verify its validity. 

• If it is valid, the old VAT Number is replaced by the new one in NetSuite’s standard Tax Reg. Number field and the record is saved. 
• If it is not valid, we have created a new field that will contain the wrong VAT number, while the standard VAT number field is cleared. This way, the user knows that the VIES check has been performed and more importantly the incorrect VAT number is not used in future transactions. 

Conclusion

With this useful customisation, we allow NetSuite users to easily verify the validity of their customer’s tax registration numbers with an official check engine. Thanks to this simple enhancement, they can sleep easy, knowing that all their transactions are using valid company’s VAT numbers and consequently the correct EC or domestic tax code.

In short

• Automated check
• Cleans + controls the validity of any registration number
• Foolproof official European Commission engine
• Compliant with EC tax accounting

A question? You would like to implement this solution?