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Austria: Duty to check validity of VAT identification numbers

Intra-Community supply. The so-called “intra-Community supplies of goods” are VAT exempt. However, the invoice has to include the valid VAT identification number of the client who has to be an entrepreneur. If these requirements are not completely fulfilled, VAT exemption is not granted. VAT has to be paid subsequently and default interest at the rate of 2% of the due VAT is applied.

The Austrian tax authorities hold the position that the client has to pay the tax due if the entrepreneur can prove that false information has been given to him/her and that, though having taken all precautions which could reasonably be expected of a prudent and diligent trader, he/she was not able to detect the false information. By “all precautions which could reasonably be expected of a prudent and diligent trader” the authorities mean all actions undertaken by the entrepreneur in order to check the validity of the VAT identification number of his/her counterpart.

The validity of a VAT identification number can be checked by a query submitted to the VAT information exchange system (VIES) of the European Union or by electronically filing a request of confirmation of a VAT identification number in Austria through the system FinanzOnline. The fiscal authorities are of the opinion that the use of both systems for checking the number is to be considered a reasonable action to be taken by the entrepreneur.

Other intra-Community services. Also when “other intra-Community services are concerned, on the basis of the principle of the place of delivery of a service it is important to check the validity of the client’s VAT identification number in order to avoid a wrong VAT assessment.

Transport. If a forwarding agent acts on behalf of the orderer under the system of the special VAT identification number in order to claim exemption from import VAT, the forwarding agent assumes the duties of the entrepreneur carrying out an intra-Community supply of goods. In this sense the forwarding agent is obliged to check the client’s VAT identification number. In case of failure to comply with this duty, the exemption requirements are not completely fulfilled and the agent has therefore to pay import VAT.

Input tax. Pursuant to the decisions taken by the independent tax tribunal, also invoices referred to purchases must be checked with regard to the validity of the supplier’s VAT identification number. The independent tax tribunal holds the view that an invoice with a false VAT identification number infringes the rules regarding the issuing of invoices and therefore non deduction of input tax is granted.

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