Automatic VAT Number Validation

Taggun’s Latest Built-In Feature: VAT Number Validation

Taggun now utilises the online search engine VIES (VAT Information Exchange System) to verify the validity of a company’s VAT number. 

There are a couple of reasons why a company might need to verify another company’s VAT number: Security and Obligation.

Security in B2B relations

Legitimacy: VAT verification provides a measure of confidence that a business you’re dealing with is legitimate, i.e., that they are who they say they are and are based in the country that they claim to be. It is also helpful to ensure that a company is currently in operation. 

Fraud Prevention: It also confirms that the VAT you are charged for is being paid to a business which is VAT registered. This helps to avoid being scammed to pay VAT by possibly shady businesses, as well as unintentional tax fraud on your company’s behalf (when claiming back VAT paid to a supplier which is not VAT registered).    

As an Obligation

In some countries, tax authorities require companies to keep records of their customers, vendors and contacts’ verified VAT numbers.  

How VAT number validation is done, without automation:

3 Step Manual Procedure

  1. Obtain the VAT number from the receipt 
  2. Verify the VAT number online
  3. Results are assessed and perhaps recorded in a database

The validity of a VAT number can be verified manually online here

There are ways to make the verification and assessment steps (2 and 3) easier by purchasing some 3rd party software to process lists of VAT numbers. However, this will cost both money and time, as the VAT number will still need to be manually identified and transcribed from receipts.  

How it can be done today, when using Taggun’s receipt OCR AI:  

Scan receipts and have these processes automatically implemented: 

  • VAT number identification and extraction from the receipt.  
  • Verification of the authenticity of the VAT number. 
  • You are returned results with either valid VAT numbers or an error message which gives insight into potential reasons for invalid numbers (e.g., incorrect country code, VAT number doesn’t match the pattern the country’s companies register expects, or perhaps the number simply isn’t valid). 
    • Note: If a user would prefer to manually verify the merchant verification details, then all the information needed is provided back to your system. 

3 Steps (at human-processing speed) –> 0 Steps (at machine-processing speed)

An example of how Taggun’s system works

  • Taggun takes a VAT number from a receipt: 
    Vat No : GB 660 4548 36
  • It is passed to the VIES platform. 
  • VIES goes to that country’s companies register and checks if it exists: If it does, detailed information about the company is returned. 

Some of the more technical details

  • Taggun’s system is trained to identify and extract VAT numbers from most countries in the EU (specific countries are included at the bottom of this post). 
  • Taggun pre-processes the VAT numbers for accuracy before submitting them to VIES for validation. 
    • Ensuring that a country code is supplied. 
    • Inferring the country code from IP/NEAR parameter information if the VAT number doesn’t specify a country code i.e. VAT No: 660 4548 36
  • Taggun ensures the VAT number format is correct for the given country (as this is country-specific).
  • Unique feature: Norwegian VAT
    • This is processed through a separate pathway.
    • Taggun converts Norwegian VAT/MVA tax numbers so that they can also be validated using our validation system (something that the VIES platform doesn’t currently support). 

Taggun’s plan for the future! 🚀

~ Growing our list of countries ~ 

In time, we plan to increase the number of countries for VAT verification. We also plan to expand into other similar tax systems (e.g., GST for New Zealand). This will allow for even greater quantities of merchant verification.  For example, France has SIRET/SIREN numbers which are not supported by the VAT platform, but can be converted to VAT numbers.

~ Optimising the IP/NEAR Parameter ~ 

Using the street address information on the receipt would be better than IP/Near param information for inferring the country code. 

For now…

Taggun is continuing to build more for features for our customers to replace time-consuming, error-prone chores with immediate, automated and robust processes.

Current Countries: 

EU Moss Austria Belgium Bulgaria Croatia Cyprus Czechia Denmark
Estronia Finland France Germany Great Britain Greece Hungary Ireland
Italy Latvia Lithuania Luxembourg Malta Netherlands Norway Poland
Portugal Romania Russia Serbia Slovakia Slovenia Spain Sweden