VAT Validation for B2B Shopify Stores: A Complete Guide

Selling to businesses in other EU countries has a big advantage: under the reverse-charge mechanism, you can invoice without VAT, and your customer accounts for the VAT in their own country. But the exemption comes with a condition that many shops handle too casually — the buyer's VAT ID has to be valid.

When does the reverse charge apply?

For an intra-community supply of goods to be VAT-exempt, broadly:

• You and your customer are both VAT-registered businesses in different EU member states,
• the goods are transported from one member state to another, and
• your customer has provided a valid VAT identification number.

Sales to businesses in your own country are not affected — they are invoiced with domestic VAT as usual.

Why the VAT ID matters more since 2020

With the so-called quick fixes to the VAT Directive, which apply since 1 January 2020, the customer's valid VAT ID became a substantive condition for the exemption of intra-community supplies of goods (Art. 138 of the VAT Directive). Before that, it was mostly treated as a formal requirement.

In practice: if you invoice without VAT and the customer's VAT ID was invalid, the tax authority can deny the exemption and claim the VAT from you.

How to validate a VAT ID

The European Commission runs VIES (VAT Information Exchange System), which relays your query to the tax database of the customer's member state and tells you whether the number is currently valid.

Good practice looks like this:

1. Check the format first. Every country has its own VAT number format; catching typos early avoids unnecessary failed lookups.
2. Query VIES before issuing a VAT-free invoice.
3. Keep a record of the result — ideally including the date and the consultation number VIES returns when you provide your own VAT ID.
4. Handle downtime. Member-state databases are regularly unavailable. Don't treat "service unavailable" as "valid".
5. Re-check regular customers periodically. VAT registrations can be cancelled.

Some member states offer additional checks. In Germany, for example, the Federal Central Tax Office offers a qualified confirmation that also compares the company name and address.

Automating it in your shop

Checking numbers by hand in the VIES web form doesn't scale once B2B orders come in daily. The VIES VAT Compliance plugin validates VAT IDs while customers enter them, exempts only valid cross-border B2B customers, stores proof of every check with the order and retries when VIES is down — for Shopify and WooCommerce.

This article is general information, not tax advice. Please consult your tax adviser for your specific situation.