VAT ID Validation

VAT ID Validation

VAT ID Validation automatically calculates the required tax for B2B transactions that take
place within the European Union (EU), based on the merchant and customer locale. Magento
performs VAT ID validation using the web services of the European Commission server.
VAT-related tax rules do not influence other tax rules, and do not prevent the application of other tax
rules. Only one tax rule can be applied at a given time.
l VAT is charged if the merchant and customer are located in the same EU country.
l VAT is not charged if the merchant and customer are located in different EU countries, and
both parties are EU-registered business entities.
The store administrator creates more than one default customer group that can be
automatically assigned to the customer during account creation, address creation or update,
and checkout. The result is that different tax rules are used for intra-country (domestic) and
intra-EU sales.
Important: If you sell virtual or downloadable products, which by their nature do not require
shipping, the VAT rate of a customer’s location country should be used for both intra-union and
domestic sales. You must create additional individual tax rules for product tax classes that
correspond to the virtual products.

Customer Registration Workflow

If VAT ID Validation is enabled, after registration each customer is prompted to enter the VAT
ID number. However only those who are registered VAT customers are expected to complete the
After a customer specifies the VAT number and other address fields, and chooses to save, the
system saves the address and sends the VAT ID validation request to the European
Commission server. According to the results of the validation, one of the default groups is
assigned to a customer. This group can be changed if a customer or an administrator changes
the VAT ID of the default address, or changes the entire default address. In some cases, the
group is temporarily changed during checkout by emulating a group change.

Checkout Workflow

If a customer’s VAT validation is performed during checkout, the VAT request identifier and
VAT request date are saved in the Comments History section of the order.
The system behavior of the VAT ID validation and the customer group change during the
checkout depends on how the Validate on Each Transaction and the Disable Automatic Group
Change settings are configured. If a customer uses PayPal Express Checkout, Google Express
Checkout, or another external checkout method that uses an external payment gateway, the
Validate on Each Transaction setting cannot be applied. Thus the customer group cannot be
changed during checkout.

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