What Happens When You Invoice a Business That Has No VAT Number

You are a freelancer or consultant based in an EU Member State. You have a new client in another EU country (or even in your own country). They are clearly operating as a business — they have a registered company, employees, a commercial website. But when you ask for their VAT identification number, they either do not have one or cannot provide one.

This puts you in an uncomfortable position. The reverse charge mechanism under Article 196 of the VAT Directive requires the customer to account for VAT — but that mechanism depends on your customer being identified as a taxable person. Without a VAT number, how do you determine whether B2B or B2C rules apply? And if B2C rules apply, you may be charging VAT in the wrong country at the wrong rate.

This situation is more common than most people assume, and the EU VAT Directive has a specific framework for handling it.

There are several legitimate reasons why a genuine business may not have a VAT identification number:

Below the registration threshold: Most EU Member States exempt small businesses from VAT registration if their annual turnover falls below a national threshold. These businesses are real taxable persons under EU law — they simply are not required to register.

Newly established: The business has applied for VAT registration but has not yet received its number. Administrative processing times vary significantly across Member States — from days to months.

Exempt activities only: Businesses that exclusively perform VAT-exempt activities (such as certain financial, medical, or educational services) may not be registered for VAT, even though they are taxable persons by definition.

Non-EU businesses: Businesses established outside the EU may not have an EU VAT number unless they have a registration obligation in a specific Member State.

The SME VAT Exemption Scheme: From 1 January 2025, the cross-border SME exemption scheme allows small businesses to benefit from VAT exemptions in other Member States. These businesses may use an EX identification number rather than a traditional VAT number.

This is the most important concept in this entire guide. Under EU VAT law, being a "taxable person" and being "VAT-registered" are two different things.

Article 9(1) of the VAT Directive defines a taxable person as "any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity." This definition does not mention VAT registration. It does not mention VAT numbers. A person is a taxable person by virtue of what they do, not by virtue of their registration status.

The CJEU confirmed this principle in Kollektivavtalsstiftelsen TRR Trygghetsradet (C-291/07): a customer that carries out both economic and non-economic activities is a taxable person for the purposes of the place of supply rules for the consultancy services at issue. This principle was later codified more broadly in Article 43 of the VAT Directive (as amended by Directive 2008/8/EC), which provides that a taxable person who also carries out non-taxable activities is treated as a taxable person for all services supplied to them.

While the legal definition of "taxable person" does not require registration, the practical rules for suppliers introduce a VAT-ID-based presumption. Article 18 of Implementing Regulation 282/2011 sets out how a supplier determines whether a customer is a taxable person.

Article 18(1)(a): If the customer communicates a valid VAT identification number verified via VIES, the supplier may regard the customer as a taxable person. This is the straightforward case — valid VAT ID, B2B rules apply.

Article 18(1)(b): If the customer has not yet received a VAT identification number but has informed the supplier that they have applied for one, the supplier may treat the customer as a taxable person — provided they obtain any other proof that the customer is a taxable person. This covers the newly-registered-business scenario.

Article 18(2): If the customer has not communicated a VAT identification number, the supplier "may regard the customer as a non-taxable person" — unless the supplier has information to the contrary. The supplier must also be able to demonstrate that the customer did not communicate their VAT identification number. This is the default presumption: no VAT ID communicated = treat as B2C.

Article 18(2) uses the word "may" — the supplier may regard the customer as non-taxable. This is a rebuttable presumption. If you have evidence that the customer is in fact a taxable person, you are not required to treat them as B2C.

However, the burden then shifts to you. If you apply B2B rules (which means not charging VAT and expecting the customer to reverse charge), you need to be able to demonstrate to your own tax authority that the customer was indeed a taxable person. Evidence could include:

A commercial registration or company extract. A certificate from the customer's tax authority confirming their taxable person status. The customer's own declaration, preferably in writing, that they are a taxable person under Article 9(1). Proof that the customer has applied for a VAT number under Article 18(1)(b).

Article 19 introduces an additional consideration: even where a customer is a taxable person, if they receive services exclusively for private use (including personal use by staff), that customer is treated as a non-taxable person for those services. This means you cannot simply rely on the client being a company — the service must be for their business purposes.

The reverse charge mechanism under Article 196 requires the customer (the taxable person receiving the service) to account for VAT. In theory, this applies whenever a taxable person receives B2B services falling under the Article 44 general place-of-supply rule from a supplier not established in the customer's Member State — including suppliers from other EU Member States and from outside the EU — regardless of whether the customer has a VAT number.

In practice, applying the reverse charge without a VAT identification number creates significant difficulties:

The supplier's problem: Without a VAT ID, you cannot verify your client's taxable status via VIES. The Article 18(2) default treats them as B2C. If your tax authority audits you and you failed to charge local VAT on what turns out to be a B2C supply, you are liable for the uncollected VAT.

The customer's problem: A non-registered business that receives a reverse charge invoice is supposed to self-assess and pay VAT in their own Member State. But without a VAT registration, they typically have no mechanism to file a VAT return and remit the tax. In many Member States, receiving a reverse charge service triggers a mandatory VAT registration obligation.

The EC Sales List problem: Under Articles 262–271, you must report cross-border B2B services on your EC Sales List, which requires the customer's VAT identification number. Without it, you cannot complete the filing.

When you treat the supply as B2C because the customer has not provided a VAT identification number, your invoice must follow the standard Article 226 requirements — including under Article 226(6), the quantity and nature of the goods supplied or the extent and nature of the services rendered. A few specific considerations apply:

If you are applying B2B treatment because you have evidence the customer is a taxable person (the Article 18(2) rebuttal), include the "Reverse charge" notation required by Article 226(11a) and retain the evidence supporting your determination on file.

In many Member States, a business that receives intra-EU services subject to reverse charge under Article 196 is obligated to register for VAT, even if they are otherwise below the domestic registration threshold. The rationale is straightforward: they need a VAT registration to self-assess and remit the reverse-charged VAT.

This means your client's lack of a VAT number may itself be a compliance failure on their part. However, this is their obligation, not yours. Your obligation is to apply the correct VAT treatment based on the information available to you at the time of the supply.

As a practical matter, it is reasonable to inform the client that receiving cross-border services may trigger a VAT registration obligation in their country, and to ask them to provide their VAT number once obtained. You can then issue a corrected invoice (via a credit note for the original B2C invoice and a new B2B reverse charge invoice) once the number is available.

From 1 January 2025, the EU's cross-border SME VAT exemption scheme introduces a new type of identification: the EX number. Small businesses that qualify for the exemption in another Member State receive this number, which contains the suffix "EX" appended to an individual identification number issued by their Member State of establishment.

An EX number is not a standard VAT identification number. It identifies the business as benefiting from the SME exemption. A business holding an EX number is making exempt supplies — meaning they do not charge VAT and do not have input VAT deduction rights.

If your client provides an EX number instead of a VAT number, they are a taxable person (they carry out economic activity), but the reverse charge rules may apply differently depending on the Member State's implementation. The EX number will not validate through VIES in the same way as a standard VAT ID, but a separate electronic confirmation mechanism for EX numbers is provided for under Article 31(2a) of Regulation 904/2010 (as inserted by Directive 2020/285).