For SaaS sellers, EU VAT treatment often depends on whether you can prove that the customer is a VAT registered business. At checkout, that means validating the customer's VAT number, storing the result, and using it to decide whether the transaction qualifies for reverse charge or should be treated as a consumer sale.
The job does not end at signup. VAT numbers can become invalid, customers can add them after payment, and upgrades, renewals and prorations all create new documents that need the correct tax treatment.
If you need the underlying rules for when reverse charge applies, see our EU VAT reverse charge guide. This guide focuses on the operational side: validating VAT numbers and keeping that validation crrrect throughout a SaaS subscription.
Validate the VAT number before deciding what to charge
Every EU software sale comes down to two facts you need before the card is charged: where the buyer is, and whether you can evidence that the buyer is a business.
The VAT number is the key piece of evidence for the second question.
Buyer | You are established in the EU | You are outside the EU (US, UK, Switzerland) |
|---|---|---|
Business in another EU country, VAT number validated | No VAT, reverse charge under Article 196 | No VAT, reverse charge under Article 196 |
Business in your own EU country | Your domestic VAT rate | Not applicable |
Business with no VAT number, or one that fails validation | Treat as a consumer | Treat as a consumer |
Consumer | Buyer's rate through the Union OSS (your home rate while EU cross border B2C sales stay under €10,000) | Buyer's rate through the non-Union OSS from the first sale |
For a cross border B2B SaaS sale, a successfully validated VAT number is what lets you evidence the customer's business status. If the number is missing or cannot be validated, the safe default is to treat the sale as a consumer transaction and charge the applicable VAT.
What counts as valid VAT number evidence
Article 18 of Implementing Regulation 282/2011 sets the standard. You may treat an EU customer as a business when it gives you its VAT number and you confirm the validity of that number, with the associated name and address, through VIES, the EU's VAT Information Exchange System.
The same article lets you treat a customer that gives no VAT number as a consumer.
So charging VAT when the VAT number field is left blank is the correct default.
The VIES result is also your evidence, so store it with the order:
the timestamp
the VAT number checked
the response
the consultation number VIES issues when you query with an EU VAT number of your own
What to do when VIES cannot validate the number
Plan for VIES gaps. Some member states return no name or address, and national databases go offline for maintenance.
If validation cannot complete, charge VAT and correct it once the number verifies. Guessing in the buyer's favour leaves the VAT with you if the number later turns out to be invalid.
That makes the checkout rule relatively simple:
Validated VAT number: apply the appropriate B2B treatment.
Missing, invalid or unverifiable VAT number: charge VAT until you have evidence otherwise.
Revalidate VAT numbers throughout the subscription
A VAT number should not be treated as permanently valid just because it passed at signup.
Revalidate at renewal
A VAT number valid at signup can be deregistered later. If it is, the next renewal is legally a consumer sale and the missing VAT is your liability.
Rechecking the number before each renewal closes that gap for the cost of one API call.
For subscription software, this means VAT validation belongs in the recurring billing flow rather than being a one-time onboarding check.
Invoice by the 15th of the following month
Article 222 requires the invoice for a reverse charged service to be issued no later than the 15th day of the month after the one in which the chargeable event occurs.
Invoices generated at payment clear this easily. Usage billed in arrears, annual true ups and manual corrections sitting in a queue are where it slips.
What if the customer adds a VAT number after payment
This is a routine B2B billing ticket.
A customer checks out without a VAT number, pays VAT, and emails a week later asking for it back.
You cannot simply edit the issued invoice. Article 219 treats a document that amends an original invoice and refers to it specifically as an invoice in its own right.
The clean fix is:
Validate the VAT number.
Issue a credit note referencing the original invoice.
Issue a new reverse charge invoice for the net amount.
Refund the VAT portion only.
Tax authorities differ on how late a buyer can supply a VAT number and still qualify, so set a cut off in your terms.
Why refunding only the VAT matters
How you refund matters because processing fees are rarely returned.
Stripe keeps its processing, Connect and currency conversion fees from the original charge on every refund.
Take a €100 plan sold to a French business that paid €120 including 20% VAT, with an illustrative fee of 2.9% plus €0.30:
Correction method | Processing fees | Customer impact |
|---|---|---|
Refund the €20 VAT, issue credit note and corrected invoice | €3.78 on the original charge | Subscription continues |
Refund €120, cancel, ask the customer to resubscribe at €100 | €3.78 on the original plus €3.20 on the new charge | Interrupted access and a second checkout |
Per case the fee gap is a few euros. The larger cost is the customer who never completes the second checkout.
VAT validation on upgrades, downgrades and proration
Every proration charge or credit is a separate document that inherits the tax treatment of its parent subscription.
A mid cycle upgrade for a customer whose VAT number has been validated needs the same VAT treatment, wording and VAT number as the original invoice.
Proration invoices built from a generic template are where the Reverse charge mention most often goes missing.
The practical rule is to keep VAT status attached to the customer and subscription record so every billing event can use the same validated information.
How to invoice after successful VAT validation
Article 226 lists what a VAT invoice must carry.
For a reverse charged software sale:
A sequential invoice number and the issue date
Your name, address and VAT number
The customer's name, address and VAT number
The service period, if it differs from the issue date
A description of the service
The net amount, VAT of zero, and the total
The mention Reverse charge, required by Article 226(11a)
Citing Article 196 of Directive 2006/112/EC beside that mention is not required everywhere, but it removes doubt for the buyer's accountant.
A compliant invoice reads like this:
Invoice INV 20260930 · issued 30 September 2026
Customer: Atelier Nord SAS, Lyon, France · VAT ID FR 12 345678901
Pro plan, monthly subscription, 1 to 30 September 2026
Net €490.00 · VAT €0.00 · Total €490.00
Reverse charge: VAT to be accounted for by the recipient under Article 196, Directive 2006/112/EC
EU established sellers follow their own member state's invoicing rules. Sellers outside the EU follow the buyer's member state in principle, with the Article 226 fields as the common baseline.
What you still report after validating the customer
Validation determines how the transaction is treated, but it does not remove the reporting requirements that apply to the seller.
EU established sellers report the net value on their domestic VAT return and list each customer's VAT number and sales total on the EC Sales List, also called the recapitulative statement.
Each member state sets the filing frequency, and a late EC Sales List can draw a penalty even though no VAT is due.
A seller outside the EU with no EU VAT registration has no EU return to file for reverse charged B2B sales. Consumer sales go through the non-Union OSS and a quarterly return, with no threshold.
The UK has run its own regime since 1 January 2021: UK business buyers self account for VAT on services from overseas sellers, and UK consumer sales need a UK registration. Our guide to UK VAT for overseas SaaS sellers covers that side.
What changes before 2030
The VAT in the Digital Age package, Directive (EU) 2025/516, rewrites cross border B2B in stages.
From 1 July 2028 a mandatory reverse charge extends to more supplies by sellers not established in the buyer's country. B2B SaaS is already covered by Article 196, so this matters more to sellers of goods and of services taxed where they are performed, such as events.
From 1 July 2030, invoices for B2B supplies between EU countries must be structured electronic invoices issued within 10 days, each transaction is reported digitally in near real time, and the EC Sales List is abolished.
The legacy VIES is due to be phased out in July 2032 in favour of a central EU database.
For cross border B2B sales, the PDF invoice and the periodic EC Sales List both have an end date. Our ViDA explainer covers the timeline.
Automating VAT number validation yourself or with a merchant of record
Keep the liability and automate the steps
Tax engines such as Stripe Tax, Quaderno and Avalara calculate VAT and generate invoices on top of your own billing.
You remain the seller: your registrations, your EC Sales List, your liability when a number fails, and your team handling every late VAT number request.
This suits companies with finance staff and a reason to keep the tax relationship in house.
Whichever stack you use, VAT validation needs to connect to your checkout, subscription renewals and invoice generation rather than living as a separate manual process.
Move the liability to a merchant of record
A merchant of record becomes the legal seller of your software to the end customer.
The VAT number validation, reverse charge decision, invoice and reporting become its obligations, and your own sale runs upstream to it as a separate B2B supply.
Paddle, Polar, Lemon Squeezy and tiun all work this way and differ on fees and on what else they bundle.
tiun validates the customer's VAT number at checkout, applies the reverse charge automatically when the conditions are met, and issues an invoice carrying the reverse charge notation, which business customers download themselves from the self serve portal.
Because tiun also runs authentication and the customer database, a buyer's VAT status sits in the same record as their subscription and access, with no separate tax tool to sync.
Pricing is 2.9% plus $0.30 per transaction and 0.5% on subscription payments, with tax compliance included.
The limitation to weigh: tiun does not support external invoicing paid by wire transfer. Every sale runs through its checkout, so enterprise buyers who pay purchase orders by bank transfer will not fit.
Whichever provider you evaluate, ask two questions:
Are VAT numbers revalidated at renewal?
Does every document, including proration invoices and credit notes, carry the Reverse charge mention and the buyer's VAT number?
Frequently asked questions
How do I validate an EU VAT number for a SaaS customer?
Validate the number through VIES, the EU's VAT Information Exchange System. Store the number, validation result, timestamp and any consultation number returned with the customer's order.
What if VIES is down at checkout?
Charge VAT at the buyer's rate, then correct with a credit note and a new invoice once the number validates. Applying the reverse charge without evidence leaves you liable.
Should I revalidate a VAT number at every subscription renewal?
Yes. A VAT number that was valid when the customer subscribed can later be deregistered. Rechecking it before renewal prevents you from continuing to apply B2B tax treatment to a customer whose number is no longer valid.
What if the customer gives me their VAT number after paying?
Validate the number first. If the transaction can be corrected, issue a credit note against the original invoice, create a new invoice with the correct VAT treatment and refund the VAT portion.
Do I need an EU VAT registration to sell to EU businesses from outside the EU?
Not for reverse charged B2B software sales. You need one, through the non-Union OSS or a direct registration, once you sell to EU consumers.