Automatic VAT verification and multi-country tax compliance

A company operating across several European markets had to manually verify each customer's tax status for every order. Checking a VAT number required going to the VIES website, entering the data and saving the result. With 500+ customers in the database — many from different countries — employees often skipped this step or relied on outdated data. A customer's VAT number could expire or be invalidated, and the company would not know.

Selecting the correct VAT rate required taking several variables into account at the same time: service type, place of supply (country of establishment vs. customer country), customer type (company vs. private individual), the customer's VAT registration status, and any tax exemptions. With 15+ rule combinations and differences between countries, employees had to refer to lookup tables or consult an accountant. Errors occurred in 5-8% of invoices — each one required a correction, additional correspondence and exposed the company to sanctions.

Managing VAT exemption documents relied on folders on a drive containing scanned files. There was no automatic tracking of expiry dates — when an exemption expired, nobody remembered until an inspection. The lack of a central verification register meant that in the event of an audit, the company could not quickly prove that VAT numbers had been validated. Any regulatory change in one of the countries required manual table updates and team retraining.