Non-US tax collection

VAT ID applies to companies and not individuals. During registration, payees can either declare they are VAT registered and provide an ID number or declare they are not VAT-registered.

If the payee has provided a valid ID number (and all other setup information is complete), the payee becomes payable. However, if the payee has entered the ID number incorrectly, the payee remains unpayable. Any payments made to the payee are marked "Deferred" with a reason explaining that the numbers provided were invalid.

UK VAT validation

When payees enter a UK VAT number in the VAT number screen via the iFrame / Supplier Hub, Tipalti automatically checks with HMRC (the UK tax authority) to confirm it’s valid. If not valid, payees see an error message and can correct it instantly. If it’s valid, they can continue onboarding. This validation only confirms that the VAT number is valid and registered, and not that it belongs to this payee. To enable this feature, contact your Tipalti rep.

EU VAT validation

When payees enter an EU VAT number in the VAT number screen via the iFrame / Supplier Hub, Tipalti automatically checks with the EU VIES to confirm it’s valid. If not valid, payees see an error message and can correct it instantly. If it’s valid, they can continue onboarding. 

This validation only confirms that the VAT number is valid and registered, and not that it belongs to this payee. To enable this feature, payers need to contact their Tipalti rep.

If VIES results are unavailable, payees can proceed with their onboarding, and the VAT check is completed offline. Payees are payable while pending validation. If an offline check is returned as invalid, the payee becomes unpayable and receives an email that they need to enter their correct VAT number.

In some countries, the VAT ID number is mandatory, whereas in other countries, it is not. VAT ID validation rules for the countries of the European Union can be found at http://ec.europa.eu/taxation_customs/vies/faq.html.

The type of local tax ID required depends on the payer's country and the relevant tax ID types for the country. If the payer's country supports more than one type of tax ID for individuals or companies, then the payee is able to select the relevant tax ID type during the setup process.

If the payee's resident country is:

• The same as the payer's country, then the local tax ID is mandatory
• Different than the payer's country, then the payee can:
  • Declare they own a local tax ID and provide the number, or
  • Declare they do not own a local tax ID

The table below shows the countries that Tipalti supports for collection of local tax and VAT IDs and where in the setup process the ID is located. The local tax ID can appear on the Tax Forms page or Payment Method page or both pages of the iFrame/ Supplier Hub.

If payees are required to enter the local tax ID on the Payment Method page, it's because the payee’s selected country requires a tax ID to be able to process payments (this requirement has nothing to do with the Taxation module). Whereas, if the payee is required to enter the local tax ID on the Tax Forms page, it's because the non-US and non-European payer is using the Taxation module.