Enable VRN validation in global jurisdictions

Introduction

Enabling VRNVAT ID
Also known as a VAT registration number (VRN), this is the unique number that identifies a taxable business that is registered for VAT.CleanShot 2023-08-17 at 11.41.50@2x.pngMost businesses (and other persons carrying out an economic activity) are required to have a VAT number.
validation in Anrok is essential for tracking international economic nexus exposure and ensuring VATVAT
A type of transaction tax levied on goods and services in more than 170 countries. Like sales tax in the US, VAT is expected to be paid by the consumer making the purchase.
is calculated correctly for B2B sales (in countries where applicable). Since all countries have their own standard VAT ID format, Anrok can help support with the VRN validation required. Anrok's customer VRN validation service uses two verification methods:

  • Format check — The customer VRN matches the correct format for the jurisdiction.
  • API check — Anrok connects to the jurisdiction's tax authority system and confirms the VRN exists and isn't expired (not applicable in every jurisdiction).

During the validation process, Anrok performs API checks for countries that specifically require an API check, including the European Union (27 member states), the United Kingdom, and Australia. All other VRN validations are based on a format check.

 


 

Enable VRN validation

You can enable VRN validation in Anrok to ensure economic nexus exposure is accurately tracked for B2B sales (in countries where applicable). Enabling VRN validation also ensures tax is accurately calculated and collected for your B2B customers.

Note CleanShot_2024-04-30_at_16.01.40_2x-removebg-preview.png

It is recommended you have customer VAT IDs in your billing system prior to enabling VRN validation in the jurisdiction. See Send VAT IDs to Anrok for validation.


Try enabling VRN validation in the demo above ☝️

  1. In the Anrok app CleanShot 2023-07-20 at 12.02.21@2x.png, go to Jurisdictions. Take me there!
  2. Select the global jurisdiction where you want to enable VRN validation.
  3. Under Jurisdiction details, click View services.
  4. Under When should Anrok begin validating customer VRNs for transactions?, enter the date Anrok should begin validating customer VRNs for the jurisdiction.

    Tip CleanShot_2024-04-30_at_15.47.03_2x-removebg-preview.png

    For the most accurate exposure calculation, select a VRN validation date of your earliest transaction in that jurisdiction.


  5. When you are finished, click Enable customer VRN validation.
  6. Under Tax calculation, click Skip for now.

 


 

VRN validation statuses

During VRN validation, Anrok will display the following VRN validation status based on the results of its format or API check:

Validation status & meaning

valid_vrn_anrok.png — VRN is valid according to local country specification.

invalid_vrn_anrok.png — VRN was present on the transaction but was invalid. We suggest reviewing the VAT ID's format or connecting with the customer for an updated VAT ID.

missing_vrn_anrok.png — VRN was expected due to a B2B product tax code in a region that requires VAT ID collection on B2B sales, but no VRN was present on the transaction. We suggest reaching out to the customer to provide you with their VAT ID.

unknown_vat_status_anrok.png — VRN was present on the transaction but VRN validation is not enabled in Anrok. We suggest enabling VRN validation for this jurisdiction in Anrok.

Blank — No VRN was provided or expected on the transaction. This is expected behavior for B2C transactions.


Note CleanShot_2024-04-30_at_16.01.40_2x-removebg-preview.png

If VRN validation has been enabled in a jurisdiction but your transactions with VAT IDs provided have a missing_vrn_anrok-removebg-preview.png status, we suggest ensuring your billing system has been set up properly to send VAT IDs. See Send VAT IDs to Anrok for validation.

 


 

VRN validation FAQs

We understand you may have questions about VRN validation for global jurisdictions. Many of these questions are common, so let's work through some of these commonly asked questions together:

Are VAT ID updates in my billing system automatically sent to Anrok?

The billing systems that send VAT registration numbers (Customer “VRNs”) information to Anrok when an existing transaction is updated include NetSuite, Stripe, Xero, Ordway, and Quickbooks. Other billing systems do not support sending updates to Anrok.

If you do need to add a Customer VRN after a transaction was created, best practice is to refund the transaction as outlined above.

What if a country's VAT ID validation website is down?

Sometimes the tax authority API is unavailable due to maintenance or when the tax authority system is experiencing technical issues. In these cases, Anrok will perform a format check only to ensure the VRN is appropriate for the jurisdiction. If this was the case on a transaction you will be able to hover over and see that only a format check was done due to a down website.

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