The EU launched an online service on 14 June 2002 to enable businesses across Europe to check the validity of their customers' VAT identification numbers on the internet.
The online service gives businesses access to certain parts of the system of electronic information exchange used between tax authorities, known as the "VAT Information Exchange System" or "VIES". The service saves time and administrative costs both for businesses and tax administrations. Under current VAT rules, supplies of goods made by a trader in one Member State to a trader in another Member State are exempt from VAT in the country of origin, on the basis that they will be taxed in the country of destination. However, a trader making intra-EU supplies must be sure that his customer is subject to VAT in another Member State before despatching the goods free of VAT as otherwise he may have to pay the VAT himself. Until then, a supplier wishing to confirm the validity of the VAT identification number provided by his customer had to contact his own tax administration which would check the VIES and confirm that the number quoted was valid.