Why You Should Care About US VAT Registration Number - Let’s Break It Down!

Why You Should Care About a U.S. VAT Registration Number - Read This and You’ll Understand!

In today’s globalized economy, cross-border trade is becoming increasingly common. Whether you're a business or an individual, more and more people are getting involved in international trade - especially with the United States. In this process, a concept that may seem unfamiliar but is actually critical is gaining attention the VAT Value Added Tax registration number.

Although the U.S. doesn’t have a nationwide VAT system like many European countries, in recent years, with the rise of cross-border e-commerce platforms and stricter tax regulations, the U.S. has been tightening its tax compliance requirements for foreign businesses. Understanding and taking VAT registration seriously has become a necessary step for anyone involved in international business.

1. What Is a VAT Registration Number?

VAT, or Value Added Tax, is a type of consumption tax collected by businesses when they sell goods or provide services. Each country has its own VAT system, and the VAT registration number is a unique identifier assigned to a business within that country’s tax system - similar to a tax ID for businesses.

Although the U.S. operates under a Sales Tax system rather than a VAT system, when doing business with countries that do have VAT systems - especially in the realm of cross-border e-commerce - many platforms now require sellers to provide VAT registration information. Additionally, some U.S. states are beginning to enforce clearer tax requirements on online sales, making VAT-related knowledge even more important.

2. Why Has the VAT Registration Number Become So Important?

1. Mandatory Requirement from Cross-Border E-commerce Platforms

In recent years, major platforms such as Amazon, eBay, and Wish have tightened their tax verification processes for sellers. For example, Amazon announced in 2025 that all sellers operating on EU sites must provide a valid VAT registration number - or risk having their accounts frozen. This rule applies not only to EU-based sellers but also to cross-border sellers from China, Southeast Asia, and beyond. Even if your main market is the U.S., you may still need to provide VAT information if your products are also sold in Canada, Mexico, or other VAT-implementing countries. Having a legal VAT registration number is now a basic requirement for global e-commerce operations.

2. Avoiding Double Taxation and Improving Cash Flow

When selling products in multiple countries, failing to provide correct VAT registration information can lead to double taxation. For example, if you ship goods into the EU without a local VAT registration, you may be required to pay import VAT and customs duties. Then, when you make a sale, you might have to pay sales tax again - leading to unnecessary costs. On the other hand, with a local VAT number, you can claim back the import VAT you paid earlier through quarterly filings, significantly reducing your tax burden. This not only improves profit margins but also speeds up cash flow, strengthening your company’s financial flexibility.

3. Enhancing Brand Credibility and Customer Trust

As consumers become more aware of brand legitimacy and transparency, having proper tax credentials can greatly boost buyer confidence. In B2B transactions, many buyers actively verify a supplier’s VAT registration number to ensure compliance. This visible commitment to compliance often becomes a key factor in building trust and closing deals.

3. Recent Events Highlight the Importance of VAT

In early 2025, Germany’s Federal Ministry of Finance introduced a new rule requiring all foreign companies selling digital products to German consumers to register for VAT and submit monthly tax reports. This means that even companies selling software, e-books, or online courses remotely to German users must follow local tax rules.

At the same time, U.S. Customs and Border Protection CBP has increased scrutiny of low-value shipments. According to a report by The New York Times, the rate of package returns due to incomplete tax documentation rose by 17% in the first half of 2025 compared to the previous year. This shows that even within the U.S., lacking proper tax information can disrupt logistics and hurt customer experience.

International payment platforms like PayPal and Stripe are also connecting with national tax databases to automatically verify VAT details. If the information doesn’t match, these platforms may restrict withdrawal or transaction capabilities. These developments make the importance of a VAT registration number even more evident in international trade.

4. How to Obtain a VAT Registration Number?

Requirements for VAT registration vary by country and region. In general, businesses can either apply directly or hire a professional agency to assist. For example, in the EU, companies can submit application materials - including business license, legal representative ID, and bank account details - through the tax authority’s official website in the target market. The process usually takes 2-6 weeks.

Although the U.S. doesn’t have a unified VAT system, if you plan to sell to other countries through third-party platforms, it’s wise to consult a professional tax advisor in advance. They can help you determine whether you need to register for VAT in specific countries and how to structure your tax strategy effectively.

5. Conclusion

In an increasingly globalized world, tax compliance is no longer optional - it’s a necessary step for any business aiming to go international. As a bridge connecting different national tax systems, the VAT registration number plays a growing role. Whether you're a cross-border e-commerce seller, a foreign trade professional, or a business owner looking to expand overseas, this is an issue you must take seriously.

Understanding the importance of a VAT registration number and mastering the application process can help you avoid legal risks, improve operational efficiency, and strengthen your brand reputation. Rather than waiting until your products are blocked at customs or your account is suspended, start treating VAT registration as part of your business development strategy - today.