Why the US Has No VAT Number
The reason you cannot obtain a VAT number in the US is structural:
- VAT vs. Sales Tax: VAT is an indirect tax applied at every stage of the supply chain, with businesses charging VAT on sales and reclaiming VAT paid on purchases. The US system uses Sales Tax, typically applied once at the point of sale to the end consumer, without an input tax recovery mechanism.
- Federal vs. State: In most countries, VAT is administered at the national level. In the US, Sales Tax is determined and enforced independently by individual states and local jurisdictions.
The United States EIN: The Federal Tax Identifier
Since there is no VAT number in the US, the United States EIN (Employer Identification Number) is what businesses use instead when asked for a tax identifier.
What is an EIN? The EIN – sometimes referred to as the Federal Employer Identification Number (FEIN) or Federal Tax ID – is a unique nine-digit number issued by the Internal Revenue Service (IRS).
Purpose: The United States EIN is used to identify a business entity for federal tax purposes, filing returns, hiring employees, and opening business bank accounts.
Not a VAT Number: Importantly, an EIN cannot be used as a VAT number. It will not work for VAT validation systems (such as VIES in the EU) and does not support VAT mechanisms like the reverse charge. However, in practice, providing a United States EIN often satisfies overseas suppliers or customers when they request a “Tax ID.”
How to Obtain a United States EIN
Applying for a United States EIN is a straightforward process. Businesses can apply directly through the IRS website at no cost. Corporations, partnerships, and multi-member LLCs are generally required to obtain one, while sole proprietors may also benefit from having an EIN for banking or international trade purposes.
When a US Business Needs a Foreign VAT Number
Even though the United States has no VAT system, American companies may still be required to obtain VAT numbers abroad. This happens when they engage in taxable activities in countries that operate VAT or GST systems, such as in the EU, UK, or Australia.
Common triggers include:
- Selling goods or digital services to consumers in a VAT jurisdiction above local thresholds.
- Storing inventory in a foreign VAT country.
- Importing goods into a VAT jurisdiction.
In these cases, the US company must register directly with the relevant tax authority or use simplified schemes like the EU One-Stop Shop (OSS). The VAT number issued will belong to that foreign country and must be used for VAT collection, reporting, and payment.
Key Takeaways
For businesses operating in or with the US:
- Domestic operations: There is no VAT number – focus on complying with state and local Sales Tax obligations. Your United States EIN serves as your federal tax identifier.
- International trade: Provide your United States EIN when foreign entities request a “VAT number” or “Tax ID.”
- Foreign VAT obligations: If trading internationally, be prepared to register for VAT in the relevant jurisdiction. Professional VAT compliance support can help ensure smooth operations and avoid penalties.
Conclusion
While the United States does not issue VAT numbers, every business operating in the country or engaging in international trade must understand the role of the United States EIN. It is the key federal identifier for tax compliance at home and the number most often requested by foreign partners in place of a VAT number. For US companies expanding globally, however, VAT registration abroad may still be necessary.
Staying compliant across multiple tax systems is complex – but it doesn’t have to be overwhelming. If your business needs clarity on US tax identification or foreign VAT registration, our experts can guide you through every step.
Contact us today to ensure your United States EIN and international VAT obligations are fully compliant.
