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Why you need to validate your TRN numbers

Why you need to validate your TRN numbers

In many parts of the world, including the EU, validating your VAT registration numbers is not just good practice – it’s a legal requirement.

VAT numbers, also referred to GST Registration Number (GRN) or Tax Registration Number (TRN), act as a unique identifier for businesses registered to collect and remit VAT. By ensuring your VAT number is accurate and validated, you can avoid costly mistakes.

Here, we’ll explore why those oh-so-important numbers are the difference between compliance and non-compliance, including the potential consequences of getting it wrong.

Plus, we’ll take a look at a comprehensive solution that simplifies the validation process, ensuring accuracy and saving you from unnecessary complications.

 

Why correct TRN formatting matters more than you think

TRNs are more than just a string of characters. As mentioned above, the unique combination of letters and/or numbers are used to identify an individual or entity registered for VAT in their respective countries.

Some require specific lengths, while others include alphanumeric combinations or even identifiers tied to a company’s registration details.

For example:

United Kingdom – GB123456789

Germany – DE123456789

France – FR12345678901 or FRX1234567890

Here’s the catch: if a TRN isn’t entered in the correct format, it won’t even make it to the tax authority’s verification portal. Instead, it gets immediately flagged as invalid.

So, why does formatting matter so much? Because without it, validation is a non-starter. Tax authorities like the EU’s VIES and the UK’s HMRC won’t accept a TRN that doesn’t meet their predefined standards. This means businesses must ensure every TRN they process meets the correct format before it’s even submitted.

 

Why you need to validate TRN numbers

Failing to properly format and validate TRNs can lead to significant issues, including:

 

Data quality risks: Invalid TRNs clutter your records, making compliance and reporting more challenging.

Compliance with EU regulations: The EU VAT Directive (Articles 217-240) mandates the inclusion of VAT numbers on all invoices for intra-EU B2B transactions. Non-compliance could result in rejected claims or audits from tax authorities.

Penalties: Reporting transactions with invalid VAT numbers can lead to financial penalties or interest charges.

Unprofessionalism:  Submitting frequent errors can flag your business as unreliable and you could develop a bad reputation with the relevant tax authorities.

Fraud: A valid TRN doesn’t always mean it’s tied to the right supplier. Mismatches can lead to unintentional VAT recovery fraud.

 

Simplifying the process with Entity Manager

To address these challenges, tools like LimeLyte® Entity Manager can mass validate up to 100,000 TRNs every hour.

Think of it as a pre-verification safety net. It ensures that TRNs meet their country-specific formatting requirements before they’re sent to tax authorities.

In selected countries where an API from the national tax authority is available, LimeLyte® Entity Manager will also verify that the TRN you have uploaded is a perfect match for the customer or supplier you are checking. If it’s incorrect, you’re alerted, allowing you to correct the issue without risking non-compliance.

The rise of e-invoicing and stricter VAT recovery rules mean TRN validation is no longer optional.

With tools like LimeLyte® Entity Manager, businesses can automate TRN validation, reduce errors, and strengthen their compliance processes.