Supplier Traffic Light Check: A new supplier in ten questions

Ten questions. One new supplier. One clear picture.

A VAT ID check is not a compliance system — and that is exactly where otherwise solid businesses fail in a dispute. This check shows in four minutes whether your supplier onboarding holds up and is provable: from VAT ID via price and payment route to filing. An orientation tool for your processes — not legal advice, not an assessment of any specific supplier — evaluated entirely in your browser.

How the check works

You answer ten questions on your onboarding with Yes, No or Don’t know — a look at your lived practice, not at the manual. Your result appears immediately as a traffic light, computed locally in your browser; “don’t know” counts like “no”, because what you cannot evidence does not protect you when it matters. Depending on the colour, the next step follows: guide, call-back or emergency line. In four minutes you see where your onboarding stands.

The traffic light rates your answers, not your company. It does not replace a review of your individual case.

What the result means

Green means: your controls hold — the essential steps exist and are provable. Document what works and keep the re-check discipline: green is a state, not a possession — it lasts only if the check path fires on changes.

Amber means: the foundation stands, but individual controls are missing or cannot be evidenced — the normal finding in businesses relying on lived but undocumented diligence. Usually two or three process steps — a price note, a re-check trigger, orderly filing — turn amber into a resilient green.

Red means: essential controls are missing or could not be produced in an audit. Not an accusation — a work order: first a minimum check path for new suppliers, then the orderly catch-up on the existing base. No hectic rebuild — sequence. If one specific supplier is the trigger, that one goes on the table first.

Why these questions

The ten questions map the check path that courts and the tax administration actually apply when they later ask whether a business “should have known”.

The standard comes from the European Court of Justice: under the Kittel line, whoever knew or should have known that his transaction was connected with a fraud chain loses deduction and exemption. The counter-boundary is Mahagében: nobody owes an investigation of his entire upstream chain — required is the diligence of a prudent trader, with deeper checks only on indications. Between these poles sits onboarding: a baseline check for every new counterparty, escalation on cause, everything documented.

What that baseline looks like was set out by Germany’s Federal Fiscal Court for the first time in late 2025: qualified VAT ID confirmation, verification of identity and authority, commercial register extract, documented undertakings — plus a prohibition on overstretching: nobody owes more than what is reasonable. Questions 1, 2, 8 and 10 follow this catalogue almost literally. The Section 25f circular lists in margin notes 15 et seq. the indications that trigger escalation — inexplicably low prices, patterns alien to the sector, unusual payment routes; questions 3 to 7 turn these into process steps. The Financial Intelligence Unit confirms the same patterns, above all third-party accounts and untraceable goods routes. Recent ECJ case law adds two clarifications: registration status and invoice picture belong in the baseline check — while a partner’s mere deregistration is not an automatic strike against you, but a reason to review.

The weighting follows the logic of evidence: VAT ID, price plausibility, payment route and filing count threefold — the points on which disputes are decided. That “don’t know” counts like “no” is not harshness but honesty: what counts is what you can show. How this check path grows into a system with escalation rules is shown by the traffic light system for daily business; the legal depth is on supplier due diligence without blanket suspicion.

Note for vehicle purchases (July 2026): Additionally verify that the vehicle’s VAT history (standard taxation or margin scheme under sec. 25a) is documented — the EPPO investigation “Huracán” specifically targets buyers of unclear margin cars. This question will be added with the next check update.

Source box

Legal status: 7 July 2026. Full citations for the legal statements made in the text.

• ECJ, judgment of 6 July 2006 — C-439/04 and C-440/04, Kittel and Recolta Recycling, ECLI:EU:C:2006:446, para. 56 et seq. (knowledge/constructive-knowledge standard).
• ECJ, judgment of 21 June 2012 — C-80/11 and C-142/11, Mahagében and Dávid, ECLI:EU:C:2012:373, para. 61 et seq. (reasonableness limit).
• ECJ, judgment of 21 November 2024 — C-624/23, SEM Remont, ECLI:EU:C:2024:976 (registration status and missing VAT statement).
• ECJ, judgment of 3 April 2025 — C-164/24, Cityland, ECLI:EU:C:2025:241 (deregistration requires individual assessment; no automatism).
• Federal Fiscal Court (BFH), judgment of 18 December 2025 — V R 3/25, ECLI:DE:BFH:2025:U.181225.VR3.25.0, paras 31 f. (catalogue of due care; no overstretching of the standard).
• Section 25f German VAT Act (UStG); Federal Ministry of Finance circular of 15 June 2022 — III C 5 - S 7429-b/21/10003 :001, BStBl I 2022, 1001, margin notes 15 et seq. (catalogue of indications).

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