Value added tax
Also known as VAT, IVA, TVA, MwSt, BTW, ΦΠΑ, PDV etc
How does it work
In the checkout form the buyer is presented with the option to enter and validate his VAT number. Example
If validation succeeds the order total is updated and no VAT applies.
The VAT number is looked up in real time in the EU servers. Local national databases are also involved. If there is a network failure or the service is unavailable validation will fail and in this case you should manually make adjustments after the customer pays.
In your backoffice you also have this utility to validate the customer's VAT number.
From your backoffice settings you can hide the VAT box if you do not care to use it in the checkout process.