The add-on Value Added Tax / Goods and Services Tax supports tax exemption based on customer’s VAT ID. Buyers who specify a VAT-using European country in the Country field of their address (in either the shipping or the billing address block, during checkout or while editing the address book in their profile) will be given an option to complete an additional field - VAT number. If they have a VAT ID that allows them not to pay VAT on the purchase, they can submit it using this field.
The X-Cart store will provide validation of the VAT number format and will submit the VAT number that has been entered to the free VAT number validation service at http://ec.europa.eu/taxation_customs/vies/. If the service returns information that the specified VAT number is valid, the X-Cart store will automatically remove the VAT amount for the buyer so they will not have to pay it. If the service responds that the VAT number is invalid or fails to respond (this sometimes happens if the service is down or overloaded), the VAT amount for the buyer will not be removed.
As an alternative to the free service http://ec.europa.eu/taxation_customs/vies/, it is possible to use a paid VAT number validation service https://vatlayer.com/. To do so, you will have to sign up at https://vatlayer.com/product, get an API key to access the service and submit this API key in the EU VAT Number Validation API key (vatlayer.com) field on the Value Added Tax / Goods and Services Tax add-on settings page (Store setup -> Taxes).