The VAT identification number (VAT ID no.) plays a role in the data exchange between EU Member States and ensures taxation of intra-community deliveries (§ 27a UStG). In Germany it is issued to business owners upon request by the Federal Central Tax Office. The number can be used to check whether a recipient abroad is classified as a business -- and must always be included on invoices for intra-Community deliveries.

Source: UStG (only available in German), Bundeszentralamt für Steuern (only available in German), Wikipedia, edited