This plugin is usefull for European shops, where VAT rules are specific. VAT tax is charged at the shop rate for all customers based in EU, and with a non registrered EU VAT ID. VAT is not charged when the customer is outside EU or for customers outside the shop country, with a EU VAT ID registered.

It is done via a live request to the european VIES service (VAT Information Exchange System). According to the result, the plugin assigns the customer in a shoppergroup. The shoppergroups must be connected to your tax rules.