International VAT guide for UK service businesses

This international VAT guide is for UK service businesses that sell to overseas clients. Selling services overseas no longer has to mean opening an office abroad. A UK consultant can advise a US client over Zoom, a marketing agency can manage campaigns for an EU brand, and a software business can sell subscriptions to customers in several countries before lunch.

That is good news for growth. However, it can make VAT feel less straightforward. If the client is outside the UK, do you charge UK VAT? Does the reverse charge apply? What evidence should you keep?

The answer usually starts with one point: place of supply. In simple terms, this means working out where your service is treated as supplied for VAT purposes. Once you know that, you can decide whether UK VAT applies, whether the supply is outside the scope of UK VAT, or whether you need to check overseas VAT rules.

Key takeaway
An overseas client does not automatically mean “no VAT”. For many B2B services, UK VAT is not charged because the place of supply is where the customer is based – or, in HMRC’s wording, where the customer “belongs”. However, the nature of the service, the customer’s status and the evidence you hold all matter.

What does place of supply mean?

For VAT, the first question is not always “where are we based?” It is “where is this service treated as supplied?”

If the place of supply is the UK, then UK VAT may be due. If the place of supply is outside the UK, the service is outside the scope of UK VAT. HMRC’s place of supply guidance sets out the main rules, but the practical issue for most businesses is knowing whether they are dealing with a business customer, a private consumer, or a service that falls under a special rule.

You should also look at the nature of the service before applying the general rule. Some services have their own place of supply rules, including land-related services, admission to events, work on goods, transport, intermediary services and some digital services.

Selling services to overseas businesses

For many B2B services, the general rule is that the supply is made where the customer belongs. In plain English, the VAT position usually follows the business customer rather than the UK supplier.

For example, if a London marketing agency provides general strategy consultancy to a business customer in New York, the place of supply will usually be the US. The UK agency would normally issue its invoice without UK VAT because the supply is outside the scope of UK VAT.

However, you need evidence. HMRC expects you to keep commercial evidence showing that your customer is in business and belongs outside the UK. For EU customers, a VAT registration number is usually the strongest evidence. Where that is not available, you may need other documents, such as company registration details, a tax identification number, a business website, contract correspondence, purchase orders or evidence of the customer’s business activities.

If you cannot show that the customer is in business, you may need to treat the sale as B2C instead. However, this can change the VAT treatment.

Selling services to overseas consumers

B2C services need more care. The general B2C rule is that the place of supply is where the supplier belongs. For a UK business, that can mean UK VAT is charged even if the customer is overseas.

However, this is not the whole story. Some B2C services supplied to customers outside the UK are treated as supplied where the customer belongs. HMRC covers these in VAT Notice 741A, section 12, under services of a professional, technical, financial, intellectual or other intangible nature. The list includes advertising services, consultancy and similar professional services, data processing, the provision of information, and certain banking, financial and insurance services.

This matters for consultants, agencies and advisers. A UK consultant advising a private individual outside the UK may not always need to charge UK VAT, but the answer depends on the exact service being supplied and whether the customer really “belongs” outside the UK.

What is the reverse charge?

The reverse charge is often described as a “paperwork flip”. Instead of the supplier charging VAT, the customer accounts for VAT in their own country, where the local rules require it.

For a UK service provider invoicing an overseas business, the important point is that the UK invoice normally should not include UK VAT where the supply is outside the scope of UK VAT. The overseas customer may then need to account for VAT locally under its own country’s reverse charge rules.

Your invoice should be clear enough for both your customer and your own VAT records. Before sending it, check that it supports the VAT treatment you have applied. Depending on the facts, it may include:

• the customer’s business name, address and country
• the customer’s VAT number, tax ID or other business evidence, where available
• a clear description of the service supplied
• no UK VAT charged where the supply is outside the scope of UK VAT
• wording such as: “Outside the scope of UK VAT. Reverse charge may apply in the customer’s country.”

Online services are not always digital services

This is one of the most common traps. A service delivered online is not automatically a digital service for VAT purposes.

For example, bespoke consultancy over Zoom is still consultancy. Advice sent by email is not automatically an electronically supplied service. A live online training session delivered by a person is different from an automated course that customers buy and access without meaningful human involvement.

HMRC’s digital services guidance gives examples of electronically supplied services, including e-books, digitised documents, online magazines, website hosting, software, software updates and advertising space on a website. It also says that using the internet simply to communicate or facilitate trading does not necessarily mean you are supplying e-services.

A simple way to think about it

If you sell automated digital services to consumers outside the UK, UK VAT may not be due, but VAT may be due where the consumer is based. For EU consumers, a UK business may need to register for the Non-Union VAT MOSS scheme in an EU member state or register for VAT in each relevant EU member state.

International VAT guide – five common examples

• A UK agency invoices a US company for a marketing strategy. This will often be outside the scope of UK VAT if the US customer is in business, belongs outside the UK and no special rule applies. Keep evidence.
• A UK consultant advises a private individual in France. The answer is not automatic here. Some B2C consultancy and information services supplied to non-UK customers can be outside the scope of UK VAT, but the precise nature of the service matters.
• A UK business sells an automated online course to EU consumers. This may be a digital service. UK VAT may not apply, but EU VAT obligations may arise.
• A UK designer advises on the refurbishment of a specific overseas property. Land-related services have special rules, so the general B2B or B2C rule may not give the answer.
• A UK VAT group has overseas branches or establishments. This is a specialist area. The VAT grouping rules should be reviewed carefully, especially if the business has previously considered the Skandia case (see the expert note below).

Record keeping matters, even when UK VAT is not charged

Not charging UK VAT does not mean there is nothing to record. You should be able to show why you treated the supply as outside the scope of UK VAT, why the customer was treated as B2B or B2C, and what evidence you relied on.

Cloud accounting software can help you use VAT codes consistently, raise clearer invoices and keep evidence in one place. However, software is only as good as the VAT setup behind it. If your business sells overseas, it is worth reviewing your cloud accounting software so that international sales are coded properly from the start.

Expert note: Larger groups with overseas branches should take advice.

In November 2025, HMRC changed its guidance on how VAT groups should treat overseas branches, following a review of its position on the Skandia case. In practical terms, an overseas branch of a UK VAT-grouped business may now be treated as part of the same VAT group. This is a technical area and will not affect most agencies or consultancies. However, if your business has overseas branches or EU establishments, it is worth asking a VAT specialist to review the position.

Pre-invoicing checklist

Before you invoice an overseas client, ask:

• Are we treating the customer as a business or a private consumer?
• Where does the customer belong for VAT purposes?
• What is the exact service we are supplying?
• Does a special rule apply?
• Is the service live and bespoke, or automated and digital?
• What evidence are we keeping?
• Should the invoice show outside the scope wording, reverse charge wording, or both?
• Do we need local VAT advice in the customer’s country?

When should you get international VAT advice?

If you sell one straightforward consultancy project to an overseas business, the VAT answer may be relatively simple. But VAT becomes more complicated when you sell to consumers, supply automated digital products, work through platforms, deal with land or events, or have branches in more than one country.

We hope this international VAT guide gives you a strong starting point. With the right VAT setup, you can take on overseas clients with much more confidence.

If you are unsure whether to charge UK VAT, whether the reverse charge applies, or whether overseas registration might be needed, speak to our VAT team. We can review your position and give you practical advice tailored to your business.