Do I need to charge VAT if I work with overseas clients?

Do I need to charge VAT if I work with overseas clients?

If you sell services or digital products to clients outside your home country, VAT can feel like a moving target. One client is in London, the next is in New York, another is in Dubai, and suddenly you are hearing terms like “place of supply,” “reverse charge,” “B2B vs B2C,” “export of services,” and “VAT registration thresholds.” The short answer is: sometimes you charge VAT, sometimes you don’t, and sometimes you don’t charge VAT but you still have paperwork or reporting to do. The longer answer depends on where you are based, where your client belongs, what you are selling, and whether your client is a business or an individual.

This article explains the practical logic behind VAT on overseas work, with a focus on services (consulting, design, software development, marketing, coaching, and other common “remote” work). It also touches on digital services and goods because many overseas client relationships include a mix. The goal is to give you a framework you can use to decide what to put on an invoice and what records you need to keep, while flagging the areas where you should get local professional advice.

Start with the basics: VAT is about where the sale is treated as happening

VAT is not simply “a tax you add when a client is abroad.” It is a consumption tax designed to fall on the end consumer in the place where the consumption is deemed to occur. That idea shows up in VAT rules through the “place of supply.” Place of supply rules decide which country has the right to tax a given supply, whether the supply is standard-rated, reduced-rated, exempt, or outside the scope of VAT.

When you work with overseas clients, the place of supply often moves out of your home country. If your sale is treated as supplied abroad, you may not charge your home VAT. But that does not automatically mean “no VAT anywhere.” In some cases, VAT is instead accounted for by the customer (reverse charge) or by you through a registration obligation in the customer’s country (especially for certain digital services or goods).

Step one: Are you even registered for VAT?

The first checkpoint is whether you are VAT-registered. If you are not registered, you typically do not charge VAT on invoices at all, whether domestic or overseas. However, two important caveats apply:

First, you might be required to register due to turnover thresholds or specific types of sales (for example, certain cross-border sales regimes can trigger obligations even when your domestic turnover is low). Second, being unregistered does not necessarily mean you can ignore VAT issues: some countries require non-resident suppliers of certain digital services to register and charge local VAT to consumers, even if the supplier has no local presence. This is particularly relevant for digital services sold directly to individuals.

If you are VAT-registered, the overseas question becomes more immediate because your default domestic invoices include VAT unless a rule shifts the place of supply or changes the mechanism for accounting for VAT.

Step two: Are you selling to a business or a consumer?

VAT treatment often splits into B2B (business-to-business) and B2C (business-to-consumer). That distinction can be more important than the country list itself. In many VAT systems, services supplied B2B are taxed where the customer belongs, while B2C services are taxed where the supplier belongs—unless special rules apply.

In practical terms, B2B overseas services frequently result in you not charging your home VAT, because the place of supply is the customer’s country. The customer then accounts for VAT under a reverse charge mechanism in their country, provided the rules there apply and the customer is properly registered. B2C overseas services can be more complex: you may have to charge your home VAT, or you may need to charge the customer’s local VAT under special “destination-based” rules (common for digital services).

So, before you worry about tax rates, you need to decide whether your client is acting as a business or as an individual consumer for that purchase.

How to decide if the client is B2B

For VAT purposes, “business” generally means the customer is purchasing in the course of economic activity. Many jurisdictions treat a customer as B2B if they provide a valid VAT number (or local equivalent) and you have reason to believe it’s genuine. In some cases, a company might not be VAT-registered (for example, small businesses below a threshold), yet still be a business customer. That can affect the evidence you should keep and the invoice wording you use.

When your overseas client is a business, you should aim to collect evidence of business status early in the relationship. This can include a VAT ID (where relevant), company registration details, a business address, a contract signed in a business capacity, a business email domain, and payment from a business account.

Step three: What exactly are you supplying?

Not all services are treated the same. Many VAT systems have a “general rule” for services and then carve out exceptions for specific categories. Some common categories that can have special place-of-supply rules include:

Services relating to land and property (for example, architecture services for a specific building). Event admissions (tickets and entry fees). Passenger transport. Restaurant and catering services. Hiring of means of transport. Cultural, artistic, sporting, scientific, educational, or entertainment services. Telecommunications, broadcasting, and electronically supplied services. Intermediary services and agency work can also introduce wrinkles.

Most remote professional services—consulting, design, marketing, software development, business coaching—often fall under the general rule. But even within “remote,” you should watch for supplies that tie you to a specific location (like on-site training, event access, or property-related work).

Typical outcome for B2B services: no home VAT, reverse charge by the customer

If you are VAT-registered and you provide a general-rule service to a business client overseas, the most typical outcome is that you do not charge your home VAT. Instead, the invoice states that the supply is subject to reverse charge (wording varies by jurisdiction). The customer then self-accounts for VAT in their VAT return, often reclaiming it at the same time if they have full input tax recovery. For the customer, this is usually VAT-neutral; for you, it simplifies cashflow because you are not collecting and paying over VAT on that invoice.

This is why many freelancers and agencies working with overseas businesses issue invoices with 0% VAT or “outside the scope” VAT treatment and include reverse charge wording. But you should not do this blindly: you need to confirm the client’s business status and you need to ensure the service actually falls under the rule that shifts place of supply to the customer’s location.

What “reverse charge” does and does not mean

The reverse charge is a mechanism that moves the obligation to account for VAT from the supplier to the customer. It is commonly used for cross-border B2B services because it avoids the need for the supplier to register in the customer’s country just to charge VAT on that sale.

However, reverse charge is not universal. Some supplies, some countries, and some customer circumstances may not allow it. Also, reverse charge does not automatically apply to B2C sales. If your customer is not a taxable business, there may be no one to “reverse charge” to, which can make the supplier responsible for charging VAT somewhere.

Common outcome for B2C services: you may need to charge VAT, but it depends

When you sell services to an overseas individual consumer, the general rule in many systems can point to the supplier’s location. That would mean charging your home VAT even though the customer is abroad. But there are major exceptions, especially for digital services and certain “use and enjoyment” rules.

For example, if you sell electronically supplied services—such as downloadable software, access to an online platform, streaming, or automated digital content—to consumers in another country, the place of supply is often where the consumer is located. That can create an obligation for you to charge the consumer’s local VAT, potentially through a simplified registration system. This is one of the biggest “surprises” for people who move from client services into direct-to-consumer digital products.

So, for B2C, you must identify whether what you supply is classed as an electronically supplied service, a traditional service delivered manually, or something else.

Electronically supplied services: why they are treated differently

Electronically supplied services (often abbreviated as ESS) are services delivered over the internet with minimal human intervention once set up. Think of automated software subscriptions, app access, paid membership access to pre-recorded content libraries, and other “click-to-deliver” products. Because these can be sold anywhere easily, many VAT systems tax them where the customer is, not where the supplier is.

If your overseas work includes a mix of human-delivered services and ESS, you may need to split invoices or clearly define what is being sold. A bespoke consulting call is typically not an ESS; access to a library of pre-recorded training videos usually is. A live, instructor-led cohort course might be treated differently from a purely automated course, depending on the exact rules in your jurisdiction.

Overseas clients inside and outside your VAT area

Another major dividing line is whether the customer is in the same VAT “zone” as you. For example, some regions have harmonized VAT rules and reporting systems, while supplies to countries outside that zone are treated as exports. Even if the principles are similar, the paperwork and invoice phrasing can differ.

In many cases, services supplied to business customers outside your VAT area are treated as outside the scope of your VAT and you do not charge VAT. For consumer customers, the obligations may shift depending on the type of service. For goods, exports can be zero-rated subject to proof of export, while imports can trigger import VAT for the customer.

What to put on the invoice when you do not charge VAT

If you are VAT-registered and you are not charging VAT on an overseas invoice, your invoice still needs to be compliant. The exact fields differ by country, but generally you should include:

Your VAT registration number (if required). The customer’s business details and their VAT ID where relevant. A clear description of the service. The net amount. The VAT rate shown as zero or marked as not charged. A note explaining why VAT is not charged (for example, “reverse charge” or “outside scope” depending on your rules). The supply date and invoice date. Your standard invoice details like payment terms and currency.

Why does the wording matter? Because your customer may need that invoice wording to justify their reverse charge treatment, and your tax authority may expect the invoice to reflect the correct VAT position.

Evidence you should keep for overseas VAT treatment

Even when you are confident you should not charge VAT, you should keep evidence that supports that decision. This is especially important if you are audited. Useful evidence includes:

Client location proof (billing address, contractual address, country of establishment). Business status proof (VAT ID, company registration, contract, website). Any VAT number validation checks you performed, if applicable. Correspondence that clarifies the nature of the service and where it is used. For goods exports, shipping and customs documents that show the goods left your country.

For consumer sales of digital services, evidence of the customer’s location can be required, and some systems expect two non-conflicting pieces of evidence (such as billing address and IP address) depending on the regime. The evidence standard varies, but the principle is consistent: if the place of supply depends on where the customer is, you should have proof of where they are.

Special scenario: you travel and perform services in the client’s country

If you travel overseas to deliver services on-site—say you run workshops in a client’s office abroad—local rules can change the place of supply or trigger local registration requirements. Some countries tax certain performance-based services where they are physically carried out. Even if the contract is with a business, the fact that you are delivering the service in-country may bring it into the scope of local VAT.

Additionally, short-term presence can create other tax issues beyond VAT, such as corporate tax “permanent establishment” risks or local withholding taxes for certain service categories. VAT is only one part of the picture when you cross borders physically.

Special scenario: services connected to land or property

Property-related services are often taxed where the property is located. If you are a designer, architect, surveyor, or consultant working on a specific property abroad, the place of supply may be tied to that property location. That can mean local VAT rules apply even if you are based elsewhere and even if your customer is a business.

If you do property-related work internationally, you should treat VAT as a project-by-project assessment rather than relying on a general rule.

Special scenario: selling goods to overseas clients

If you sell physical goods to overseas clients, VAT treatment typically depends on whether the goods are exported from your country and who is responsible for import VAT and customs duties. Exports are often zero-rated when you can prove the goods left your country, but the customer may need to pay import VAT and duties on arrival. If you sell goods directly to consumers, there can be distance-selling thresholds, import VAT collection schemes, or marketplace rules that affect whether you must register and charge VAT in the customer’s country.

If your business blends services with physical deliverables—like a design project that includes printed materials shipped abroad—you may need to separate the goods and services components or treat them as a single composite supply, depending on how they are packaged and priced.

VAT registration thresholds and why overseas sales might still matter

Many businesses watch VAT registration thresholds based on domestic taxable turnover. But depending on your jurisdiction, some overseas supplies count toward registration thresholds and some don’t. For example, if your overseas services are outside the scope of your VAT, they may be excluded from the threshold calculation. In other systems, certain overseas taxable supplies might still be relevant.

This matters because you might assume “I’m under the threshold” while your tax authority uses a different definition of what counts. It also matters for partial exemption calculations if you make both taxable and exempt supplies.

Partial exemption and mixed supplies: the hidden complexity

If you make a mixture of taxable and exempt supplies, VAT can become more complex because your ability to reclaim input VAT on expenses can be restricted. Overseas clients can affect this depending on whether the supplies are taxable, exempt, or outside scope. For example, certain financial or educational services may be exempt, and exporting them might not change the exemption status. On the other hand, some outside-scope supplies may still grant a right to recover input VAT in certain systems if they would be taxable if made domestically.

This area is highly jurisdiction-specific, but the practical takeaway is: if you have unusual supplies or a mix of activities, you should not rely on generic guidance. The consequences show up in how much VAT you can reclaim on software subscriptions, equipment, rent, and professional fees.

How to approach VAT decisions with a simple checklist

When you are about to invoice an overseas client, run through this checklist:

1) Am I VAT-registered? If no, do I nevertheless have an obligation to register abroad due to the type of sale?

2) Where does the client belong? Identify the client’s country of establishment or usual residence, and collect evidence.

3) Is the client a business or a consumer for this purchase? Obtain VAT ID or other business evidence if B2B.

4) What am I supplying? General consulting service, property-related service, event admission, training, digital service, goods, or a bundle?

5) Which place-of-supply rule applies? General rule or special rule?

6) If VAT is not charged, is it reverse charge or outside scope? Put correct wording on the invoice.

7) Do I need to report the sale in a particular box on my VAT return or in additional cross-border reports? Keep records.

This checklist won’t replace local advice, but it prevents the most common mistake: deciding VAT purely based on the client’s country without considering B2B/B2C and the nature of the supply.

Examples to make the logic concrete

Example 1: You are a VAT-registered graphic designer and you design a brand identity for a company in Canada. The service is a general B2B service delivered remotely. In many systems, the place of supply is where the business customer belongs (Canada). You do not charge your home VAT. You keep evidence that the client is a business and belongs in Canada and you include appropriate reverse charge/outside scope wording on the invoice.

Example 2: You are a VAT-registered consultant and you provide strategy calls to an individual in Australia for their personal project. This is B2C. Under the general rule in many systems, you may need to charge your home VAT because the place of supply is where you belong. However, if your jurisdiction has special rules that apply to certain services to overseas consumers, the result could differ. You should check whether any “use and enjoyment” or special B2C rules apply. The key point is: consumer status changes the analysis.

Example 3: You sell access to an automated online course platform to consumers worldwide. This is likely an electronically supplied service. Many regimes tax it where the consumer is located, meaning you may need to charge local VAT in each customer’s country through a simplified scheme or local registrations. You need customer location evidence, correct VAT rates, and compliant invoicing/receipting. This is where using a capable payment provider or tax engine becomes important.

Example 4: You run an in-person workshop for a client in another country and you travel there to deliver it. Depending on the rules, the place of supply for certain training or event-related services may be where it is physically performed. You might need to consider local VAT implications and whether the client can account for VAT or whether you must register. This is an “ask before you travel” situation, not an “oops after the fact” situation.

Common mistakes freelancers and small agencies make

One common mistake is assuming that “overseas equals no VAT.” That is often true for B2B services, but it is not universally true, especially for consumer sales and digital services.

A second mistake is failing to gather proof of client business status or location. If an auditor challenges your decision not to charge VAT, you need more than a memory and an email thread. Make evidence collection part of onboarding.

A third mistake is treating bundles casually. If you sell a package that includes consulting sessions, access to a digital portal, and downloadable templates, the VAT treatment might depend on whether the package is one composite supply or multiple separate supplies. Your marketing, pricing, and contract terms can influence that analysis.

A fourth mistake is forgetting reporting. Even if you do not charge VAT, you may have to include the sale on VAT returns or cross-border statements. Missing reporting can trigger penalties even when the VAT itself is nil.

Practical tips to reduce VAT risk in overseas client work

Write clear descriptions of what you deliver. Avoid vague invoice lines like “services rendered” when the nature of the service determines the VAT rule. Use contract language that matches the economic reality of what you provide.

Build a “VAT info” step into your onboarding form. Ask for company name, address, country, VAT ID (if applicable), and whether they are purchasing as a business. For consumers, capture billing address and country information that matches your payment records.

Use consistent invoice templates. Include the correct VAT wording for overseas B2B invoices and the correct VAT number placement. If you operate in multiple jurisdictions, consider separate templates per jurisdiction.

Keep a simple VAT decision log. For each overseas client type, note which rule you apply and why. You don’t need a thesis; you need a repeatable rationale that matches your invoices and records.

When in doubt, treat unusual services with extra caution. Property-related work, on-site services, event admissions, and digital consumer products deserve a deeper check than ordinary consulting.

So, do you need to charge VAT when working with overseas clients?

You might, but often you won’t—especially for B2B services. If you are VAT-registered and you provide general services to overseas business clients, it is common that you do not charge your home VAT and the customer accounts for VAT under reverse charge in their country. If your overseas client is a consumer, you may need to charge your home VAT unless a special rule shifts the place of supply. If you sell automated digital services to consumers abroad, you may need to charge VAT based on the customer’s location and comply with foreign VAT regimes.

The safest way to approach the question is not to memorize a single rule, but to follow a structured method: confirm your VAT registration status, establish client location, classify the client as business or consumer, identify the type of supply, apply the relevant place-of-supply rule, and document your reasoning. Do that, and you will be able to invoice overseas clients confidently, avoid undercharging or overcharging VAT, and keep the records you need if questions arise later.

Finally, remember that VAT is local law with cross-border principles. Small differences in definitions and exceptions can change the outcome. If you are expanding into new markets, selling digital products to consumers, or delivering services on the ground abroad, it is worth getting advice that is specific to your country and the countries where your customers are based.