Place of supply: which country's VAT does a freelancer charge?

The two-second version

For services to a business client (a company, a partnership, anyone with a VAT/GST number), the general rule across VAT and GST systems is that the tax belongs where the customer is. In practice that means you invoice without VAT and the client accounts for it themselves — the reverse charge in the EU and UK, self-assessment in Canada, and similar mechanisms elsewhere. For services to a consumer (a person, no tax number), the tax generally belongs where you are, so you charge your own rate as usual.

That single split — does my customer have a tax registration number? — decides the majority of freelance invoices correctly. Everything below is what to do about the exceptions.

The decision sequence, in order

1. Where are you (the supplier) established? Your home rules are the fallback for anything the rest of the sequence doesn't settle.
2. Is the customer a business or a consumer? A VAT/GST number on the invoice is the cleanest evidence. For B2B services: no VAT, customer self-accounts. For B2C: usually your own VAT.
3. Is it genuinely a "service"? Goods, events, and work on physical property (renovating a building, photographing on site) have their own place-of-supply rules that don't follow the general line. EU rules, for instance, tie work connected to immovable property to where the property is.
4. Is the customer in the same country as you? Then none of the cross-border machinery applies — charge domestic VAT as normal.
5. Any special scheme in play? UK construction domestic reverse charge, EU telecoms/broadcast/e-services B2C rules, and marketplaces that collect for you all override steps 2–4.

Work the steps top to bottom and stop at the first one that clearly applies. Most people go wrong by starting at step 5.

Four invoices, worked

A UK designer, a German agency client (B2B). You're established in the UK; the client is a GmbH with a DE VAT number. B2B services: place of supply is Germany, you charge no UK VAT. The invoice shows £2,000, notes "reverse charge — customer to account for VAT to HMRC" (the UK phrasing) with the client's VAT number on it. The German agency then self-assesses German VAT at 19% in its own return: €-equivalent of £2,000 → about €2,320 gross of 19% VAT, which it claims back as input tax if fully taxable use. Nobody remits cash at invoice time — it nets out in returns.

The same UK designer, a German couple redecorating their holiday flat remotely (design consult, B2C). No VAT number, it's a consumer — but the service connects to immovable property in Germany, which pulls the place of supply to Germany. The realistic outcome for a small supplier: check the German small-business threshold or register. This is exactly the kind of case where the sequence's step 3 catches people: "it's a design service" is true and irrelevant.

A Canadian consultant, a UK publishing client (B2B). Place of supply for the UK customer's general rule puts it outside Canadian GST/HST: no Canadian tax on the invoice. Canada handles this through place-of-supply rules that generally treat services made to a non-resident customer, for their consumption outside Canada, as outside the Canadian GST/HST. Invoice CAD 5,000, no tax line, note the client's UK VAT number.

A UAE freelancer, a US startup (B2B). UAE VAT at 5% applies to supplies connected to the UAE; services to a foreign business consumed abroad are outside the scope (zero-rated in the FTA's terminology for many categories). Invoice without VAT, keep the evidence of foreign consumption — the contract and the client's US address — with the return paperwork.

The invoice wording that keeps everyone honest

A compliant cross-border B2B invoice is a normal invoice plus three things: the customer's tax number, a line that names the mechanism ("reverse charge", "self-assessment", "GST/HST not applicable — place of supply is…"), and enough description that a reviewer can see what was supplied. Ambiguity here is what triggers queries later. The full phrasing options — including the exact UK wording HMRC expects — are on our reverse charge guide.

And the arithmetic check before it goes out: if you're converting currency as well as deciding tax, run the net figure through the net-to-gross calculator when domestic VAT applies, or leave the net untouched when it doesn't. Getting a £2,000 invoice right and then adding 20% "just in case" is its own classic error — VAT charged in error is still owed to the authority once the customer reclaims it.

Where freelancers actually get this wrong

• Charging domestic VAT to a foreign business "to be safe". Once the client reclaims it through the refund mechanism, that money is owed to your authority — and unwinding an erroneous VAT charge across a border is far harder than not charging it.
• The opposite: zero-rating a domestic client. "They're a big company" is not the test; their location and tax status are.
• Forgetting the customer moved. Place of supply follows where the customer is established — the address on the contract, not their current project site. A German agency's UK satellite office is still the German entity.
• Assuming US clients mean no tax anywhere. True for the US side (no federal VAT), but your own country's rules still apply to what you owe — the sequence above, not the client's country, drives your return.

What to keep in your files

For every no-VAT cross-border invoice, keep: the contract or purchase order showing the customer's establishment, their tax number (or a VIES check printout for EU clients), and the invoice copy. If an authority asks why no VAT was charged two years later, this folder is the entire answer — and assembling it from memory in an audit window is exactly as fun as it sounds.

Check your figures before sending: the main calculator handles any rate, the reverse charge guide covers the EU/UK wording, and the rates page has every standard rate with the authority links to check against.

Place-of-supply questions

Last reviewed: 10 November 2026 · Methodology · Editorial standards · Report an error