In most cases you do not charge VAT to overseas customers, but it turns on the "place of supply". As a rule, services sold to an overseas business (B2B) are supplied where the customer belongs, so you raise an invoice with no UK VAT and the customer accounts for it under the reverse charge. Goods exported outside the UK are usually zero-rated. The exceptions matter, so check them before you raise that invoice.
What "Place of Supply" Actually Means
VAT is a tax on supplies that take place in the UK. The place of supply rules decide which country a sale is treated as happening in. If the place of supply is the UK, you charge UK VAT. If it is overseas, the supply falls outside the scope of UK VAT and you charge nothing here, though the customer may have a local VAT obligation.
The rules divide into two branches: goods and services. Services then divide again depending on whether your customer is a business (B2B) or a consumer (B2C).
Selling Services to Overseas Customers
For services, the "general rule" is the usual starting point.
- B2B (business customer): the place of supply is where the customer belongs. So a UK consultancy invoicing a French company supplies that service in France. No UK VAT. The French business handles VAT through the reverse charge.
- B2C (private consumer): the place of supply is usually where the supplier belongs. So you generally charge UK VAT at 20% as normal, even though the customer is abroad.
The Reverse Charge in Plain English
The reverse charge shifts VAT accounting from supplier to customer. When you sell qualifying B2B services abroad, you don't add VAT; your customer self-accounts for it at their local rate. On your invoice, add a note such as "Reverse charge: customer to account for VAT". HMRC's full position is set out in VAT Notice 741A.
Report the net value of these sales in Box 6 of your VAT return; there is no output VAT in Box 1.
Special Rules That Override the General Rule
The general rule has carve-outs. These are supplied where the service is physically performed or located, not where the customer belongs:
| Service type | Place of supply |
|---|---|
| Land and property (e.g. surveying a UK building) | Where the property is |
| Events, conferences, training (admission) | Where the event takes place |
| Restaurant and catering | Where physically carried out |
| Hire of transport (short term) | Where the vehicle is handed over |
| Digital services to EU consumers | Where the consumer lives (often needs VAT registration there) |
If you sell digital services (apps, e-books, streaming) to EU consumers, you may need to register for the EU's One Stop Shop. Don't assume the B2C "supplier" rule applies to digital sales.
Selling Goods to Overseas Customers
Goods follow their own logic, based on where they physically go.
- Exports outside the UK: generally zero-rated (0% VAT), provided you keep valid evidence the goods left the UK within the time limit (usually three months). Zero-rated is not the same as "no VAT", you still record the sale on your return.
- Goods sold to EU consumers: you may need to deal with EU import VAT or the Import One Stop Shop, depending on value and arrangements.
- Goods you never owned in the UK (e.g. drop-shipped from abroad): different rules can apply entirely.
Keep proof of export, commercial invoices, transport documents, customs paperwork. Without evidence, HMRC can treat a "zero-rated" export as standard-rated and bill you the 20% retrospectively.
Do You Need to Be VAT Registered First?
These rules only bite once you're in the VAT system. You must register when your taxable turnover exceeds the £90,000 threshold (2026/27), or you can register voluntarily earlier. Note that B2B services supplied abroad still count towards your turnover when you assess registration, even though no UK VAT is charged.
If you're below the threshold and not registered, you simply invoice without VAT, but you also can't reclaim input VAT on costs. Our VAT services team can model whether voluntary registration helps your margins.
Quick Decision Summary
| What you sell | To whom | UK VAT? |
|---|---|---|
| General services | Overseas business (B2B) | No, reverse charge applies |
| General services | Overseas consumer (B2C) | Usually yes, 20% |
| Digital services | EU consumer (B2C) | EU VAT via One Stop Shop |
| Goods exported outside UK | Anyone | Zero-rated (0%) with evidence |
| Land/property services | Anyone | Where the property is located |
Frequently Asked Questions
Do I charge VAT to a customer in the EU after Brexit?
For most B2B services, no, the reverse charge applies and your EU business customer accounts for VAT locally. Goods sent to the EU are normally zero-rated UK exports, but the EU buyer may face import VAT and customs duty on arrival.
What is the VAT reverse charge for overseas customers?
It's a mechanism where the customer, not the supplier, accounts for the VAT. You invoice your overseas business customer with no UK VAT and a note stating they must apply the reverse charge. The tax stays in the customer's country.
Do I still record zero-rated exports on my VAT return?
Yes. Zero-rated means the VAT rate is 0%, not that the sale is ignored. Include the net value in Box 6 of your VAT return and keep export evidence in case HMRC asks.
What if I get this wrong and don't charge VAT I should have?
HMRC can assess the VAT you should have charged, plus interest and possible penalties, going back up to four years. Because place of supply can be genuinely fiddly, it's worth checking borderline supplies, see our FAQ or ask us before invoicing.
Cross-border VAT is one of the easiest areas to get wrong and one of the most expensive to fix later. If you're unsure whether to charge VAT on a specific overseas sale, get in touch with Zmartly and we'll confirm the correct treatment before you send the invoice.
