For a UK online seller, value added tax (VAT) on Google Ads depends on the supplier and the service. If you're VAT-registered and the overseas services reverse charge applies, you calculate and report the UK VAT yourself, even if the invoice shows none. If you aren't registered, check your registration position before using the return examples below.
Start with the invoice and the contract behind it. The Google name alone doesn't establish which company supplied your advertising or how to record the purchase.
The supplier determines whether Google Ads charges VAT
A Shopify seller buying advertising needs to establish the legal supplier before choosing a VAT treatment. Check the company named on the invoice against the contracting entity in the terms that apply to your account. Don't assume another seller's invoice applies to yours.
For business services covered by the general rule, the place of supply is where the customer belongs. This means the country where the service is treated as supplied for VAT purposes. For a seller whose business belongs in the UK, that normally puts the service within UK VAT rules.
Who accounts for that VAT is a separate question. A supplier belonging in the UK accounts for any UK VAT due on its UK supplies. Where the overseas services reverse charge applies, the UK customer accounts for the tax instead.
| What you've established | What it means for your checks |
|---|---|
| The supplier belongs in the UK for this service | Check the UK VAT charged and whether you can reclaim it under the normal rules. |
| The supplier belongs outside the UK and the service falls within the reverse charge | Account for the VAT yourself and claim only the amount you're entitled to recover. |
| The invoice and contract leave the supplier's position unclear | Resolve that uncertainty before choosing the VAT treatment. |
These are conditional treatments, not a claim that every Google Ads account has the same supplier. HM Revenue and Customs (HMRC) explains these rules in its guidance on services bought from overseas.
Read the invoice alongside the contract
Check the following details on your Google Ads invoice and contract.
- Identify the legal company supplying the advertising.
- Compare that company with the supplier named in the applicable contract.
- Check which business is receiving the advertising service.
- Read the service description and any VAT or reverse charge wording.
- Check whether the amount labelled as VAT is UK VAT.
- Resolve inconsistencies with the supplier before relying on the invoice's treatment.
A registered office address alone doesn't establish where a business belongs for VAT. Nor does a UK VAT registration, without supporting resources, create a UK fixed establishment. A fixed establishment means a location with the people and technical resources needed to provide or receive services on a permanent basis.
If a supplier has establishments in several countries, the establishment most closely connected with the service matters. That's why an address or VAT number can be useful evidence without settling the answer on its own.
For an Etsy seller, the practical question is which company supplied the advertising to the shop. Where an advert appeared doesn't answer that question.
A reverse charge invoice still needs VAT entries
The reverse charge means you act as both the supplier and the customer for VAT accounting. You calculate the VAT due on the service, then separately work out how much of that VAT you can reclaim.
The VAT you account for is called output VAT. The VAT you're entitled to reclaim is called input VAT. Those labels describe the entries on the return, even though you're buying advertising rather than selling it.
If you can recover the full amount, the entries cancel each other out financially. They still belong on the return. A nil net effect isn't permission to leave the transaction out.
If recovery is restricted, the entries won't necessarily cancel. For example, a business making both taxable and exempt sales may be subject to partial exemption rules, which restrict how much purchase VAT it can recover. Don't assume every seller can reclaim everything simply because the advertising supports a business.
A worked Shopify advertising example
This is an illustration, not a real client. A UK VAT-registered Shopify seller buys £1,000 of advertising from a supplier established outside the UK. Assume the purchase falls within the overseas services reverse charge, is standard-rated, and the seller can recover all the related input VAT. The example uses normal VAT accounting.
The standard VAT rate is 20 per cent. The seller calculates £200 of reverse charge VAT: £1,000 multiplied by 20 per cent. That produces the following additions to the return.
| Return entry | Illustrative amount | Explanation |
|---|---|---|
| Box 1 | £200 | VAT accounted for under the reverse charge. |
| Box 4 | £200 | Input VAT recovered, assuming full entitlement. |
| Box 6 | £1,000 | Service value included as a reverse charge output. |
| Box 7 | £1,000 | Service value included as a purchase. |
The additional VAT payable is £200 less £200, which equals £0. The advertising purchase remains £1,000. The entry in Box 6 doesn't mean the seller earned another £1,000 from customers: it's part of the reverse charge reporting.
These figures are additions from this purchase, not the seller's complete return. Sales, stock purchases and other expenses will have their own entries. For the wider calculation, see our guide to completing a UK VAT return.
Correctly charged UK VAT follows a different route
If the supplier belongs in the UK for the service and correctly charges UK VAT, don't automatically apply the overseas services reverse charge as well. Review the purchase under the ordinary input VAT rules.
Here is a separate illustration, not a real client or a statement about a particular Google entity. A UK VAT-registered eBay seller buys standard-rated advertising for £1,000 plus £200 UK VAT. The invoice total is £1,200.
Assuming full recovery and a proper supporting VAT invoice, the seller includes £200 in Box 4 and £1,000 in Box 7. There is no reverse charge addition to Box 1 or Box 6 for this purchase. After recovering the £200, the advertising cost is £1,000.
Compare the paperwork, not just the final cost. Both illustrations leave a fully recovering seller with a £1,000 advertising cost, but the invoice totals and return entries differ.
Incorrect VAT on an overseas invoice needs correcting
If an overseas supplier wrongly charges UK VAT on a service that falls within the reverse charge, that error doesn't make the reverse charge optional. HMRC says you must still apply it and ask the supplier to amend or correct the invoice.
Don't treat a VAT line as proof that the supplier has dealt with everything correctly. Equally, don't treat an invoice without VAT as proof that there's nothing to report.
The useful next step is to identify the disagreement: supplier location, the business receiving the service, or the invoice's tax treatment. Ask the supplier to address that specific point. An accountant can then assess the return treatment against the corrected facts.
Sellers without VAT registration need a separate check
A seller without a VAT number can still be a business customer. HMRC distinguishes business purchases from services received wholly for private purposes. Being a business and being registered for VAT aren't interchangeable descriptions.
For a UK-established business, compulsory registration normally applies if taxable turnover goes over £90,000 in the last 12 months, or if you realise it will go over £90,000 in the next 30 days alone. These tests concern taxable turnover, not profit after advertising and other costs.
However, don't use that general threshold alone to decide how overseas advertising affects your position. Ask an accountant to check the registration treatment of the services you're buying as well as your sales. The VAT-registered examples above aren't filing instructions for an unregistered seller.
Our VAT registration service can help you assess your position before applying a treatment intended for an already registered business.
Check the return treatment before filing
Once the supplier and VAT treatment are established, review the entries your accounting software produces. For the reverse charge illustration above, the check includes both the VAT amounts and the service values. Looking only at the final amount payable would miss an omitted transaction that has no net VAT cost.
HMRC's VAT return guidance explains the boxes and says businesses using special accounting schemes should also read the relevant scheme rules. Don't copy a normal accounting example into a Flat Rate Scheme or cash accounting return without checking the applicable treatment.
If you want help making advertising invoices agree with your records and return, our team provides VAT services for UK businesses. Start with the supplier and the service. The software entry follows from those facts.
Frequently asked questions
Is there VAT on Google Ads for UK businesses?
VAT on Google Ads depends on the supplier and the service, so check your invoice and contract. Where a UK business receives advertising subject to the overseas services reverse charge, the customer accounts for VAT. An invoice without UK VAT therefore doesn't necessarily mean the purchase has no VAT reporting consequences.
Does Google Ads charge VAT on every UK invoice?
You shouldn't assume Google Ads charges UK VAT on every invoice. Establish the legal supplier and where it belongs for the service you're buying. A supplier belonging in the UK accounts for any UK VAT due on its UK supplies; an overseas service falling within the reverse charge requires the customer to account for it.
Can I reclaim VAT on Google Ads?
A VAT-registered seller can reclaim eligible input VAT, subject to the normal recovery rules. That includes eligible VAT accounted for under the reverse charge. Full recovery isn't automatic: business use, supporting evidence and any partial exemption restrictions matter. Check entitlement separately from the amount of VAT you must account for.
Which VAT return boxes apply to reverse charge advertising?
For overseas advertising subject to the reverse charge under normal VAT accounting, include VAT due in Box 1, recoverable VAT in Box 4, and the service value in Boxes 6 and 7. Full recovery may leave no additional VAT payable, but the entries still matter. Special accounting schemes require a separate check.
What if an overseas supplier wrongly charges UK VAT?
If the service falls within the reverse charge, you must still apply it and ask the supplier to correct the invoice. Incorrect UK VAT on the invoice doesn't make the reverse charge optional. Establish the supplier's position and the nature of the service before deciding how the purchase belongs on your return.
