Charging Tax to Overseas Clients: Place of Supply Rules
The most common tax mistake freelancers make with international clients is charging their local VAT/GST when they shouldn't — or not charging when they should. The rule is almost always: tax follows the <strong>place of supply</strong>, which is usually where your customer is, not where you are.
Last updated 2026-09-17.
The golden rule: place of supply
For services, the place of supply is typically where the customer belongs. For goods, it's where the goods are located or shipped from. This single principle drives almost every cross-border tax decision.
UK freelancer → EU business client (B2B services)
Reverse charge applies. You do not charge UK VAT. The client accounts for VAT in their own country at their local rate.
- Your invoice: 0% VAT (or
Reverse charge
) - Show: Your VAT number, client's VAT number
- Text:
Reverse charge: VAT accounted for by recipient under Article 196 of EU Directive 2006/112/EC
- Client: Reports input and output VAT on their return (nets to zero if fully taxable)
Exception: Services related to immovable property, admissions to events, restaurant/catering — these are taxed where the property/event/restaurant is located.
UK freelancer → EU consumer (B2C services)
You may need to charge the client's local VAT. Since July 2021, the EU's OSS (One Stop Shop) scheme means you can register in one EU country and remit VAT for all EU B2C sales. Threshold: €10,000 cross-border sales per year — below that, you can charge your home VAT (or none if not registered). Above it, you must use OSS.
Digital services (SaaS, downloads, streaming) have been under this regime since 2015. Non-digital services joined in 2021.
UK freelancer → non-EU client (US, Australia, etc.)
Export of services = zero-rated (0% VAT). You do not charge UK VAT. Keep evidence of the client's location (contract, correspondence, IP address for digital services).
- Invoice: 0% VAT or
Zero-rated export of services
- Your VAT number still shows (you're registered)
- No client VAT number needed
- Counts toward your VAT turnover but at 0%
EU freelancer → UK client (post-Brexit)
Mirror of the UK→EU rules. For B2B services: reverse charge. UK client accounts for UK VAT. EU freelancer invoices with 0% VAT, shows EU VAT number and client's UK VAT number.
Australian freelancer → overseas client
Exported services are GST-free (0%). No Australian GST charged. Invoice shows GST-free export
or similar. Keep evidence of export (contract, emails, proof the service is consumed outside Australia).
Indian freelancer → overseas client
Export of services = zero-rated under GST. Conditions: payment received in convertible foreign exchange, service consumed outside India. Invoice: IGST 0%, marked Export without payment of IGST
(if LUT filed) or Export with payment of IGST
(refund claimed later).
US freelancer → overseas client
Generally no US sales tax on export of services. But check the client's country rules — they may impose VAT/GST on imported services:
- EU: VAT on digital services (OSS/IOSS), B2B reverse charge
- UK: VAT on digital services (UK OSS), B2B reverse charge
- Australia: GST on digital services and low-value goods
- India: OIDAR (Online Information Database Access & Retrieval) services attract 18% IGST
- Canada: GST/HST on digital services to consumers
- Singapore: GST on imported services (reverse charge for B2B, OVR for B2C)
Decision flowchart: do I charge tax?
1. Are you selling goods or services?
Goods → where are they shipped from/to? Services → where is the customer?
2. Is the customer a business (B2B) or consumer (B2C)?
B2B → usually reverse charge (customer accounts for tax). B2C → you may need to charge their local tax.
3. Are you registered for tax in your country?
If not registered → you cannot charge tax. If registered → apply place-of-supply rules.
4. Does the client's country have a registration threshold for non-residents?
Many do (e.g., EU €10k, Australia $75k, Canada $30k). Below threshold → no obligation.
What to put on the invoice
| Scenario | Tax rate on invoice | Label / note |
|---|---|---|
| UK → EU B2B | 0% | Reverse charge + both VAT numbers |
| UK → EU B2C (over €10k) | Client's local rate | OSS registration + client's country VAT |
| UK → US/Rest of world | 0% | Zero-rated export of services |
| EU → UK B2B | 0% | Reverse charge + both VAT numbers |
| AU → Overseas | 0% | GST-free export |
| IN → Overseas | 0% (IGST) | Export w/ or w/o payment of IGST |
| US → Overseas | 0% | No US sales tax; check client's country |
Evidence to keep
Tax authorities will ask for proof that the supply was outside your jurisdiction. Keep:
- Contract or engagement letter showing client's address
- Email correspondence confirming location
- For digital services: IP logs, billing address, payment method country
- Bank receipts showing foreign currency receipt
- Any local tax registration (OSS, IOSS, etc.)
How the Tax Calculator handles this
The Tax Calculator does the arithmetic. You choose the rate. For zero-rated exports, set the rate to 0% — the calculator will show the gross = net and tax = 0. For reverse charge, also 0%. The label dropdown lets you pick VAT
, GST
, or Tax
so the PDF matches your jurisdiction's terminology.
Related guides
- VAT vs GST vs Sales Tax: What Freelancers Need to Know
- Tax Exclusive vs Tax Inclusive: The Mistake Everyone Makes
- What an Invoice Must Contain (Legal Requirements)
- How to Create an Invoice: Step-by-Step Guide
This guide explains common cross-border tax patterns. It is not tax advice. Place-of-supply rules, registration thresholds, reverse-charge applicability, and digital-services regimes vary by jurisdiction and change frequently. Verify with a qualified tax professional before invoicing.