International consultancy asks:
Should I charge VAT to my overseas clients for consultancy services I have provided?
Acumenica answers:
Whether or not you should charge Value Added Tax (VAT) to an overseas client depends on several factors, including your location, the client's location, and the nature of the goods or services you are providing. Generally speaking though, if your client is a business, the General Business-to-business (B2B) Rule will apply, and if the client is an individual or consumer, then the General Business-to-consumer (B2C) Rule will apply.
The General B2B Rule
If your client is a business, then the General B2B rule states that VAT should be charged according to the location of the customer. This means that if you are supplying service to an overseas customer, these services are outside the scope of UK VAT, so VAT shouldn’t be charged.
If the overseas business customer is located in an EU member state, or other country operating an EU-style VAT system, they will usually be required to self account for VAT due on the supply on the supply under the reverse charge
The General B2C Rule
If your client is not a business, then the General B2C rules states that VAT should be charged according to the local of the supplier (ie, you). In simple terms, therefore the services will be subject to UK VAT - you should charge VAT.
Exceptions to the General Rules
As with most things HMRC related, there are several exceptions to both rules with a significant one being where supplies of digital services are made to non-UK consumers. The definition of ‘digital services’ is both broad and specific at the same time! If you’re involved in digital services, we recommend you take professional advice specific to your situation.
