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International invoicing: VAT, GST and the reverse charge

By Muhammad SaadPublished Updated 9 min read

Guide

When to charge tax across borders, and the phrase that keeps your client legal

Cross-border invoicing has one question that trips up almost every freelancer the first time it comes up. Do I charge VAT or GST on this invoice, or not? The short answer is that it depends on three things. Once you know what those three things are, the rest is mechanics.

The three things that determine the answer

1. Where are you registered? If you are not VAT or GST registered yourself, you do not charge VAT or GST. Skip the rest of this article, but do also check whether you are required to register based on revenue (thresholds are listed below).

2. Where is the customer? Same country as you, elsewhere in the same union (the EU is the main case), or completely outside any union you belong to.

3. Is the customer a business or a consumer? B2B and B2C have very different rules in almost every jurisdiction.

EU VAT (the rules most freelancers care about)

EU VAT works on a place-of-supply principle for services. Whose VAT rules apply depends on where the customer is and whether they are a business or a consumer.

B2B service, customer in another EU country. You do not charge VAT. Instead, write "Reverse charge: VAT to be accounted for by the recipient" on the invoice. The customer self-assesses VAT in their country. You also need both your VAT number and theirs on the invoice, and you must report the sale on your EC Sales List (the exact name varies by member state).

B2C service, customer in another EU country. Depends on the service. Digital services like SaaS, downloads, ebooks are taxed at the customer's local VAT rate, which means registering for the OSS (One Stop Shop) scheme to file a single return covering all member states. Most other services are taxed at your home rate.

Customer outside the EU. Generally outside the scope of EU VAT. Mark the invoice 0 percent or "Outside the scope of EU VAT". You still report the sale on your VAT return as a zero-rated supply.

UK VAT after Brexit

The UK runs its own VAT system at a 20 percent standard rate. EU customers are now treated the same way as US customers from a UK VAT perspective, which is to say outside the UK system. B2B services to overseas customers are typically outside the scope of UK VAT.

For UK B2B clients of EU freelancers, the reverse charge mechanism still works in the same shape. A VAT-registered EU freelancer invoices a UK business without VAT, includes "Reverse charge applies" on the invoice, and the UK client self-assesses.

GST in Canada, Australia and Singapore

Canada (GST 5%, HST 13–15%, plus PST/QST). Place-of-supply rules similar to VAT. B2B to a Canadian GST-registered business: the business handles GST or HST under reverse charge. Cross-border outbound to non-residents: typically zero-rated.

Australia (GST 10%). Do not charge GST on supplies to non-residents. Inbound digital services sold to Australian consumers from foreign suppliers can trigger an obligation to register once sales exceed AUD 75,000 a year.

Singapore (GST 9% from 2024 onwards). Similar shape. Mandatory registration threshold is SGD 1,000,000 of taxable turnover in a calendar year.

Registration thresholds, 2026

You can usually register voluntarily below the threshold. Some freelancers do this so they can reclaim input VAT on business purchases. Some do it so their UK clients see a VAT number on the invoice and treat them as a more serious counterparty. Both are valid reasons.

The reverse-charge phrase to memorise

For B2B cross-border invoicing inside the EU, the invoice needs the magic words. Pick one of these for the notes block:

You also need both VAT numbers on the invoice (yours and your client's). Check the client's VAT number is valid via VIES, the EU's VAT number validation service. If it comes back invalid, you cannot rely on the reverse charge and you are back to charging VAT.

Common mistakes

When this gets complicated, get help

International tax for freelancers reaches a complexity ceiling somewhere around the 200,000-a-year revenue mark, or whenever you have customers in five or more jurisdictions. At that point the cost of a part-time tax advisor is much less than the cost of getting it wrong. Until then, the rules above cover most cases for most freelancers.

Related reading

Sending across borders? Open the generator.
International invoicing: VAT, GST and the reverse charge, explained | InvoiceWithMe