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
- UK: £90,000 per year (rolling 12 months)
- Ireland: €40,000 services / €80,000 goods
- Germany: €22,000 in the prior year, projected €50,000 in the current
- France: €36,800 services / €91,900 goods
- Australia: AUD 75,000 per year
- Canada: CAD 30,000 over four consecutive quarters
- US: No VAT or GST. State-by-state sales tax based on economic nexus thresholds set per state.
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:
- "Reverse charge: VAT to be accounted for by the recipient."
- "VAT reverse charge: Article 196 of Directive 2006/112/EC." (the formal version that some larger AP departments insist on)
- "Reverse charge supply: recipient liable for VAT."
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
- Charging VAT to a non-EU client. You are effectively making them pay 20 percent extra for nothing, and you then have to refund it after the misunderstanding gets caught.
- Forgetting the reverse-charge text. Your client's accountant cannot self-assess without it. The invoice gets bounced and you have to reissue.
- Not validating VAT numbers. A single typo or an expired number means the reverse charge does not apply and you owe the VAT yourself. The VIES check takes about fifteen seconds.
- Mixing up B2B and B2C rules. When in doubt, ask the client for their VAT number. The existence of one effectively confirms B2B.
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.