How does VAT work on international services?
Answered 11 March 2026
VAT on International Services
This is a multi-layered topic. Here is a structured overview based on the authoritative sources found.
What the Law Says
The key statutory provisions governing VAT on international services are all found in the VAT Act 1994:
- Section 7A — sets the general rule for B2B and B2C supplies of services and defines a "relevant business person"
- Section 8 — covers the reverse charge accounting mechanism for services received from outside the UK
- Section 9 — determines where a person is regarded as belonging for VAT purposes
- Schedule 4A — covers special rules for specific types of services
- Schedule 8, Group 7 — covers zero-rating provisions for international services
Under section 8(1), UK recipients of certain services received from abroad are required to account for VAT on those supplies as if they were the supplier — the so-called "reverse charge".
HMRC Guidance / Practice
1. The Two General Rules: B2B vs B2C
There are two general rules for determining the place of supply of services:
| Supply Type | General Rule |
|---|---|
| B2B (business to business) | Supply is made where the customer belongs |
| B2C (business to consumer) | Supply is made where the supplier belongs |
Special place of supply rules apply to certain services (e.g. land, events, transport, use and enjoyment). Full details are in VAT Notice 741A.
2. Determining B2B vs B2C
A supply is treated as B2B where the customer is a "relevant business person" — i.e. a person who carries on a business and the services are not received wholly for private purposes.
3. UK Supplier Selling to Overseas Customers (B2B)
Where a UK supplier provides B2B services to a customer belonging outside the UK, the supply is outside the scope of UK VAT — no UK VAT is charged. The UK supplier must retain evidence that their customer is in business.
4. UK Business Receiving Services from Overseas (Reverse Charge)
If you are a UK business and receive B2B general rule services from outside the UK, you must account for VAT under the reverse charge procedure — treating yourself as if you made the supply.
The reverse charge applies when:
- The place of supply is the UK
- The supplier belongs outside the UK
- The customer is a relevant business person belonging in the UK
- The supply is not exempt
The effect is that the overseas supplier's supply is disregarded for UK VAT registration purposes, and the UK customer accounts for both output and input tax.
On your VAT return, as the customer using the reverse charge for international services, you must fill in:
- Box 1 (output VAT)
- Box 4 (input VAT)
- Box 6 (value of the deemed supply)
- Box 7 (purchase value)
5. Use and Enjoyment Rules
For certain services (e.g. telecoms, electronically supplied services, hiring of goods, broadcasting), the use and enjoyment rules can override the general place of supply rules. The place of supply shifts to where the services are actually consumed, regardless of where the supplier or customer belongs.
6. B2C Services of an Intangible Nature to Non-UK Customers
Where a UK supplier provides B2C services of a professional, technical, financial, intellectual or other intangible nature to customers belonging outside the UK, those services are supplied where the customer belongs and are therefore outside the scope of UK VAT.
7. Zero-Rating
Zero-rating under Schedule 8, Group 7 can only apply to supplies made within the UK. If a service is supplied outside the UK under the place of supply rules, it is not zero-rated under Group 7 but is simply outside the scope of UK VAT.
⚠️ Key reference: The primary HMRC guidance on this entire topic is VAT Notice 741A: Place of Supply of Services, which is referenced throughout the above sources and should be consulted for detailed rules on specific service types.
Citation sources
UK VAT law covered by this notice is contained in the VAT Act 1994, as amended, as follows: section 7A of the VAT Act covers the general rule for business to business (B2B) and business to consumer (B2C) supplies of services and also defines a ‘relevant business person’ for supplies of services (read section 6) section 8 of the VAT Act covers the accounting mechanism for supplies received from outside the UK — the ‘reverse charge’ procedure (read section 5) section 9 of the VAT Act covers where
If you’re the customer and you receive any services from outside the UK that are subject to the B2B general rule for the place of supply of services, those services are treated as if you supplied them, and you must account for any output tax due on them. You can recover the VAT on these services as input tax, subject to the normal rules. This is called the ‘reverse charge’ procedure. If you receive B2B general rule services from outside the UK, their value counts towards your taxable turnover. T
In order to determine the place of supply using the general rule it is important to determine whether the supplier’s customer is a relevant business customer. Customers that have both business and non-business activities, such as charities and government bodies, are treated as being in business for all activities if they are a relevant business person. Guidance on determining whether the customer is a relevant business person is here VATPOSS01350. The general rule is that services supplied B2B a
This section applies if: you belong in the UK you supply B2C services to customers who belong outside the UK those services are included in the list in paragraph 12.2 Where this applies, your services are supplied where your customer belongs and so are outside the scope of UK VAT. It’s the nature of the service that you should consider, rather than your professional qualification or status. Additional rules apply to B2C letting on hire of goods and radio and television broadcasting services (rea
The reverse charge applies to services where the place of supply is the UK the supplier belongs outside the UK the customer is a relevant business person (see VATPOSS01350) who belongs in the UK the supply is not exempt (this includes exempt supplies subject to an option to tax), and for supplies not within the general rule (see VATPOSS06000), the customer is VAT registered in the UK. The effect of the reverse charge is that the supply is deemed to be made by the UK customer instead of the overs
Under section 8(1) of the VAT Act 1994, UK recipients of certain services received from abroad are required to account for VAT on those supplies as if they were the supplier. These are frequently referred to as reverse charge services. Regulation 82 of the VAT Regulations 1995 (see VATTOS2320) establishes the tax point.
Under the reverse charge procedure, the buyer of the goods or services, rather than the seller, is liable to account for the VAT on the sale. You need to use the following information to complete your VAT return. If you use the reverse charge for gold or international services, and you’re the: supplier — fill in box 6 (value of the supply) customer — fill in box 1 (output VAT), box 4 (input VAT), box 6 (value of the deemed supply) and box 7 (purchase value) If you use the reverse charge for mobi
Zero-rating under Group 7 can only apply to supplies which are made within the UK. You must determine its place of supply before attempting to decide whether a supply is zero-rated under this Group. If a service is supplied outside the UK under these rules, it is not zero-rated under Group 7, but is outside the scope of UK VAT. A UK supplier of such services is not required to charge UK VAT. Zero-rating under item 1 of Group 7 of Schedule 8 applies where the goods on which the work is to be carr
For many of the place of supply rules it is important to establish whether a supply of services is made to a relevant business person (B2B) or non-business customer (B2C). A supply is treated as B2B where the customer is a relevant business person. A person is a relevant business person in relation to a supply of services if: (a) the person carries on a business, and (b) the services are not received by the person wholly for private purposes, whether or not the services are received in the cours
The ‘use and enjoyment’ rules apply to the following supplies: B2B supplies of telecommunication services electronically supplied services insurance repair services B2B and B2C supplies of hiring of goods hiring of means of transport broadcasting services Effective use and enjoyment take place where a recipient actually consumes services irrespective of the contractual arrangements, payment or beneficial interest. These rules prevent distortive outcomes that would happen if we only considered th
There are 2 general rules for determining the place of supply of services, one for business to business (B2B) and one for business to consumer (B2C). The B2B general rule for supplies of services is that the supply is made where the customer belongs. The B2C general rule for supplies of services is that the supply is made where the supplier belongs. There are also special place of supply rules for certain services. For more information read Place of supply of services (VAT Notice 741A). If you b