Ultimate Guide to VAT on Export of Services from the UK

As a service provider in the UK, value-added tax (VAT) is an essential aspect of how your business functions. Yet, VAT on services in the UK can vary when exporting services, compared to the typical standard and reduced VAT rates employed by businesses.

The differences can be complex and too much to keep up with. Therefore, understanding how VAT on overseas services works is necessary to avoid fines, losses, and maximise your revenue.

In this guide, we’ll examine how VAT on export of services from the UK works and provide you with practical tips to navigate the system successfully. In addition, we’ll discuss Wise Business, a powerful international payments platform that enables you to send and receive money in 40+ currencies with low and transparent fees.

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What is VAT on exports and how does it work?

VAT on exports is a tax levied on goods and services you sell to customers overseas. If your business is registered for VAT in the UK, you are required to charge VAT on the goods and services you sell, unless you are exempt¹.

Some examples of VAT-exempt goods and services are²:

• financial services like investment and insurance
• funeral plans, burial or cremation services
• healthcare and medical treatment
• charity events
• antiques
• gambling or lottery tickets
• sports activities

Additionally, companies can charge a zero rate on goods exported from:

• Great Britain (England, Wales, and Scotland) to a location outside the UK³.
• Northern Ireland to a location outside the UK and European Union (EU)³.

Although exports from this location are at a zero rate, you must include VAT on your invoice, but at 0% instead of charging the standard rate³. You also need documentary evidence of goods leaving either the UK from Great Britain or the UK and the EU from Northern Ireland³.

Unlike exempt goods and services, which are not taxable, zero-rated goods and services are taxable, but the VAT rate applied is 0%.

However, if your customers ask for a delivery to be made to a UK address, you must not zero-rate these sales³. This is because delivery to a UK address means these goods and services will be “consumed” in the UK.

A UK company may also pay VAT on exported services, depending on their nature, such as digital (like streaming) or consulting (like investment).

What is the difference between exporting goods and services?

Generally, there’s no VAT charged when a business in the UK exports goods³. However, they need to retain proof of export, such as customs declarations or shipping documents.

For example, if a UK-based sportswear manufacturer sells stocks to a retailer company in South Africa, the VAT is at 0% because the goods supplied are not “consumed” in the UK.

When exporting services, the rules usually vary. While there is no VAT on overseas services, the rules depend on the type of consumer and service.

For exported goods, the place of supply is outside the UK, while for some types of exported services (consulting, telecommunications, etc.), the place of supply can still be the UK.

What is the place of supply of services and how does it work?

The place of supply refers to the location where you supply services, i.e., where you may be charged and pay VAT⁴. Its rules differ based on the customer type (individual or business) and the service type (events or digital).

Let us consider the customer type:

• For B2C (Business to Customer) services⁵: The place of supply may be where the individual customer is based. However, there are certain exceptions to this rule.
• For B2B (Business to Business) services⁵: The place of supply is where the business customer is established. So, if you’re billing a German or Chinese business, the place of supply is each of their respective locations.

Let us consider the service type:

• For event services⁵: For B2B outside the UK, VAT may be contingent on where the event takes place. On the other hand, for B2C outside the UK, VAT may apply (if the event is in the UK).
• For digital services⁵: For B2B outside the UK, no VAT applies. For B2C outside the UK, VAT may apply. Some of these services include telecommunications, broadcasting, etc.

How to account for VAT when exporting services?

When it comes to VAT on overseas services, businesses must be informed of and follow the rules that control the process. Below is a quick rundown of how to account for VAT when exporting services as a business in the UK:

Rules and exceptions when exporting services

Generally, you charge a zero rate on services to overseas customers. This is because while the service is taxable, no VAT is added to the price. However, you must record VAT on your invoice, but at 0%.

In some instances, the place of supply is determined by the type of service supplied. For certain services, VAT applies, even if the customer resides overseas. Digital services, for example, such as streaming and downloading, may require a VAT charge depending on the customer’s location.

In such instances, businesses need to register for VAT in the relevant countries in which they operate. This would enable them to efficiently collect and remit the taxes.

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FAQs - VAT on export of services

Here are some of the frequently asked questions on VAT on the export of services:

What are the rules for supplying digital services to overseas customers?

For digital services, VAT is typically charged in the consumer’s location. This means UK businesses offering digital services must follow the VAT rules in their customers’ country, or utilise the VAT MOSS (Mini One-Stop-Shop) scheme⁶.

Are there exceptions to the general place of supply rules for B2B services?

Yes, in some instances, the type of service a B2B company provides may be considered supplied in the UK, even if the customer is overseas⁷. For context, services such as accountancy, legal services, and consultancy provided to a business in the US on a UK contract may be subject to UK VAT.

What happens if I incorrectly charge UK VAT on an exported service?

If UK VAT is incorrectly charged on an exported service, the business will need to amend the invoice and refund the surplus to the customer. Similarly, customers can also request a refund through the HMRC if the business can’t or doesn’t amend the invoice. The company may incur a penalty or interest if the overcharged VAT isn’t corrected promptly.

Are there specific invoicing requirements for exported services?

When exporting services, businesses are required to provide a VAT invoice (even if it is zero-rated). The invoice should include the customer’s VAT number, place of supply, and documentation that states the service is exempt from VAT.

Understanding VAT on the export of services from the UK is essential for businesses with customers overseas. This would enable them to be efficient and avoid errors, leading to fines or losses.

Generally, there is 0% charged as VAT on services to overseas customers. However, there are certain exceptions and rules when exporting services, particularly for B2B, B2C, or digital services.

For businesses in the UK with customers abroad, having a reliable payment solution like Wise Business makes receiving international payments seamless. With a Wise Business account, you can open account details in 8+ and send money to 140+.

Sources used in this article:

Sources last checked 23/09/2025