Do I Need to Charge VAT If I Sell to Customers Outside the UK

This is one of the most important VAT questions for any business that sells beyond the UK and it is also one of the easiest areas to get wrong. I see confusion around this from online retailers, consultants, software providers, creatives, manufacturers, and service businesses of all sizes. Many assume that selling outside the UK automatically means no VAT. Others assume the opposite and charge VAT when they do not need to. Both mistakes can be costly.

The honest answer is it depends. Whether you need to charge VAT when selling to customers outside the UK depends on what you are selling, where your customer is based, whether they are a business or a consumer, and where the supply is treated as taking place for VAT purposes.

In this article I will explain how VAT works on overseas sales in plain English, covering goods and services separately, EU and non EU customers, business to business and business to consumer sales, and the most common traps I see in practice. I will also share the approach I use with clients so you can apply the rules confidently rather than guessing.

The Core VAT Principle for Overseas Sales

UK VAT is a tax on consumption in the UK. This single principle underpins everything that follows.

If a supply is treated as taking place outside the UK then UK VAT is usually not charged. However that does not always mean no VAT applies at all. It may simply mean that VAT is due in another country instead.

So the real question is not do I charge VAT but where is the supply treated as taking place for VAT purposes.

Selling Goods vs Selling Services

The VAT rules for overseas sales split very clearly into two broad categories:

Selling goods

Selling services

The rules are different for each and mixing them up is a common source of error.

I always start by asking clients a very simple question. Are you selling something physical that is shipped or something intangible such as advice, access, or digital content.

Selling Goods to Customers Outside the UK

Let us start with goods because the principles are more intuitive.

Selling Goods to Customers Outside the UK

If you sell goods and those goods physically leave the UK then in many cases you do not charge UK VAT. Instead the sale is either zero rated or outside the scope of UK VAT.

However the detail depends on where the goods are going and who you are selling to.

Selling Goods to Customers Outside the UK but Outside the EU

If you sell goods to customers outside the UK and outside the EU this is usually treated as an export.

In most cases:

UK VAT is not charged

The sale is zero rated for VAT

The sale still counts as taxable turnover

You can usually reclaim VAT on related costs

This applies whether you are selling to a business or an individual overseas.

The critical requirement is evidence. You must be able to prove that the goods left the UK. This usually includes:

Shipping or courier documentation

Export declarations

Tracking showing delivery abroad

Commercial invoices

Without this evidence HM Revenue & Customs can deny zero rating and assess VAT at 20 percent.

Selling Goods to Customers in the EU

Since Brexit the VAT treatment of EU sales has changed significantly.

From a UK VAT perspective:

Goods sold from the UK to the EU are exports

UK VAT is usually zero rated

Import VAT is usually due in the EU country

However the practical VAT burden has shifted to the destination country.

Depending on your setup:

Your customer may pay import VAT

You may need to register for VAT in the EU

You may use special schemes such as IOSS

The Incoterms used in your contracts are critical here because they determine who is responsible for import VAT and customs duties.

Selling Goods to EU Businesses

If you sell goods to EU businesses:

UK VAT is usually not charged

The sale is zero rated as an export

Import VAT is handled in the EU

This is true regardless of whether the customer provides a VAT number. Post Brexit EU VAT numbers no longer determine UK VAT treatment.

Selling Goods to EU Consumers

If you sell goods to EU consumers:

UK VAT is still not charged

Import VAT is due in the EU

The customer may face unexpected charges

Many UK businesses now use EU fulfilment centres or EU VAT registrations to manage this more smoothly.

Distance Selling Thresholds and the EU

Before Brexit distance selling thresholds applied. These no longer apply to UK businesses selling from the UK.

However if you store goods in the EU or sell via EU marketplaces you may trigger EU VAT registration obligations.

This is an area where early advice is essential.

Selling Services to Customers Outside the UK

Services are where things get more complex.

VAT on services depends on the place of supply rules. These rules determine where a service is treated as supplied for VAT purposes.

The starting point is whether you are selling to a business or a consumer.

Selling Services to Businesses Outside the UK

This is known as business to business or B2B.

In most cases when you sell services to a business customer outside the UK:

UK VAT is not charged

The place of supply is where the customer belongs

The reverse charge usually applies

This means the customer accounts for VAT in their own country rather than you charging UK VAT.

This applies to many common services such as:

Consultancy and advisory services

Professional services

Marketing and design services

IT and software services

You should include wording on your invoice indicating that the reverse charge applies.

Evidence Required for B2B Services

To treat a service as B2B you must be satisfied that your customer is genuinely a business.

This often includes:

A valid VAT number where applicable

Business registration details

Contractual documentation

Without this evidence HMRC may treat the sale as B2C which can change the VAT outcome.

Selling Services to Consumers Outside the UK

This is known as business to consumer or B2C.

Here the rules vary depending on the type of service.

General Services

For many general services supplied to consumers outside the UK:

UK VAT is not charged

The place of supply is outside the UK

Examples include consultancy or coaching provided to individuals overseas.

Digital Services

Digital services are treated differently.

Digital services include:

Downloadable software

Online subscriptions

Streaming services

Online courses delivered automatically

For digital services sold to consumers outside the UK:

VAT is often due in the customer’s country

You may need to register for VAT overseas

Special VAT schemes may apply

This is an area where many online businesses get caught out.

Selling Services to EU Consumers

If you sell certain services to EU consumers you may need to deal with EU VAT even though you are UK based.

This applies particularly to:

Digital services

Telecommunications

Broadcasting

VAT is charged based on the customer’s location not yours.

Many businesses use special schemes to simplify reporting but the obligation still exists.

Do I Need to Be VAT Registered to Sell Overseas?

You do not need to be VAT registered simply because you sell overseas.

However VAT registration may still be required if:

Your UK taxable turnover exceeds the threshold

You make taxable supplies in another country

You store goods overseas

You sell digital services to overseas consumers

Voluntary VAT registration can also make sense where you want to reclaim VAT on costs.

VAT Registration Threshold and Overseas Sales

Only UK taxable turnover counts towards the UK VAT threshold.

This includes:

Standard rated UK sales

Zero rated exports

It does not include:

Outside the scope services

Some overseas service supplies

This means exporters often reach the VAT threshold even though they charge no VAT.

Charging VAT on Invoices to Overseas Customers

Even where you do not charge UK VAT your invoice still matters.

A compliant overseas invoice should usually include:

Your VAT number if registered

Clear wording explaining why VAT is not charged

Reference to zero rating or reverse charge where appropriate

Poor invoicing is one of the most common issues I see during VAT checks.

Common Mistakes I See with Overseas VAT

Over the years I have seen the same mistakes repeated.

The most common include:

Charging UK VAT to overseas customers unnecessarily

Failing to zero rate exports due to missing evidence

Ignoring overseas VAT obligations

Confusing goods and services rules

Treating all overseas sales the same

These errors can lead to VAT overpayments or assessments.

How HMRC Reviews Overseas VAT Sales

HMRC pays close attention to overseas sales because VAT is often reclaimed but not charged.

They will typically check:

Export evidence

Customer status

Place of supply decisions

Invoicing wording

Consistency of treatment

Clear documentation is your best protection.

Practical Advice I Give Clients Selling Overseas

When a client tells me they sell outside the UK I usually recommend a structured approach.

I suggest:

Identify whether you sell goods or services

Separate B2B and B2C sales

Document place of supply decisions

Keep export and customer evidence

Review overseas VAT obligations early

This approach prevents most problems before they arise.

So Do You Need to Charge VAT If You Sell to Customers Outside the UK?

Sometimes yes and sometimes no.

In summary:

Goods exported from the UK are usually zero rated

Services to overseas businesses are usually outside the scope of UK VAT

Some services to consumers trigger overseas VAT

Evidence and invoicing are critical

Overseas VAT obligations still matter

Selling internationally does not remove VAT complexity. It changes where that complexity sits.

If overseas sales are a growing part of your business it is worth getting clarity early. VAT mistakes in cross border trade rarely stay hidden and fixing them later is far harder than setting things up correctly from the start.