Services to EU businesses: the reverse charge
HMRC’s VAT Notice 741A sets the starting point. For business-to-business (B2B) services under the general rule, the place of supply is where the customer belongs. If your customer belongs in France, Germany or any other EU country, the service is outside the scope of UK VAT: you do not charge UK VAT.
On the EU side, the VAT Directive taxes such services where the customer is established (Article 44) and makes the business customer liable for the VAT when the supplier is not established in that country (Article 196). That is the reverse charge: your customer declares the VAT in its own return.
You must be able to show the customer is a business. HMRC says you should obtain commercial evidence that your customer is in business and belongs outside the UK, and that for EU customers their VAT registration number is the best evidence. If a customer cannot provide a VAT number or other clear evidence of business activity, treat the supply as business-to-consumer (B2C).
Check the special rules first. Some services ignore the general rule: land-related services are taxed where the land is, and there are specific rules for hire of means of transport, services supplied where they are performed, passenger and freight transport, and intermediary services. Notice 741A asks you to rule these out before applying the general rule.
Services to EU consumers
For B2C services, the general rule is the opposite: the place of supply is where the supplier belongs, whatever the customer’s location.
Two large exceptions apply when your consumer customer belongs outside the UK:
- Intangible and professional services listed in paragraph 12.2 of Notice 741A are supplied where the customer belongs, and so are outside the scope of UK VAT. The list includes the services of consultants, engineers, lawyers and accountants, advertising, data processing and provision of information, transfers of copyright, patents and trademarks, banking and insurance, supply of staff and hire of goods (other than means of transport). You need factual evidence that the customer belongs outside the UK.
- Digital services (electronically supplied, telecommunications and broadcasting services) to consumers are supplied where the consumer is located. EU VAT is then due in the consumer’s country.
For that EU VAT, you do not have to register in every country. The EU’s non-Union scheme of the One Stop Shop (OSS) is open to businesses not established in the EU: you register in one EU country and declare, in a quarterly return, the VAT on your services to consumers in all member states. The UK’s own VAT MOSS stopped applying to sales made after 31 December 2020.
Goods sent from Great Britain
Since 1 January 2021, goods leaving Great Britain for the EU are exports. VAT Notice 703 lets you zero-rate them if you meet its conditions, several of which have force of law:
| Condition | Direct export (you arrange transport) | Indirect export (customer collects) |
|---|---|---|
| Time limit to export the goods | 3 months | 3 months |
| Time limit to obtain evidence | 3 months | 3 months |
| Evidence | Official or commercial evidence of export, plus evidence of the supply | Same, and the customer must be an overseas customer |
| Not allowed | - | Customers with a UK place of business making taxable supplies, UK-resident individuals, visitors exporting in their baggage |
Official evidence is an export declaration on the Customs Declaration Service that has generated a departure confirmation; commercial evidence is transport evidence of the physical movement. HMRC treats both as equally valid, but if one lacks detail you need the other.
In the EU, the goods are imported. Import VAT is due in the member state where the goods enter the EU (Article 60 of the VAT Directive), payable by the person that country designates as liable (Article 201).
Low-value parcels to EU consumers: IOSS
For distance sales of goods in consignments worth no more than €150 (excise goods excluded), the EU’s import scheme (IOSS) lets the seller declare the EU VAT on these sales in a single monthly return. A business not established in the EU must appoint an intermediary established in the EU to use it.
The Northern Ireland exception
Under the Windsor Framework, Northern Ireland aligns with EU VAT rules for movements of goods. HMRC’s guidance on goods moving between Northern Ireland and the EU sets the conditions to zero-rate a sale to an EU business:
- your customer is VAT-registered in an EU member state and has given you that number;
- the goods are sent from Northern Ireland to a destination in an EU member state;
- you submit an EC Sales List accurately accounting for the supply, and keep valid evidence of removal.
Your invoice must show your VAT number with the XI prefix and your customer’s EU VAT number with its country code. For distance sales to EU consumers, you charge UK VAT until your sales across the EU exceed the threshold of £8,818 (€10,000) in a calendar year; above it, VAT is due in each customer’s country, which you can declare through the OSS. This guidance covers goods; for services, the UK rules described above apply.
Do you need a fiscal representative?
Sometimes. If you must register for VAT in an EU country, the VAT Directive (Article 204) allows member states to require a non-established business to appoint a tax representative where there is no mutual assistance agreement with the business’s home country. They cannot impose it on a business that uses the non-Union OSS scheme. Rules vary by country: check the tax authority of the country concerned before you register.
EU e-invoicing mandates: what applies to a UK supplier
Several EU countries now require structured e-invoices between businesses. Most of these obligations target businesses established in the country, not foreign suppliers:
| Country | Position for a supplier not established there |
|---|---|
| Belgium | Mandatory B2B e-invoicing since 1 January 2026 does not apply to businesses without a permanent establishment in Belgium, even if VAT-identified there (the law is still being amended on this point). Belgian customers can receive invoices from foreign suppliers over Peppol |
| Germany | The obligation applies between domestic businesses. A foreign business registered for German VAT without a fixed establishment can say so on its invoice to explain why it does not issue an E-Rechnung |
| France | E-invoicing covers businesses established in France. Their transactions with operators established abroad are reported to the tax authority separately (e-reporting) |
| Italy | The obligation applies to parties resident or established in Italy invoicing each other; for invoices to and from foreign parties, e-invoicing through the SdI is optional |
Even when you are not obliged, a large customer may ask you to invoice through its e-invoicing channel, because its own processes are now built around structured invoices. A tool that can send EN 16931 invoices over Peppol covers most of these requests, and it will also prepare you for the UK’s own mandate: see UK e-invoicing: the road to April 2029 and our e-invoicing overview.
Whatever the channel, the invoice must still contain the right information. Our guide on what a VAT invoice must include covers the UK side.
Frequently asked questions
Do I charge UK VAT on consultancy for a German company?
Normally no. Under the B2B general rule the service is supplied where the customer belongs, so it is outside the scope of UK VAT, and your customer accounts for German VAT under the reverse charge. Keep its VAT number as evidence it is a business.
Do I charge UK VAT on services to an EU consumer?
Under the general B2C rule, yes. But services listed in paragraph 12.2 of VAT Notice 741A, such as consultancy, legal and accounting services, are supplied where the customer belongs, and digital services are taxed in the consumer’s country.
Can I zero-rate goods shipped from England to a customer in Ireland?
Yes, as an export, if the goods leave the UK within 3 months and you obtain official or commercial evidence of export within 3 months, as set out in VAT Notice 703. Import VAT is then due in Ireland.
Why are Northern Ireland businesses treated differently?
Under the Windsor Framework, Northern Ireland follows EU VAT rules for goods. Sales of goods to EU VAT-registered customers can be zero-rated as intra-EU supplies, using the XI prefix and an EC Sales List.
Must I send e-invoices to my Belgian customers?
Belgium’s B2B obligation does not apply to businesses without a permanent establishment there, according to the Belgian finance ministry. Your customer may still prefer to receive your invoices over Peppol.
Sources
- HMRC — VAT place of supply of services (VAT Notice 741A) (gov.uk)
- HMRC — VAT on goods exported from the UK (VAT Notice 703) (gov.uk)
- HMRC — VAT on movements of goods between Northern Ireland and the EU (gov.uk)
- EUR-Lex — Council Directive 2006/112/EC on the common system of VAT (Articles 44, 60, 196, 201, 204) (eur-lex.europa.eu)
- European Commission — The One Stop Shop (non-Union, Union and import schemes) (vat-one-stop-shop.ec.europa.eu)
- FPS Finance Belgium — e-invoice FAQ: general questions on the B2B obligation (einvoice.belgium.be)
- Bundesministerium der Finanzen — FAQ on the mandatory E-Rechnung (German Federal Ministry of Finance) (bundesfinanzministerium.de)
- impots.gouv.fr — “Je découvre la facturation électronique” (French tax authority) (impots.gouv.fr)
- Agenzia delle Entrate — “La fattura elettronica e i servizi gratuiti” (Italian tax authority guide, December 2025) (agenziaentrate.gov.it)
This article summarises the official texts to help you get organised. It is not a substitute for personalised advice from your accountant.