How to Handle VAT When Working With Overseas Clients 2025/26
- JSC Accounting Team
- Oct 7
- 2 min read
Global trade isn’t just for big corporations anymore. Many small UK businesses now serve clients abroad, especially in Europe. That means navigating international VAT rules. It sounds complicated, but with a few basics, you can stay compliant and avoid overpaying.
Selling goods overseas
When you sell goods to customers outside the UK, whether in the EU or beyond, you usually don’t charge UK VAT. Instead, you record the sale as zero-rated, meaning you still include it in your VAT return but at 0%.
You’ll need evidence that the goods actually left the UK, such as shipping documents or courier invoices. Keep these records in case HMRC asks for proof.
If you sell regularly to EU countries, you may need to register for VAT in that country, depending on the delivery arrangements and the value of sales.
Selling services overseas
Services are trickier because VAT depends on where the customer is based and whether they’re a business or an individual.
To overseas businesses: generally, you don’t charge UK VAT. The customer accounts for VAT in their own country using a “reverse charge” system.
To overseas individuals (non-businesses): you may still need to charge UK VAT, depending on the service type and where it’s consumed.
For example, digital services (like online training or software subscriptions) often follow special “place of supply” rules.
Buying from overseas suppliers
When you purchase services from overseas, you may have to apply the reverse-charge mechanism in the UK (declaring the VAT on your return and then reclaiming it, assuming it’s a business expense).
This can seem confusing, but modern bookkeeping software such as Xero or QuickBooks can handle most of it automatically once the settings are correct.
Customs and import VAT
If you import goods, you’ll usually pay import VAT when the goods enter the UK. You can reclaim this as input VAT on your next return, provided the goods are for business use and you have the correct import documentation.
The simple takeaway
International VAT doesn’t have to be scary. Keep accurate invoices, understand who the customer is and where they’re based, and use software that tracks it correctly. For anything unclear, like new EU rules or mixed supplies, get advice before filing.
Need help making sense of your taxes? JSC Accounting works with small businesses across the UK to keep things simple and compliant. Get in touch for a friendly chat about how we can help.
