Services VAT often gets less attention than goods VAT in the post-Brexit conversation, partly because there is no border for services to cross and partly because the rules for B2B services across the EU were already complex before 2021. What changed at Brexit was less the conceptual framework and more the practical interaction with EU systems. Five years on, UK businesses providing or receiving cross-border services still get the place of supply rules wrong, and we want to set out the framework clearly.
The basic rule for B2B services
For business-to-business supplies of services, the general place of supply is where the customer belongs. A UK consulting firm invoicing a Spanish customer business charges VAT under Spanish rules, not UK rules. In practice, the supplier does not charge VAT and the customer accounts for VAT on its own return under the reverse charge mechanism. The invoice must be marked "reverse charge" or with an equivalent reference to the customer accounting for VAT.
This is unchanged by Brexit. The general B2B rule applied to services between the UK and EU before 1 January 2021 and continues to apply now. What has changed is that the UK is no longer part of the EU VAT system, so the EC Sales List for services is no longer required and the cross-border VIES validation system is not directly accessible from a UK VAT perspective.
The customer's VAT status: how to evidence it
For the general B2B rule to apply, the supplier must be able to evidence that the customer is a business. Before Brexit, UK suppliers could check an EU customer's VAT number through VIES. Now, UK suppliers should still obtain the customer's EU VAT number and validate it (manually through the customer or via the EU Commission's VIES tool, which remains publicly accessible), and retain documentary evidence of business status.
Without evidence of business status, the supply may be treated as B2C, where the place of supply rules are different and the supplier may need to charge UK VAT or register in the customer's country under a non-Union scheme.
B2C services and the special rules
For business-to-consumer services, the general place of supply is where the supplier belongs. A UK firm providing services to an EU individual generally charges UK VAT. But there are exceptions for digital, broadcasting, and telecommunications services, and for certain land-related, event-related, and transport services where place of supply follows the activity.
Digital services to EU consumers are the most commercially significant exception. Place of supply is the consumer's country, and the supplier must charge VAT at the consumer-country rate. Pre-Brexit, UK suppliers used the EU's One Stop Shop (OSS) to file a single return. Post-Brexit, UK suppliers must register under the EU's Non-Union OSS in a single chosen EU member state, or register individually in each customer country.
Receiving services from overseas: the reverse charge in the UK
UK VAT-registered businesses that receive services from overseas suppliers (whether EU or rest of world) generally apply the reverse charge. The UK customer treats the supply as if it had supplied the service to itself, including output VAT in Box 1 and recovering input VAT in Box 4 subject to normal recovery rules. For fully taxable businesses, the entries cancel out. For partially exempt businesses, the input recovery is restricted.
Common categories caught by the reverse charge include software subscriptions, advertising services, professional services, and most consultancy. Marketplace fees from Amazon, eBay, and similar platforms are also typically reverse-charge supplies and feed directly into the VAT return of UK seller customers.
The exceptions you should know about
Some services follow the place where the supply is physically performed or where land is located rather than the general B2B rule. Examples include services connected with immovable property (land and buildings), admission to events, restaurant and catering services, and short-term hire of means of transport. A UK architect designing a building in Italy charges Italian VAT; a UK firm running a conference in Germany charges German VAT on entry fees.
These exceptions often require non-UK VAT registrations even for businesses that otherwise only operate in the UK. The threshold for registration is country-specific and frequently low or zero for non-residents.
The Northern Ireland nuance
Northern Ireland remains aligned with EU VAT for goods but follows UK rules for services. A service supplied from Northern Ireland to Ireland follows UK service rules (general B2B place of supply: where the customer belongs, reverse charge applies). A good supplied from Northern Ireland to Ireland follows EU rules with no customs intervention under the Windsor Framework arrangements.
Practical compliance: invoices and records
Invoices for reverse-charge supplies must include specific markings such as "Reverse charge: Customer to account for VAT" or "VAT to be paid by the customer". The customer's VAT number must be shown. Records must support the place of supply analysis: customer business status evidence for B2B, customer location for B2C, performance location for exception categories.
How PushDigits supports services exporters
Our VAT team reviews place of supply analyses, sets up reverse-charge accounting in cloud bookkeeping, and supports Non-Union OSS registrations for UK businesses selling digital services into the EU. Our business advisory team works with growing service exporters on the structural questions: when does an EU branch or subsidiary make commercial sense, and what are the consequences for VAT?
If you are unsure whether you are applying place of supply rules correctly, book a services VAT review or visit our contact page.