No, if your business is UK VAT-registered and you provide services to customers in the United States, you generally do not need to charge UK VAT.
When a UK VAT-registered business supplies services to customers located in the US, the fundamental principle governing VAT is the "place of supply" rule. For most services, including common professional services like advertising, the place of supply is considered to be where your customer is located.
Understanding the Place of Supply for Services
The "place of supply" determines which country's VAT rules apply. For services provided by a UK business to a customer in the US, the place of supply is typically the US. This applies regardless of whether your US customer is:
- An individual (non-business customer): Even if you are providing services directly to a private individual in the US, the place of supply remains the US.
- A business (B2B customer): For services rendered to a US-based company, the place of supply is also the US.
Since the place of supply for these services is outside the UK, UK VAT is not applicable to the transaction. This means you would not add 20% VAT (or any other UK VAT rate) to your invoices for these US customers.
Key Considerations for Services to US Customers
To clarify the VAT implications when providing services from the UK to US customers, consider the following:
- No UK VAT Charged: For services where the place of supply is the US, you will not charge UK VAT. This makes your services more competitive for US clients as they are not subject to an additional tax.
- Invoice Requirements: Although you don't charge UK VAT, your invoices should still clearly state that no VAT has been charged and indicate the customer's US address.
- Record Keeping: You must maintain accurate records of all services provided to US customers, demonstrating that the place of supply was indeed outside the UK.
- Exporters of Services: Businesses that supply services to customers outside the UK are essentially exporting services. These "exports" are zero-rated for VAT purposes in the UK, meaning you don't charge VAT, but you can still recover input VAT on related costs.
Practical Application
Here's a simple breakdown based on the place of supply rule for UK businesses providing services to US clients:
| Customer Type | Customer Location | Place of Supply | UK VAT Charged? |
|---|---|---|---|
| Individual | United States | United States | No |
| Business | United States | United States | No |
This means that whether you're offering digital marketing, consulting, web development, or advertising services (as an example) to clients across the Atlantic, your UK VAT registration does not obligate you to add UK VAT to their invoices. This streamlined approach simplifies billing for international clients and ensures compliance with UK VAT regulations for cross-border services.
For further details on VAT between the UK and the US for services, you can refer to resources like SumUp Invoices.
