VAT for Internationally Mobile Businesses and Freelancers

Value Added Tax is one of the most geographically complex taxes for internationally mobile businesses and freelancers. Unlike income tax, where your personal residence generally determines your tax home, VAT obligations depend on where supplies are made, who receives them, and the nature of the services — not simply on where you live or where your business is registered. A UK-registered freelance consultant working remotely from Portugal and serving clients in Germany, the UAE, and the United States may have VAT obligations in multiple jurisdictions simultaneously.

This guide explains how UK VAT applies to internationally mobile businesses and freelancers, how the place of supply rules determine where VAT is owed, and the key planning considerations as of 2026.

UK VAT Registration

UK VAT registration is required where a business makes taxable supplies in the UK above the registration threshold, which is £90,000 per rolling 12-month period as of 2026. Registration is also required (regardless of turnover) where the business acquires goods from the EU above certain levels, or expects to reach the threshold in the next 30 days.

Voluntary registration is available below the threshold and may be beneficial where the business incurs significant VAT on its inputs (enabling input tax recovery) and its customers are businesses that can reclaim VAT themselves.

Non-UK businesses that make taxable supplies in the UK — for example, an overseas company providing digital services to UK consumers — may also be required to register in the UK, depending on the nature of the supply and the customer.

Place of Supply: The Core Concept

For VAT purposes, the key question is always: where is the supply made? VAT is due in the country of supply. For goods, place of supply is relatively straightforward (broadly, where the goods are located at the time of supply). For services — the primary concern for freelancers and service businesses — place of supply depends on the nature of the service and whether the customer is a business (B2B) or a consumer (B2C).

B2B Services: The General Rule

For services supplied from a UK VAT-registered business to another VAT-registered business, the general rule is that the place of supply is where the customer belongs (the "reverse charge" principle). This means:

• If a UK-registered consultant provides advisory services to a German GmbH, the place of supply is Germany. The German company accounts for German VAT under the reverse charge mechanism. No UK VAT is charged.
• The UK consultant does not charge UK VAT and reports the supply as a zero-rated export on their UK VAT return.

This is beneficial for UK-registered businesses with overseas business clients: there is no UK VAT to collect, no foreign VAT to charge, and the UK business recovers its UK input VAT in the normal way.

B2C Services: The Problem for Digital Suppliers

For services provided to consumers (non-business recipients), the rules are different and potentially require registration in every country where consumers are located. For digital services specifically — software, ebooks, streaming, online courses, apps — EU VAT rules require the supplier to account for VAT in the consumer's country of residence, not the supplier's.

The EU's One Stop Shop (OSS) mechanism (available from 2021) allows suppliers to register in one EU member state and account for VAT on all EU B2C digital sales through a single return, avoiding the need for individual country registrations. UK businesses can use the Non-Union OSS scheme (registering in any EU member state) or the Union OSS (if they have a fixed establishment in the EU).

For B2C supplies to UK consumers, UK VAT at the standard rate (20%) applies regardless of the supplier's location. Non-UK businesses selling digital services to UK consumers must register for UK VAT above the registration threshold.

Exceptions to the General Rules

Certain services are subject to specific place of supply rules that override the general B2B/B2C distinction:

• Land-related services: The place of supply is where the land is situated. Architecture, surveying, construction, and property management services are taxed where the property is located.
• Admission to events: The place of supply is where the event takes place.
• Passenger transport: The place of supply is where the transportation takes place.
• Restaurant and catering services: The place of supply is where the services are physically performed.
• Short-term hire of means of transport: Where the means of transport is put at the disposal of the customer.

For internationally mobile freelancers, the most important exception is generally the land-related services rule: if you provide services relating to property in Spain, Spanish VAT applies, regardless of where you are based.

The Reverse Charge Mechanism

The domestic reverse charge — applied in the UK and most EU countries — shifts VAT accounting from supplier to recipient where both are VAT-registered businesses. This is particularly relevant for:

• Construction services in the UK (the Construction Industry Scheme reverse charge)
• Services received from overseas suppliers

Where a UK business receives services from an overseas supplier (for example, software subscriptions, professional services, or digital tools from US providers), the UK business is responsible for accounting for UK VAT on the supply under the reverse charge. The VAT is typically declared and simultaneously reclaimed (where the business has full input tax recovery), so there is no net cost, but it must be correctly accounted for on the VAT return.

VAT on Disbursements and Expenses

For freelancers and professional service providers, distinguishing between expenses that are disbursements (recharged at cost, not subject to VAT) and expenses that are recharges (part of the service, subject to VAT) is important. A disbursement — a cost incurred as agent for the client — is outside the scope of VAT. A recharge — a cost incurred by the supplier and passed on as part of their service — is subject to VAT at the standard rate. Court fees paid as agent for a client are typically disbursements; hotel and travel costs incurred by a consultant and recharged as part of their fee are typically recharges.

Moving Business or Residence Overseas

For a UK-registered freelancer who relocates overseas:

• If the business continues to make taxable supplies in the UK, UK VAT registration must be maintained
• If all supplies are to overseas business clients (B2B) and qualify as zero-rated exports, UK VAT registration may still be required to recover UK input VAT, but may not add material compliance burden
• If the business relocates entirely and ceases making UK supplies, deregistration should be considered
• Registration in the new country of residence or operation may be required under local VAT/GST rules (UAE introduced VAT in 2018 at 5%; Singapore GST is 9% as of 2026; the UAE and Singapore thresholds and rates differ from the UK)

Failing to register in a new jurisdiction when required creates exposure to back-dated registration, unpaid VAT, interest, and penalties.

Making Tax Digital for VAT

UK VAT-registered businesses must file VAT returns through Making Tax Digital (MTD)-compatible software. Returns are filed quarterly (or monthly for repayment traders) and payment is due one month and seven days after the end of the VAT period. Late submission and late payment penalties apply under the new points-based system introduced from January 2023.

Internationally mobile business owners must ensure their accounting systems are MTD-compliant even where they are managing their business from overseas, and that returns and payments are submitted on time regardless of time zones or travel schedules.

How Global Investments Can Help

Global Investments advises internationally mobile business owners and freelancers on cross-border VAT structuring, place of supply analysis, overseas VAT registration requirements, and the interaction between UK VAT obligations and local indirect tax rules across the major markets where our clients operate internationally. We help clients avoid inadvertent non-compliance and manage the compliance burden of multi-jurisdiction VAT obligations efficiently. This guide reflects the position as of 2026; VAT rules are subject to change in the UK and across all jurisdictions. Professional advice specific to your business model and client base is essential.