VAT on Services, where does the liability sit?
Sell a service across borders and there’s no shipment, no customs entry, no parcel to track — just a rulebook that decides which country gets to tax it. Get the “place of supply” wrong and you can end up charging VAT nobody owed, or missing a registration nobody warned you about.
Talk to a SpecialistWhy services aren’t taxed like goods
When goods cross a border, there’s a physical event — customs, a shipment, a warehouse — that VAT can hang off. Services have none of that. A consultancy call, a software licence, or a design contract can be “delivered” without anything ever moving, so the EU VAT rules instead ask one question: where is the supply treated as taking place? That’s the “place of supply,” and it — not where your business is registered — decides which country’s VAT applies, and who has to account for it.
Two general rules cover most services. Then a short list of exceptions overrides them for specific service types — land, events, transport hire, catering, and digital services among them. Most disputes we see come from applying the general rule when an exception actually governs.
The two general rules
Everything starts by asking who your customer is — a business, or a private consumer.
Business customer: taxed where they are
Sell a service to another VAT-registered business, and the general rule puts the place of supply at the customer’s location — not yours. In practice this usually means you invoice without VAT, and your customer self-accounts for it under the reverse charge mechanism in their own country.
You’ll still need your customer’s valid VAT number on file to justify the zero-rated invoice — an unverified number is the most common reason this gets challenged on audit.
Private consumer: taxed where you are
Sell the same service to a private individual, and by default the place of supply flips to your location — you charge your own country’s VAT rate, regardless of where the customer lives.
This default is the one most often overridden. Digital services, event admission, land, and short-term transport hire all have their own rule that replaces it — covered below.
When the general rule doesn’t apply
A handful of service types are carved out with their own place-of-supply rule, in both B2B and B2C sales. These are the ones sellers most often miss.
Land & property services
Construction, surveying, letting, architects, estate agents — taxed wherever the land or building physically is, for both business and private customers.
Event admission
Tickets to cultural, artistic, sporting, scientific or educational events are taxed where the event actually happens, not where the organiser is based.
Short-term transport hire
Hiring a car, van or boat for up to 30 days (90 for vessels) is taxed where the vehicle is physically handed to the customer.
Restaurant & catering
Taxed where the meal is physically served — with a separate rule for catering served on board ships, aircraft or trains during an EU journey.
Digital, telecom & broadcasting (B2C)
Sold to a consumer, these are taxed where the consumer lives — overriding the usual “taxed where the supplier is” default. Reported EU-wide through a single OSS return instead of registering in every country.
Sold to non-EU consumers
Certain professional services — consultancy, legal, accountancy, advertising, IP licensing — follow the customer even in a B2C sale, if that customer is outside the EU. Often means no EU VAT at all.
Selling digital services to EU consumers?
Software, apps, streaming, e-learning, and other electronically supplied services sold to consumers are taxed at the buyer’s local rate — which can mean 27 different rates across the bloc. The Union OSS scheme lets you report and pay all of it through one quarterly return instead of registering separately in every country your customers happen to live in.
Not sure whether OSS is worth the switch, or what it would actually save you? Run the numbers.
Explore the OSS SchemeWhere liability lands, registration can follow
Working out the place of supply tells you which country’s VAT rules apply — it doesn’t automatically mean you need to register there. Under the general B2B rule, your customer usually handles that through reverse charge. Under most of the exceptions above, though, the liability can land on you directly.
If you’re mixing goods and services — a software company that also ships hardware, an event company that also sells merchandise — the two supply chains are assessed separately. Each needs its own place-of-supply check.
Common questions
Does my software or SaaS product count as a “digital service”?
Usually yes, if it’s delivered automatically over the internet with minimal human involvement — think downloads, subscriptions, or cloud tools. A service that still requires meaningful manual work (bespoke development, live consulting) is typically not “electronically supplied” and falls back to the general rule instead.
My B2B customer gave me a VAT number — am I automatically off the hook?
Not quite. You still need to verify that the number is valid and that the customer is genuinely acting as a business for this purchase, not a private individual. An unverified or incorrect number is the most common reason a zero-rated reverse-charge invoice gets challenged later.
I sell both goods and services — do the same rules apply to both?
No. Goods follow the distance-selling and import rules (IOSS/OSS goods scheme, thresholds, customs); services follow the place-of-supply rules on this page. If your business does both, each transaction type needs its own separate check.
Where do UK businesses stand selling services into the EU?
The place-of-supply rules themselves are largely unchanged post-Brexit, since the UK still mirrors the EU framework. What changed is that UK businesses are now “third country” suppliers for EU VAT purposes — relevant for the non-EU exceptions above, and for whether a fiscal representative is required in a given member state.
Not sure how your services are treated?
Tell us what you sell and to whom, and we’ll map out the place of supply, the registrations it triggers, and the reporting route that fits.
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