VAT on Services to US Clients from Home Country — Complete Picture (2026)

Home VAT is charged ONLY on services with place of supply in home country. If place of supply is US — no home VAT.

But where "place of supply" is depends on two factors:

1. What type of service do you provide?
2. Who is the recipient — taxable person (company) or non-taxable (individual)?

VAT law has specific rules for determining place of supply. For typical cases with US clients, rules are simple — but each specific case deserves attention.

Most common scenario for international freelancers with US LLC or direct work with US client.

Rule: Reverse Charge

For B2B service delivery (recipient is taxable person), place of supply is "where recipient has established independent economic activity."

If US company is recipient → place of supply is US → NO home VAT charged.

What "Taxable Person" Means

US company (Inc., LLC, LP, corporation) is taxable person — business entity. For B2B services this is clear.

Real Life Application

John is freelance developer at home. Works for US SaaS startup (Delaware C-Corp). Monthly invoice: $8,000.

• Service: software development
• Recipient: US company (taxable person)
• Place of supply: US
• Home VAT: 0%
• John invoices $8,000 without VAT, receives $8,000

Documentation

Home invoice must indicate:

• Reason for no VAT: "Reverse charge under local VAT article X"
• Alternative: "Place of supply outside home country"

For US clients, this is just informational — they don't charge US VAT (no federal VAT), don't use reverse charge.

Tax authority sometimes wants evidence that recipient is business entity (not individual). How to demonstrate for US client:

Standard Evidence

• Employer Identification Number (EIN) — US business tax ID. US company has it. Can be provided by you or requested at onboarding.
• Certificate of Good Standing — issued by secretary of state
• Business website with clear business contact info
• Contract showing client is business entity
• Invoice payer info from your records

Usually EIN + business contract is enough. Tax authority doesn't require notarized copies — reasonable business documentation OK.

If You Own US LLC — Special Case

If working through your US LLC (not directly to US client):

• Your US LLC invoices US client — this is B2B between two US entities, outside home VAT
• Your US LLC transfers money to you personally — this is distribution, NOT service, outside VAT

With this configuration, VAT question barely arises. Entire transaction flow is outside home VAT system.

If your client is US individual (not business), rule is different.

Rule: Place of Supplier

For B2C delivery, place of supply is "where supplier has established independent economic activity" — meaning home country.

If you're VAT-registered at home — you charge home VAT on service.

Example

Maria is graphic designer at home, VAT-registered. Makes logo for American (individual, not business). Price: $500.

• Recipient: US individual (not business)
• Place of supply: home
• Invoice: $500 + VAT (e.g., 20%) = $600
• Client pays $600, Maria reports VAT to tax authority

Problem: Americans don't expect to pay VAT to foreign companies. They'll ask "why?". Need to educate them or absorb VAT in final price.

Exceptions — Electronic Services

For B2C electronic services (SaaS, online courses, digital products, streaming), special rules apply:

• Up to €10,000 EU-wide annual: place is home (home rate)
• Over €10,000 in EU: place is recipient country, need OSS registration
• For US individuals: place stays home (US not in OSS system)

How to Avoid B2C Complications

• Work only with US business clients — contract with US LLC, Inc., or partnership
• If client is entrepreneur but no formally registered business, ask them to register (US LLC for $100-400 is trivial)
• Structure for services: require company billing info, refuse consumer-level accounts

Critical point for most international IT professionals. Many work for US clients with zero sales obligations — but still need VAT registration due to purchases.

The Rule

If you receive services from taxable persons in EU (or other third countries) and aren't otherwise VAT registered, you must register under simplified scheme.

Typical Triggers

• Google Workspace (Google Ireland) — €6/user/month
• Microsoft 365 (Microsoft Ireland) — $15/user/month
• AWS (Amazon EU/Luxembourg) — any cloud services
• GitHub (GitHub Ireland) — Pro plan $4/month
• Figma (Figma EU) — design subscriptions
• Notion (Notion Labs EU) — collaboration tool
• JetBrains IDEs — from Czech Republic
• SaaS tools with European hosting

If using any of these services — subject to mandatory simplified VAT registration from first invoice.

What Simplified Registration Obligates

• Registration with tax authority (one-time)
• Submit EU sales lists
• Self-charge VAT on received service (reverse charge)
• Declare in monthly VAT return
• If no right to credit — paid VAT is expense

Self-Charging — Example

John uses Google Workspace for €10/month. Receives invoice from Google Ireland without VAT.

• Self-charges: €10 × 20% = €2 VAT
• Reports €2 in VAT declaration as charged VAT
• If John is VAT registered under simplified scheme (not standard): no right to tax credit → €2 is expense
• Effectively pays: €10 + €2 = €12/month for Google Workspace

This is 20% uplift on all US/EU SaaS expenses.

Why Most Developers Don't Know About This

• Not explicitly explained in popular guides
• Most accountants focus on standard registration threshold
• Tax authority doesn't actively prosecute for small amounts, but at audit — penalties + interest for past years

Better-known VAT registration is standard (mandatory at certain revenue).

Threshold for Standard Registration

• Threshold: varies by country (~€50-100K for 12-month period)
• Automatic registration at threshold
• Application deadline: within days of reaching threshold

Important: Sales to US DO NOT Count Toward Threshold

Key point. For threshold purposes, only "taxable turnover" counts — meaning deliveries with place of supply in home country.

Services to US companies → place of supply in US → NOT counted in threshold revenue.

Practical Consequence

You have John, freelance developer with $150K annual income from US client:

• Home country turnover: 0
• EU turnover (if any): possible
• US turnover: €140,000+
• Threshold revenue: about 0
• Mandatory standard registration: no

John can have $150K income and zero obligation for standard registration.

But Almost Certainly Has Obligation for Simplified

If John uses Google Workspace, GitHub, AWS, Notion or other EU SaaS — simplified scheme activates and requires registration.

Can register for standard VAT voluntarily even without obligation. When worth it?

Case 1: Large Volume of US Clients + Many EU Expenses

If using $500-1,000/month AWS + other SaaS tools, simplified scheme means 20% on all = $100-200/month expense.

With voluntary standard registration → right to tax credit → self-charged VAT offset by credit right → zero additional expense.

Case 2: Planning to Hire Employees

VAT registration simplifies hiring and bookkeeping.

Case 3: Work with EU B2B Clients

For EU B2B clients, they want valid VAT number for reverse charge. Without registration, they must include home VAT in prices — reduces your competitiveness.

When NOT to Register Voluntarily

• Small US-only business (no EU clients, no many EU SaaS)
• Admin overhead of monthly VAT declarations (~€50-150/month accounting)
• Planned extraEU transition (digital nomad)

If working through own US LLC (not directly as individual or local corp), VAT equation changes.

Money Flow

1. US client pays US LLC (US entity → US entity, EU and home VAT don't apply)
2. US LLC transfers money to your personal home account (distribution, not service)
3. You declare these revenues to home tax authority (personal income)

Nowhere in this flow does home VAT obligation arise for services to US client.

But: Simplified Scheme Still May Apply

If you personally (not US LLC) use EU SaaS (Google Workspace for personal email, Notion personal account), simplified scheme still applies to you as individual.

If US LLC pays for tools (US LLC has Mercury account, pays GitHub directly) — tools used by US LLC, not you personally. Simplified scheme may not apply in this specific case, but tax authority may look at substance over form.

Best Practice

• Clearly separate LLC expenses from personal
• If self-employed at home, register under simplified scheme for peace of mind (registration free, just adds declaration)
• At larger volumes — consultation

1. Charging VAT to US B2B clients inadvertently — lose 20% of pricing due to mistake. Client pays it, but you quote $1,000 for monthly fee when you could take $833 + VAT.
2. Not registering under simplified scheme — 80% of home developers with EU SaaS tools are non-compliant. At tax audit — past years back, penalties + interest.
3. Confusing simplified and standard registration — simplified is "reduced" VAT status without tax credit right. If you register standard you have credit right and often more beneficial.
4. Incorrect invoice basis — "No VAT" is wrong. Need "Reverse charge" or equivalent text.
5. Treating US LLC distributions as income — distributions from disregarded entity to physical person aren't service. Not VAT obligation.
6. Missing EU sales lists — if registered under simplified scheme, list report is monthly (not annual). Submission mandatory even with zero amounts.
7. Not knowing when service received — receiving Google Workspace monthly = monthly reverse charge. One-two monthly tax events.

Step 1: Check What Services You Receive from EU/US

Make list of all recurring subscriptions:

• Email/productivity: Google Workspace, Microsoft 365
• Dev tools: GitHub, JetBrains, Docker, npm
• Cloud: AWS, Google Cloud, Digital Ocean, Vercel
• Design: Figma, Adobe Creative Cloud
• Collaboration: Notion, Slack, Linear
• Accounting: Xero, QuickBooks

Step 2: Check Invoicing Addresses

Go to each service and check from which legal entity you receive invoice. If EU jurisdiction (Ireland, Germany, Netherlands) → simplified scheme trigger.

Step 3: If Have EU SaaS — Register Under Simplified Scheme

• Online application in tax authority portal
• One-time, free
• Receive "reduced" VAT status regime
• Start monthly declarations

Step 4: Accounting Support

Monthly VAT declarations are 15-30 minutes/month with professional accountant. Cost: €30-80/month depending on volume.

Step 5: Analyze Potential for Standard Registration

If voluntary standard registration would give net benefit — direct calculation:

• EU SaaS expense annually × 20% = allocated VAT without credit
• If over ~€1,000/year — voluntary standard registration pays off

VAT compliance is separate area from US LLC setup, but we cover both edges:

• Case analysis — what's optimal VAT status for you
• Simplified or standard registration — administrative process with tax authority
• Annual VAT compliance — monthly declaration, EU sales list
• Structure optimization — US LLC + home individual vs US LLC + home corp, impacts on VAT status
• Invoicing templates — correct wording for invoices to US clients (non-VAT)

We work with home tax consultant on VAT matters and US CPA for US LLC compliance. Contact us for a custom quote on our contact page.