If I sell hosting to a US citizen in the US, do I charge VAT? Or do I have to pay US tax?

Question

Hello,

I’m currently in the process of expanding my services to the rest of Europe and the USA. I sell game server hosting.

If I sell Hosting to a US citizen in the US, do I charge VAT? Or do I have to pay US tax?

Any help would be appreciated,

Thank You,
Aidan

Answer

International services which involve electronic services can be complex but if I outline the general rule that applies to the place of supply of services is that the place of supply of services to a purpose who is not a business is where the supplier belongs. Therefore if the supplier is in the UK the supply is subject to the UK VAT rules. However when we are talking about “intangible services” in the sense of electronically supplied services which should include web hosting then if the customer is not a business and belongs outside of the EU the place of supply is outside the UK and outside the scope of UK VAT.

Any local taxes in that overseas country would need to be considered.

Public Notice 741A would be a good place to read up on the details to confirm your understanding.

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