Stop worrying about tax compliance. Master VAT, GST, and sales tax rules for invoicing international clients with our comprehensive guide.
Understanding different tax systems worldwide
Different countries use different tax systems. VAT (Value Added Tax) is used in UK, EU, and 160+ countries. GST (Goods and Services Tax) is used in Canada, Australia, India, New Zealand. Sales Tax is used in the US (varies by state). HST (Harmonized Sales Tax) is used in some Canadian provinces. Each has different rates, thresholds, and rules for invoicing.
VAT requirements for UK and EU businesses
UK businesses must register for VAT when turnover exceeds £85,000. Standard VAT rate is 20%. VAT invoices must include: your VAT number, customer's VAT number (for B2B), VAT rate applied, and total VAT amount. EU businesses follow similar rules with rates ranging from 17-27%. Reverse charge applies for B2B services between EU countries.
GST rules for Canada, Australia, and India
Canada: GST is 5% federally, plus provincial taxes (HST in some provinces). Register if revenue exceeds $30,000 CAD. Australia: GST is 10%, register at $75,000 AUD turnover. Include ABN on invoices. India: GST has multiple rates (5%, 12%, 18%, 28%), with separate CGST, SGST, and IGST for inter-state transactions. Registration required at ₹20 lakhs (₹10 lakhs for special states).
US sales tax complexity
Sales tax varies by state (0% to 10%+). Some states have no sales tax (Alaska, Delaware, Montana, New Hampshire, Oregon). Nexus rules determine where you must collect tax (physical presence or economic nexus). Digital products have different rules. Must register in each state where you have nexus. InvoiceFlow automatically calculates the correct rates based on client location.
Cross-border invoicing rules
B2B cross-border: Often zero-rated (reverse charge applies). B2C cross-border: Must charge tax based on customer location. Digital services: Special rules apply (EU MOSS, Norway VOEC). Include customer's tax ID on invoices. Document why tax was or wasn't charged. Keep records for 6+ years for audits.
How InvoiceFlow simplifies tax compliance
InvoiceFlow automatically detects client location and applies correct tax rates for VAT, GST, HST, or sales tax. It validates tax IDs, generates compliant invoices with all required information, tracks tax collected for reporting, and updates rates when governments change them. Stop worrying about compliance—InvoiceFlow handles it automatically.
Keep momentum after every invoice
InvoiceFlow automates approvals, nudges clients when payments slip, and surfaces the metrics you need to stay cash-flow positive.