Exporting Services to the UK — How to Account for VAT after Brexit

The UK as a Third Country after Brexit — What Changed?

Until 31 December 2020 the United Kingdom was part of the European Union and its single VAT area. From 1 January 2021 the UK is treated like any other third country — it is no longer covered by EU VAT directives, the OSS scheme or intra-Community mechanisms.

For a Polish business supplying services to the UK this means principally:

• No access to the EU OSS (One Stop Shop) for B2C sales to the UK.
• The same rules apply as for supplies to non-EU countries.
• Potential obligation to register for VAT in the UK for certain service types.
• New rules for digital services supplied to UK consumers.

General Rule — Place of Supply

Under Polish tax law (VAT Act, Articles 28a–28o) the place of supply determines in which country VAT is due. Key rules:

B2B Services (business to business)

When you supply a service to a VAT-registered business in the UK, the place of supply is the customer's country — the United Kingdom (Article 28b of the VAT Act). In Poland you issue the invoice:

• without any VAT charged,
• annotated "reverse charge",
• with the customer's VAT number (GB…),
• reported as an export of services in your VAT return.

The UK customer self-accounts for VAT at the UK standard rate (20%) under the reverse charge mechanism — recording it as both output and input tax, which is effectively tax-neutral where full recovery applies.

B2C Services (business to consumer)

When supplying services to private individuals (consumers) in the UK, the general rule is that the place of supply is the supplier's country — Poland — and Polish VAT should be charged. However, many service categories have exceptions to this rule.

Digital and Electronic Services to the UK — Special B2C Rules

Electronic services (streaming, software, online games, e-books, online courses) supplied to UK consumers are subject to specific regulations. After Brexit the UK independently regulates VAT on digital services under its own system — the UK Digital Services Tax and UK VAT rules for digital services.

UK VAT registration threshold: If your sales of electronic services to UK consumers exceed £85,000 per year (the UK VAT threshold), you must register for VAT in the UK and charge tax at the UK rate. Below this threshold you may apply Polish rules and charge Polish VAT.

Important: The EU OSS scheme, which covers B2C digital service sales within the EU, does not cover the UK. You cannot account for UK transactions through OSS — you must register directly with HMRC.

Consultancy, IT and Advisory Services — How to Invoice

The most common services exported to the UK include business consulting, IT services (development, SaaS, technical support), marketing, translation, accountancy and market research.

Procedure for B2B:

1. Confirm the customer's tax status — request a GB VAT number or UTR number (for VAT-exempt entities).
2. Issue the invoice without VAT — net amount, annotated "reverse charge applicable".
3. Report the transaction in your VAT return — in the field for service exports.
4. Retain documentation — contracts, correspondence, evidence of the customer's place of establishment.

Example invoice for IT services to a UK company:

Factoring and Financial Services for UK Clients

Financial services (factoring, leasing, insurance, financial intermediation) are generally VAT-exempt in Poland. When supplying such services to UK businesses Article 28b applies — the place of supply is the UK. However, because of the VAT exemption, it is important to define the nature of the supply carefully and verify that the service is not treated as property-related or as one performed at the supplier's location.

Construction Services in the UK — Mandatory VAT Registration

Construction, renovation, installation and other services connected with immovable property have their place of supply where the property is located (Article 28e of the VAT Act). If you carry out works on a building in London, VAT is due in the UK — regardless of whether the customer is a business (B2B) or a consumer (B2C).

Obligations for a Polish construction firm working in the UK:

• Register for VAT in the UK with HMRC (threshold £85,000 or voluntary registration).
• Submit quarterly or monthly VAT returns to HMRC.
• Apply the CIS (Construction Industry Scheme) when subcontracting.
• Potentially apply the domestic reverse charge for VAT on subcontractors.

Legal, Accounting and Specialist Services

For legal, accounting, advisory, advertising, marketing and similar intangible services supplied B2B, the general rule under Article 28b applies — the place of supply is the customer's country. You issue invoices without VAT, annotated reverse charge.

For services supplied to consumers (B2C) — where these are not digital services — the general rule applies: the place of supply is Poland and you charge Polish VAT at 23%.

Documentation and Record-Keeping

For tax purposes you must hold documentation confirming that your customer is a UK VAT-registered business:

• Customer's VAT number (GB…) — verifiable via the HMRC VAT number checker.
• Contract or purchase order containing the UK company's identifying details.
• Business correspondence, pro-forma invoices, payment confirmations.
• Customer's registration documents (Companies House number).

Tax authorities may request these documents during an audit, particularly for high-value transactions. Retain them for five years.

Summary — VAT Rules for Services to the UK

FAQ — VAT on Services to the UK