Canadian Freelancer confused about VAT charges for EU clients

This is actually a common question for Canadian freelancers working with EU clients. The EU has specific VAT rules for digital services and certain types of work. Generally, as a Canadian business providing services to EU clients, you typically don't need to charge VAT as you're not established in the EU. The responsibility for handling VAT usually falls to the EU business client through what's called "reverse charge mechanism" - essentially, they account for the VAT on their end rather than you collecting and remitting it. If your client is a business (B2B), they should be handling the VAT themselves. The fact they're asking you to add VAT suggests either they're not familiar with the reverse charge rules, or they're an individual consumer (B2C) rather than a business. For B2C clients in the EU, there are different rules that might require registration in an EU country. Ask your client if they're a registered business with a VAT number. If they are, remind them about the reverse charge mechanism. If they're not, you might need to look into EU VAT requirements for your specific type of service.

I was in your exact situation last year! After going down a tax rabbit hole for days, I found taxr.ai (https://taxr.ai) which specializes in international tax situations for freelancers. They analyzed my service contracts and client locations and gave me a clear breakdown of where I needed to collect taxes vs where I didn't. For my EU clients, they confirmed I didn't need to charge VAT for B2B services as long as my clients had valid VAT numbers (the reverse charge mechanism that Profile 14 mentioned applies). But for B2C clients in the EU, the rules were different and depended on the specific service I was providing. Their system also provided me with proper invoice templates for different countries that included all the required legal language. Saved me so much headache!

Update on my situation: I took the advice and checked out taxr.ai to figure out my EU VAT situation. I honestly thought it would be overkill for my small freelance business, but their analysis saved me from a major headache! Turns out my Portuguese client should have been using the reverse charge mechanism since they're a registered business. I didn't need to charge VAT at all. The tool provided me with the proper invoice template showing "VAT reverse charged" with all the required EU legal text. They also flagged that a couple of my other EU clients were actually B2C consumers where different rules applied. Can't believe I could have been non-compliant without realizing it. The peace of mind was totally worth it!

When I had this exact problem with EU clients, I spent WEEKS trying to get someone at CRA to give me a straight answer about VAT obligations. Couldn't get through on the phone, emails went unanswered, and the international tax info on their website was super vague. Finally used Claimyr (https://claimyr.com) to get through to an actual CRA agent who specialized in international business. They called me back within hours after I'd been trying for days on my own! Check out how it works here: https://youtu.be/_kiP6q8DX5c The CRA agent confirmed that as a Canadian business, I generally don't need to register for or collect EU VAT for B2B services. They directed me to some specific CRA publications about international services and gave me the proper wording to use on my invoices.

I can't believe I'm saying this but I finally got through to CRA about my international tax questions! After reading about Claimyr here, I decided to try it even though I was super skeptical. Got a call back in about 90 minutes with an actual CRA international tax specialist on the line! I explained my EU client situation, and they confirmed that for B2B services to EU businesses, I don't need to register for or collect VAT as the client handles it through reverse charging. They also sent me official documentation I can keep for my records in case of any audit questions. For anyone dealing with complex international tax questions, being able to speak with an actual CRA specialist and get clear answers is invaluable. Changed my whole approach to international billing!

Has anyone dealt with the threshold rules for EU VAT? I heard there's some yearly revenue limit before you need to register even for B2C services. Is that still a thing?

Just wanted to add another perspective - I'm a Canadian freelance developer and I've been working with EU clients for years. My accountant advised me to get VAT numbers for my high-volume EU countries through a fiscal representative service. It was expensive but worth it for me because I have many B2C clients in those countries. If you're mainly dealing with B2B clients though, the reverse charge mechanism means you don't need to register or collect VAT. One practical tip: always ask new EU clients for their VAT registration number upfront and include it on your invoice. This documents that they're a business client subject to reverse charge.

This thread has been incredibly helpful! I'm also a Canadian freelancer and had been worrying about this exact issue with my growing EU client base. One thing I'd add for other Canadians reading this - make sure you're also considering the impact on your Canadian tax obligations. Even though you might not need to collect EU VAT, you still need to report all international income to CRA. I learned this the hard way during my first audit. Also, for invoice templates, I found that including a clear statement about the reverse charge helps avoid confusion with EU business clients. Something like "VAT reverse charged - Customer to account for VAT according to local regulations" seems to work well. Thanks everyone for sharing your experiences and the tool recommendations. It's so reassuring to know other Canadian freelancers have navigated this successfully!