Do I Charge VAT to Overseas Clients?

Common situations

The last two rows are where businesses go wrong most often. A foreign invoice address does not make a supply an export, and delivering to your overseas customer’s UAE agent means the goods never left.

Working through it

The question everyone asks is about the customer. The question that decides it is about the supply.

For goods, what matters is whether they physically left the UAE and whether you can prove it. A sale to a customer in London, delivered to their freight forwarder in Jebel Ali and collected weeks later, is not automatically an export at the point of invoicing.

For services, the place of supply rules determine the treatment, and they turn on the nature of the service and where it is consumed rather than on where the invoice is addressed. Services connected with UAE real estate, services physically performed in the UAE, and services supplied to a customer’s UAE establishment can all remain within scope regardless of the customer’s nationality or head office location.

So the reliable approach is to describe the supply accurately first, and only then ask what treatment follows. Businesses that start from the customer’s address reach the wrong answer often enough to make it a systematic risk rather than an occasional error.

Export evidence: the condition, not a formality

For zero-rated goods, the evidence requirement is where positions actually fail. Zero-rating without it means the supply is standard rated and the VAT comes out of your margin, because the customer has long since paid and gone:

• Retain it at the time of shipment, not when somebody asks. Reconstructed evidence is the most common reason a zero-rated position collapses
• Customs documentation showing the goods left the UAE
• Transport documentation: airway bill, bill of lading, courier record
• Commercial documents linking the shipment to the specific invoice
• A process, not good intentions: particularly for high-volume small-parcel exporters where per-shipment evidence has to be captured automatically or not at all

E-commerce sellers shipping hundreds of small parcels are the hardest case here. The evidence exists in courier systems but is rarely linked back to the invoice, and assembling it retrospectively across a period is close to impossible.

Services: where the customer is, and where the service is

Two separate questions, and both matter.

Where is the customer established? Not where they are incorporated or where the invoice is addressed, but where they have a business establishment relevant to the supply. An overseas group with a UAE branch that actually receives the service is a UAE customer for this purpose.

Where is the service consumed or performed? Services connected with UAE real estate follow the property. Services physically performed in the UAE (training delivered here, an event run here, work on goods located here) frequently remain within scope even for an overseas customer.

The combination is what determines the treatment. A consultancy delivered remotely to a genuinely overseas business with no UAE presence sits at one end; advice about a Dubai building, given to the same client, sits at the other.

Where a business has a mix, the treatment has to be decided per engagement rather than set once per client.

What being wrong costs, in each direction

Both errors are expensive and they fail differently.

Charging no VAT where you should have. The liability is yours. You owe the output tax whether or not you can go back to the customer for it, and on an overseas client who has paid and moved on, you generally cannot. It comes out of margin, and it accumulates across every invoice until somebody reviews the position.

Charging VAT where you should not have. Less dangerous but not free. Your price was 5 per cent higher than it needed to be, which may have cost you the work, and unwinding it means credit notes and a corrected return.

The asymmetry favours getting a proper answer rather than defaulting either way. For a business with meaningful overseas revenue this is worth documenting once per engagement type, with the reasoning recorded, because in two years the person who made the decision will have gone and the position will still need explaining.

What people get wrong

• Inferring the treatment from the invoice address. The supply decides it, not the customer’s letterhead.
• Zero-rating without retained export evidence, which makes the supply standard rated in substance.
• Assembling export evidence retrospectively rather than capturing it at shipment.
• Treating a UAE branch of an overseas group as an overseas customer.
• Ignoring services connected with UAE real estate, which follow the property.
• Treating goods delivered inside the UAE as an export because the buyer is foreign.
• Setting one treatment per client where the engagements genuinely differ.

What to do about it

1. Describe the supply accurately first, then ask what treatment follows.
2. Check whether your customer has a UAE establishment receiving the service.
3. Confirm export evidence is captured at shipment, automatically if volumes are high.
4. Separate engagements connected with UAE property or performed in the UAE.
5. Document the reasoning per engagement type, so it survives staff turnover.

Related questions

Frequently Asked Questions

Last reviewed 27 July 2026. Rates, thresholds and deadlines change, the e-invoicing provider deadline has already moved once. Confirm current requirements with the Federal Tax Authority before acting, or ask us to check your position.