Very much in progress
I hope to write up something a bit more readable than the following dot-points once I've marshalled the facts...
- Most important - check where you are tax resident, this will primarily dictate which tax laws are relevant.
- Tax treaties are also important - if you're a foreign national temporarily resident in a country you may or may not also be tax resident, not to mention registered as tax resident - and all of these can effect which taxes are to be paid
- It seems likely (to be confirmed and referenced) that Australian GST does not need to be charged to an international invoice (for an Australian resident in Australia). This would seem logical as GST is passed along the top of a fee and directly passed to the government - so charging an international client GST would suggest that the government could tax a foreign person/organisation.
For the UK at least - I've confirmed via phone-call to the HMRC (VAT help line: +44 2920 501 261) that VAT is only payable if you are registered for VAT in the UK. If you are resident in the UK there are rules for when you must register (from my perspective I was working through an umbrella company which was registered anyway), but if you are outside the UK you do not need to register for VAT. Therefore - if you are non-resident in the UK, and not registered for VAT, you can invoice UK clients without including VAT. http://www.hmrc.gov.uk/vat/reg-how-to.htm (under the section "Businesses with no UK place of business selling to UK customers" suggests that VAT registration may be required if VAT would otherwise be required for a UK resident - which suggests that trading over £65,000 pounds per year within the UK might be the trigger point.
It's possible that GSTR 2000/31 Goods and services tax: supplies connected with Australia has something in it of value, though it's rather obscured behind a mass of the ugliest legalese (we pay people to write this stuff?)
- Talking with the ATO (switch-board: +61 2 6216 1111) confirmed there are two main points:
- If the non-resident client is in Australia for the work (ie selling to an international visitor) GST is payable. A client entirely outside Australia is not
If you are working on a physical good (physical work on a good) in Australia then GST may be payable. Software ain't physical so we seem to have a handy out here. The relevant ruling is GSTR 2003/7, paragraph 56 & 58, 59. Paragraph 55 even mentions software...
For a private ruling send/fax NAT Number 13742 (private ruling application form)
In fact - GSTR 2003/7 paragraph 55 is particularly promising:
- A supplier may use goods or real property as inputs in making a supply. However, that use does not make that supply directly connected with the goods or real property used. A direct connection between a supply and goods or real property does not extend to a connection between the supply and the business infrastructure used by the supplier to make that supply. For example, if a supplier supplies and charges an overseas customer for information or software provided electronically via facsimile or Internet, the use of the supplier's infrastructure (for example, facsimile machine or computer) is essential as the means of transmitting the information or software to the customer. However, the supply is not directly connected with the supplier's infrastructure.
Paragraphs 56 through 59 then go on to talk about how if you're not making any physical changes to a physical good then the item is GST-free (so software is in a good light). Paragraph 55 suggests that the use of local infrastructure to provide software or information that is then used exclusively outside of Australia by the client does not matter, so providing software to an international client should be GST free.