We work with a lot of consultants, and we find this question coming up a lot: “Do I need to charge GST/HST on the services I perform for clients in another country?” Usually, they are referring to clients in the US.
The simple answer is no!
Place of Supply
In Canada, the Canada Revenue Agency (CRA) deems the place of supply for services to be the location where your client is based. This holds true even if you perform the work remotely from your office in Canada. However, there are some exemptions to the place of supply rules. Whether the exceptions apply to you depends on the type of services you provide.
Exporting Goods and Services
On the Canada Revenue Agency website, they clearly indicate that most goods and services for which you charge and collect GST/HST in Canada are zero-rated when exported. There are two important considerations to make. The CRA has deemed these exports to be zero-rated NOT exempt.
Zero-Rated vs Exempt
If zero-rated and exempt goods and services are both taxed at 0%, what does it matter?
It matters a lot, actually!
When supplies are exempt, like many medical/dental services, the business CANNOT claim the GST/HST paid on any expenses incurred in providing those services. If the service is zero-rated then you can claim any GST/HST paid on expenses incurred in providing those services.
The Bottom Line
If you provide taxable services and/or supplies to non-resident companies or individuals and you have hit the minimum $30,000 worldwide taxable sales threshold, then you need to register for GST/HST. However, if all your services are zero-rated, you may end up getting a refund each time you file your GST/HST return.
We recommend you check the rulings to determine where your specific service fits. Some have different requirements to determine your place of supply. If you need help, fill out this form to get in touch.
