How to Handle Cross-Border Service Contracts — VAT, Withholding Tax, and Compliance (2026)

A UK Ltd providing services to a German company (B2B): no UK VAT (reverse charge applies in Germany — the German company accounts for German VAT). The German company does not withhold tax on most service payments under UK-Germany DTT. But if the service is a royalty or services attract withholding under German domestic law, the rate may apply. This article covers the B2B and B2C cross-border service rules for UK, EU, and US transactions.