DO I CHARGE GST/QST ON SERVICES DELIVERED OUTSIDE CANADA

If you are a Quebec service provider — consultant, designer, freelancer, IT developer, coach, agency, contractor, or professional — chances are you will eventually work with clients outside Canada. When that happens, one of the first questions is: Do I need to charge GST or QST for services delivered to foreign clients? In many cases, international services are zero-rated, but not always. The rules depend on what the service is, where it is consumed, and where the recipient is located.

This guide explains exactly when GST/QST applies to services delivered outside Canada and when they can be billed at 0% tax.

LEGAL AND REGULATORY FRAMEWORK

Sales tax rules for international services are governed by:

• the Excise Tax Act (GST)
• the Quebec Taxation Act (QST)
• federal place-of-supply rules for services
• zero-rated export provisions

These determine whether a service to a non-resident is:

• taxable
• zero-rated (taxed at 0%)
• exempt (rare for services)

KEY COURT DECISIONS

Courts have ruled that:

• a service is zero-rated only when it meets exact legislative criteria
• GST/QST applies if the service is consumed in Canada, even if the client is foreign
• proof of non-resident status may be required
• place-of-supply rules depend on the nature of the service
• suppliers must document why a service is zero-rated

Courts consistently reinforce that misclassification leads to assessments.

WHY BUSINESSES GET CONFUSED

Common sources of confusion include:

• assuming “international client = no tax”
• misunderstanding digital and online services
• mixing up exempt and zero-rated
• uncertainty about consumption location
• client billing address vs. place of consumption
• services performed partly inside Canada

This misunderstanding leads to billing errors and compliance issues.

DO YOU CHARGE GST/QST ON SERVICES DELIVERED OUTSIDE CANADA?

Here is the clear breakdown.

1. MOST SERVICES TO NON-RESIDENTS ARE ZERO-RATED (0% GST/QST)

If you provide services to a client located outside Canada, the service is usually zero-rated, meaning:

• GST = 0%
• QST = 0%

You still report the sale but do not charge tax.

These include:

• consulting
• software development
• design and creative services
• digital marketing
• coaching and training delivered online
• engineering
• business advisory
• remote IT services
• SaaS used exclusively outside Canada

This applies as long as the service is not consumed in Canada.

2. SERVICES CONSUMED IN CANADA ARE TAXABLE

Even if the client is foreign.

Examples:

• a U.S. client hires you to perform work physically in Quebec
• the customer participates in the service while in Quebec
• training delivered while the participant is physically in Quebec
• services related to real property located in Canada
• repairs or maintenance for goods located in Quebec

These require:

• GST 5%
• QST 9.975%

3. SERVICES RELATED TO CANADIAN PROPERTY ARE ALWAYS TAXABLE

Tax applies when the service is:

• related to Canadian real estate
• related to goods located in Canada when the service is performed
• performed in Quebec or another Canadian province

Examples:

• repair services
• installation
• construction
• real estate consulting for Canadian property
• architectural services for Canadian buildings

4. ZERO-RATED SERVICES MUST MEET STRICT CONDITIONS

To zero-rate services, they must be:

• provided to a non-resident
• not related to property located in Canada
• not primarily consumed in Canada
• not provided to an individual physically in Canada
• supported by documentation proving export

Zero-rated services still allow ITCs/ITRs.

5. DIGITAL SERVICES ARE ZERO-RATED IF CONSUMED OUTSIDE CANADA

Digital services include:

• software
• SaaS
• downloadable content
• subscriptions
• online training
• digital consulting

If the user is based outside Canada → zero-rated.
If the user is in Quebec → QST applies.

6. COACHING & TRAINING SERVICES: LOCATION MATTERS

• If the client is physically outside Canada during delivery → zero-rated
• If the client attends from Quebec (even online) → GST/QST applies
• If both participants are in different locations → provider evaluates case-by-case

7. SPECIAL CASE: MULTI-JURISDICTIONAL SERVICES

If a project involves:

• work done in Canada
• work done outside Canada
• foreign and Canadian usage

Tax rules depend on where the service is primarily consumed.

Documentation and contract clarity are essential.

HOW TO PROVE A SERVICE WAS ZERO-RATED

You must keep:

• client’s foreign address
• written confirmation of non-resident status
• contract indicating foreign usage
• email correspondence
• proof that the service was delivered or consumed outside Canada
• location logs for digital services (if applicable)

Revenu Québec may ask for documentation during verification.

COMMON MISTAKES TO AVOID

• charging GST/QST unnecessarily to foreign clients
• failing to zero-rate legitimate exports
• assuming all international services are exempt (they are not)
• classifying zero-rated supplies as “exempt”
• failing to collect non-resident documentation
• providing in-person services in Quebec but not charging tax
• misconfiguring e-commerce or invoicing software

MACKISEN STRATEGY

Mackisen CPA helps businesses correctly apply GST/QST rules for international service transactions. We:

• classify services as taxable, zero-rated, or exempt
• configure invoicing and accounting systems
• prepare documentation to support zero-rating
• correct filing errors and amend returns
• assist with verification and audit responses

Our guidance protects your business from tax misapplication and ensures compliance.

REAL CLIENT EXPERIENCE

A Montreal consultant mistakenly charged QST to U.S. clients. Mackisen corrected invoices and improved system settings.

A SaaS provider hesitated to apply zero-rating. Mackisen clarified rules and optimized pricing.

A design agency misclassified U.S. services as exempt instead of zero-rated. Mackisen corrected GST/QST filings to recover credits.

COMMON QUESTIONS

Are all international services zero-rated?
No — only those that meet specific criteria.

Do I need proof of the client’s location?
Yes. Documentation is essential.

What if part of the service is performed in Quebec?
Tax may apply depending on consumption and property involvement.

Are zero-rated services eligible for ITCs/ITRs?
Yes — they are fully creditable.

WHY MACKISEN

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses navigate GST/QST rules for international services with clarity and precision. Our expertise ensures correct tax application and strong documentation for audit protection.