In most cases you do not charge GST or HST to foreign clients, but “no tax” is not automatic. Charging GST to foreign clients in Canada is governed by the zero-rating rules in Schedule VI of the Excise Tax Act: if your sale meets the conditions, you charge 0% and the client pays nothing; if it doesn’t, you charge the full 5% GST or 13–15% HST that applies in your province.1Canada Revenue Agency. Charge and Collect the GST/HST The conditions differ depending on whether you’re selling services, physical goods, or digital products, and several exceptions can pull a foreign sale back into taxable territory no matter where the client sits.
What Zero-Rating Actually Means
Zero-rated is not the same as exempt. On a zero-rated sale you charge 0% to the client, but you still get to claim input tax credits to recover the GST/HST you paid on your own business expenses. On an exempt sale you also collect nothing, but you lose the ability to recover input tax credits. When people say sales to foreign clients are “tax-free,” they almost always mean zero-rated, which is the better outcome for the seller.
Zero-rating only works if you are registered for GST/HST in the first place. If you are below the $30,000 small-supplier threshold and not registered, you don’t charge tax on anything, but you also can’t recover any of the GST/HST embedded in your Canadian expenses.2Canada Revenue Agency. When to Register for and Start Charging the GST/HST
Services Sold to Foreign Clients
This is the situation most freelancers, consultants, and agencies are asking about: you’re in Canada, your client is a business overseas, and you’re delivering the work remotely. The Excise Tax Act splits services to non-residents into two tracks, and which one applies to you controls the conditions you have to meet.3Department of Justice Canada. Excise Tax Act – Schedule VI, Part V
Consulting, Advisory, and Professional Services
Most knowledge-work services fall here: web developers, marketing consultants, accountants, lawyers, designers, and similar professionals billing a client abroad. Under section 23 of Part V of Schedule VI, these supplies are zero-rated when the non-resident client is not registered for GST/HST in Canada, provided the service does not relate to Canadian real property or tangible personal property located in Canada.4Canada Revenue Agency. Exports – Services and Intangible Personal Property
The registration piece trips people up. It is not enough that the client has a foreign address. If that foreign client also holds a Canadian GST/HST registration number, section 23 zero-rating does not apply and you have to charge tax. Ask, and keep the answer in your file.
Other Services
If your service isn’t consulting, advisory, or professional in nature, the general provision under section 7 covers it. Section 7 excludes not only the consulting category (which has its own track) but also postal, transportation, agency, and telecommunications services.3Department of Justice Canada. Excise Tax Act – Schedule VI, Part V For services that survive those carve-outs and are supplied to a non-resident recipient, zero-rating applies.
Exceptions That Make a Foreign Sale Taxable
Even with a clearly non-resident client, three exceptions can pull the sale back into full taxation. These are the ones the CRA looks for on audit.
Anything Tied to Canadian Real Property
Services connected to real property located in Canada are excluded from zero-rating no matter where the client lives.5Canada Revenue Agency. Real Property and the GST/HST A foreign investor hiring a Canadian architect to design a building in Calgary, or a non-resident landlord paying a Canadian property manager to run a rental in Vancouver, gets charged GST/HST. Appraisals, repairs, legal work for buying or leasing Canadian real estate, and property management all fall inside this exception. The CRA’s test is whether the purpose of the service is to fulfil a need arising from or relating to the property.4Canada Revenue Agency. Exports – Services and Intangible Personal Property
Services on Goods in Canada
Services performed on tangible property located in Canada are generally taxable. There is a narrow zero-rating path when the property is ordinarily located outside Canada, was imported solely to receive the service, and is exported as soon as practicable after the work is done.4Canada Revenue Agency. Exports – Services and Intangible Personal Property A non-resident carrier sending a damaged trailer to a Canadian shop for repair and then exporting it would qualify. If the property lingers in Canada for other reasons, or isn’t exported promptly, you charge the standard rate.6Canada Revenue Agency. GST/HST on Imports and Exports
Non-Resident Individuals Physically in Canada
A service supplied to a non-resident individual who is in Canada when they have contact with you, or while the service is being performed, is not zero-rated.3Department of Justice Canada. Excise Tax Act – Schedule VI, Part V A U.S. resident who flies to Toronto for an in-person coaching session pays HST on that session.7Canada Revenue Agency. Doing Business in Canada – GST/HST Information for Non-Residents This exception applies to individuals, not corporations.
Physical Goods Shipped to a Foreign Client
Goods shipped from Canada to a foreign destination are zero-rated when the supplier ships them out of Canada, or when the recipient exports them as soon as reasonably possible after taking delivery.3Department of Justice Canada. Excise Tax Act – Schedule VI, Part V When the client exports the goods themselves, the recipient must intend to export, must not use the property in Canada before exporting it, and the goods cannot be further processed in Canada beyond what’s needed for transportation.
Shipping directly to a foreign address using a carrier is the clean path. Problems appear when a foreign buyer picks up in person at your Canadian location. If the buyer is a consumer, section 1 of Part V does not apply to consumer pickups at all, and you charge the full GST/HST for your province. If the buyer is a non-resident business, zero-rating is still possible if the goods are exported promptly and not used in Canada first, but the documentation burden is heavier.
Digital Products and Intangible Property
Digital products and other intangible personal property sold to non-residents who are not registered for GST/HST in Canada are zero-rated under a dedicated provision.4Canada Revenue Agency. Exports – Services and Intangible Personal Property This covers website subscriptions providing access to databases or content, downloadable e-books and music, and digitized information delivered on a subscription basis. Intellectual property such as patents, trademarks, copyrights, and trade secrets licensed to a non-resident also qualifies.
Zero-rating does not apply if the buyer is an individual physically in Canada when the supply is made, if the property relates to Canadian real or tangible property, or if the intangible property can only be used in Canada.
Registration and Why It Matters for Exporters
You must register for GST/HST once your total worldwide taxable revenue exceeds $30,000 CAD over four consecutive calendar quarters, or in any single calendar quarter.8Government of Canada. Canada Revenue Agency – Small Suppliers Sales to foreign clients count toward that worldwide total even when they are zero-rated. Fail to register when you’re required to and you become liable for the tax that should have been collected, plus interest and penalties.
If you’re below the threshold but sell mostly to foreign clients, voluntary registration is often worth it. Registered exporters charge 0% on zero-rated foreign sales and still claim input tax credits to recover the GST/HST paid on software, office costs, and professional fees.9Canada Revenue Agency. Register Voluntarily for a GST/HST Account Stay unregistered and you absorb every dollar of that embedded tax with no way to get it back.
Converting Foreign Currency for Reporting
When a client pays in a currency other than Canadian dollars, you convert to CAD for GST/HST reporting. The default is the exchange rate on the day the tax becomes payable, which is the earlier of the day the consideration is paid or the day it becomes due.10Canada.ca. Conversion of Foreign Currency The CRA also accepts the rate on the day you receive payment, the rate on the day you acquired the foreign currency, or an average rate for the month in which the tax becomes payable.
Whichever method you pick, use it consistently for at least one year. If your conversion date lands on a weekend or holiday, use the previous business day’s rate.
Documentation You Need to Keep
The burden of proving zero-rating is on you. In an audit, weak records mean the CRA assesses you for the tax you should have collected, plus interest and penalties. “The client said they were foreign” does not survive.
For exported goods, keep evidence that the goods actually left Canada and that the evidence links back to the sale invoice: commercial invoices, bills of lading, freight forwarder receipts, and customs declarations.11Canada Revenue Agency. Exports – Tangible Personal Property
For exported services, your records need to establish two things: that the client is a non-resident, and that the service doesn’t fall into a taxable exception. Keep contracts and invoices showing the foreign address, and confirm the client’s Canadian GST/HST registration status. If a service could plausibly relate to Canadian real property or tangible property, document why it doesn’t.
All GST/HST records must be kept for at least six years from the end of the last tax year they relate to.12Canada Revenue Agency. Where to Keep Your Records
What It Costs to Get It Wrong
If you fail to collect GST/HST when you were required to, the CRA doesn’t chase your client. It comes to you. You owe the tax that should have been collected, a penalty of 6% per year on the unpaid amount, and interest at the prescribed rate.13Canada Revenue Agency. Penalties and Interest For Q2 2026, the prescribed rate on overdue GST/HST is 7%.14Canada Revenue Agency. Interest Rates for the Second Calendar Quarter
Interest and penalties run from the day the tax should have been remitted until the day it’s paid. A retroactive audit assessment can cover several years of uncollected tax with interest compounding across the whole period, which is why the classification of every foreign sale and the paper trail behind it matter more than most businesses realize until they’re the ones being assessed.