In most cases, you do not charge GST or HST to foreign clients in Canada, because sales of goods, services, and digital products to non-residents are usually “zero-rated” under the Excise Tax Act. Zero-rated means you apply a 0% tax rate on the invoice but still get to claim input tax credits on the GST/HST you paid for related business expenses. The catch is that zero-rating only applies when specific conditions are met, and the burden of proving those conditions sits with you. Get it wrong, and the Canada Revenue Agency will come after you for the full tax that should have been collected, plus interest and penalties.1Canada Revenue Agency. Penalties and Interest
The standard GST rate is 5%, and HST rates in participating provinces range from 13% to 15%, so correctly applying zero-rating has a real effect on what you charge and what you keep.2Canada Revenue Agency. Charge and Collect the GST/HST Whether a given sale qualifies depends on what you’re selling, who the client is, and where the service is consumed or the goods are delivered.
Zero-Rated Is Not the Same as Exempt
Both zero-rated and exempt sales mean you collect no tax from the customer. The difference is on your side of the ledger. With a zero-rated sale, you can still claim input tax credits to recover the GST/HST you paid on business inputs tied to that sale. With an exempt sale, you cannot. For an exporter, that distinction decides whether you recover the tax paid on your software subscriptions, office expenses, and professional fees, or absorb it as a cost.
Selling Services to Foreign Clients
Services sold to non-residents are where most Canadian businesses get tripped up, because the rules split into two tracks depending on the type of service.
Consulting, Advisory, and Professional Services
If you provide consulting, advisory, or professional services to a non-resident client who is not registered for GST/HST in Canada, the supply is zero-rated, provided it does not relate to Canadian real property or tangible property located in Canada.3Canada Revenue Agency. Exports – Services and Intangible Personal Property This covers the scenario most freelancers are asking about: a Canadian web developer, marketing consultant, or accountant invoicing a client in the United States or Europe for remote work.
The critical condition is that the non-resident must not be registered for GST/HST under the regular registration provisions. If your foreign client happens to hold a Canadian GST/HST registration number, the zero-rating does not apply. Confirm the client’s registration status, not just their mailing address.
Other Services
For services that are not advisory, consulting, or professional in nature, a separate general zero-rating provision applies. It covers a narrower range because it excludes postal services, transportation services, agency services, and telecommunications.4Department of Justice Canada. Excise Tax Act – Schedule VI, Part V If your service does not fall into any of those excluded categories and the recipient is a non-resident, it can be zero-rated.
Selling Physical Goods to Foreign Clients
Physical goods shipped from Canada to a foreign client qualify for zero-rating when the supplier ships the property to a destination outside Canada, or when the recipient exports the goods as soon as reasonably possible after taking delivery.4Department of Justice Canada. Excise Tax Act – Schedule VI, Part V
When your foreign client is a business and you are relying on them to export the goods, the Excise Tax Act adds several conditions. The recipient must intend to export the property, must not acquire it for use in Canada before exporting it, and the goods cannot be further processed or altered in Canada beyond what’s needed for transportation. You must also maintain evidence that satisfies the CRA that the export actually happened.
The cleanest path is shipping goods directly to a foreign address through a carrier. Problems arise with in-person pickup at a Canadian location. If the buyer is a consumer, this specific zero-rating provision does not apply at all, because the statute excludes consumers. You charge the full GST/HST applicable to your province. If the buyer is a non-resident business and the goods are exported promptly without being used in Canada first, zero-rating can still apply, but proving that to an auditor is harder when you handed goods over at a Canadian warehouse. A foreign investor who buys specialized equipment and uses it for a week at a Canadian job site before exporting it would not qualify, because the goods were consumed in Canada before export.
Selling Digital Products and Intangible Property
Digital products and other intangible property sold to non-residents who are not registered for GST/HST in Canada are zero-rated under a dedicated provision, as long as the supply doesn’t fall into an exception.3Canada Revenue Agency. Exports – Services and Intangible Personal Property Eligible supplies include website subscriptions providing access to databases or content, downloadable e-books and music, and digitized information delivered electronically on a subscription basis.
Zero-rating does not apply when:
- The recipient is an individual physically in Canada when the supply is made.
- The property relates to Canadian real estate or to tangible property ordinarily located in Canada.
- The property’s use is restricted to Canada.
Intellectual property like patents, trademarks, copyrights, and trade secrets sold to non-residents also qualifies for zero-rating under a separate provision. A Canadian software company licensing proprietary technology to a foreign corporation can zero-rate the license fee, provided the licensee is not registered for GST/HST in Canada and the IP is not restricted to Canadian use.
When You Still Have to Charge GST/HST
Even when your client is clearly a non-resident, several exceptions override zero-rating and make the sale fully taxable. These are based on where the service is consumed or what it relates to, not who the buyer is.
Anything Tied to Canadian Real Property
Any service connected to real property located in Canada is excluded from zero-rating, regardless of where the client lives or whether they’ve ever set foot in the country.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 handle a rental in Vancouver, pays the applicable GST/HST. Appraisals, repairs, legal services for buying or leasing Canadian real estate, and property management all fall squarely within this exception.
Services to Individuals Physically in Canada
A service made to a non-resident individual who is in Canada at the time they have contact with the supplier, or who is physically in Canada while the service is being performed, is not zero-rated. If a U.S. resident flies to Toronto and receives an in-person session from a Canadian business coach, the coach charges HST. The CRA gives personal care and entertainment services rendered to an individual in Canada as a clear example of a sale that cannot be zero-rated. This exception applies to individuals, not to corporations or other business entities.
Services on Goods Located in Canada
Services performed on tangible property in Canada are generally taxable, but there is a narrow zero-rating path for work on goods that are ordinarily located outside Canada, were temporarily imported solely to receive the service, and are exported as soon as practicable after the work is done. A non-resident shipping company that sends a damaged trailer to a Canadian repair shop and exports it once repairs are complete can receive zero-rated repair services. If the goods are not exported promptly, or were already in Canada for reasons unrelated to the service, zero-rating does not apply.6Canada Revenue Agency. GST/HST on Imports and Exports
Do You Even Need to Be Registered?
Before any of this applies, you need to be registered for GST/HST. Registration is mandatory once your total worldwide taxable revenue exceeds $30,000 CAD over four consecutive calendar quarters, or in a single calendar quarter.7Government of Canada. Canada Revenue Agency – Small Suppliers Below that threshold, you are a “small supplier” and are not required to register or charge GST/HST on any sales.8Canada Revenue Agency. When to Register for and Start Charging the GST/HST
If your sales fall below the threshold and your clients are mostly overseas, voluntary registration is often still worthwhile. Once registered, you can claim input tax credits to recover the GST/HST you pay on business expenses.9Canada Revenue Agency. Register Voluntarily for a GST/HST Account Because your foreign sales are zero-rated, you collect no tax but still get the recovery. That math tends to favour businesses whose revenue is overwhelmingly export sales.
Converting Foreign Currency for Reporting
When a foreign client pays in a currency other than Canadian dollars, you convert the amount to CAD for GST/HST reporting. The default rule uses the exchange rate on the day the GST/HST 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 the payment is received, the day you acquired the foreign currency, or a monthly average rate for the month the tax becomes payable. Whichever method you choose, use it consistently for at least one year. If the conversion date falls on a weekend or holiday, use the previous business day’s rate.
Documentation to Support a Zero-Rated Sale
In a CRA audit, inadequate documentation lets the auditor assess you for the full GST/HST that should have been collected, with interest and penalties. “I was told the client was foreign” is not a defence.
For exported goods, keep evidence that the goods actually left Canada and that links clearly to the sale invoice: commercial invoices, bills of lading, freight forwarder receipts, and customs declarations.11Canada Revenue Agency. Exports – Tangible Personal Property For exports to the United States, goods valued at less than $2,000 CAD and non-restricted goods may not require a formal export declaration, but you still need records proving the goods left Canada.12Canada Border Services Agency. Exporters’ Guide to Reporting
For exported services, your records must establish two things: that the client is a non-resident, and that the service does not fall into a taxable exception. Keep contracts or invoices showing the client’s foreign address, and confirm whether the client holds a Canadian GST/HST registration number. If your service could plausibly relate to Canadian real property or tangible property in Canada, document why it does not.
All GST/HST records must be kept for a minimum of six years from the end of the last tax year they relate to.13Canada Revenue Agency. Where to Keep Your Records
What It Costs If You Get It Wrong
If you fail to collect GST/HST when you should have, the CRA does not pursue your client. It pursues you. You become liable for the full amount that should have been collected, a penalty of 6% per year on the unpaid amount, and interest at the prescribed rate.1Canada Revenue Agency. Penalties and Interest For Q2 2026, the prescribed interest rate on overdue GST/HST amounts is 7%.14Canada Revenue Agency. Interest Rates for the Second Calendar Quarter
Those charges compound from the day the tax should have been remitted until the day it’s paid. A CRA audit can produce a retroactive assessment covering years of uncollected tax, with interest running the entire time. Classifying each sale correctly and keeping the records that support it is cheaper than defending the opposite position later.