Complete guide to GST/HST compliance for digital products and services. Covers the simplified registration regime for non-resident vendors, B2C and B2B place-of-supply rules, and CRA reporting obligations.
0-27%
GST/HST Rate Range
Canadian
Mandatory CRA Registration
B2C/B2B
Different Rules
IP
Track Needed
Digital services are services supplied over the internet or electronically. These attract different GST/HST rules than physical goods. CRA treats digital services as place-of-supply services, meaning the location of the customer determines where GST/HST is due.
Since 1 July 2021, non-resident vendors and digital platform operators that supply taxable digital products or services to Canadian consumers must register for GST/HST under a streamlined CRA regime once their 12-month sales to Canadian consumers exceed CA$30,000.
Register through the CRA's online portal (search for "GST/HST for digital economy businesses"). You'll need your business details, identifying number from your home country, and an estimate of Canadian sales. Registration is free and confirmation is usually issued within a few business days. If you want to claim input tax credits, register for the standard GST/HST regime instead via Form RC1.
GST/HST Rate Applied
Customer's country rate (0%-27%)
Place of Supply
Where the customer is established
Evidence Needed
IP address, billing address, payment method, SIM registration
Example
Selling a software license to a German consumer requires German GST/HST (19%)
GST/HST Rate Applied
Supplier's country rate (usually 5% in Canada)
Place of Supply
Where the supplier is established
Evidence Needed
Valid Business Number (BN), business documentation
Example
Selling SaaS to a French company with Business Number (BN) = 5% Canadian GST/HST applies
Key Difference: B2B sales follow the supplier's country rules; B2C follows the customer's country rules. Always verify the customer's GST/HST status and location.
| Country | Standard Rate | Reduced Rate | Super Reduced |
|---|---|---|---|
| UK | 5% | 5% | 0% |
| Germany | 19% | 7% | 0% |
| France | 5% | 10% | 5.5% |
| Italy | 22% | 10% | 4% |
| Spain | 21% | 10% | 4% |
| Netherlands | 21% | 9% | 0% |
| Poland | 23% | 8% | 5% |
| Hungary | 27% | 18% | 5% |
Note: Rates shown are for digital services. Some countries offer reduced rates for digital books or publications. Always check the latest rates with local tax authorities.
Proper record-keeping is essential for digital service GST/HST compliance. You must maintain evidence of the customer's location and the GST/HST rate applied.
Retention Period: Keep all records for at least 6 years. CRA may request documentation during audits to verify GST/HST calculations and customer locations.
Are you a Canadian resident or non-resident? Do you sell to Canadian consumers (B2C) or businesses (B2B)? Have you crossed CA$30,000 in 12 months? These answers determine whether simplified or standard GST/HST registration applies.
Register in an Canadian province through your chosen tax authority. You'll provide business information and select your reporting member state.
Implement systems to capture and verify customer location (IP address, billing address, payment method). Configure your invoicing software accordingly.
File quarterly simplified GST/HST returns showing total Canadian taxable supplies. Apply the customer's provincial GST/HST rate and remit the net tax electronically through the CRA portal.
Pay GST/HST calculated across all countries. Payment is made to the reporting member state. Keep records of all payments and correspondence.
No. The simplified GST/HST regime trades input tax credits for a lighter compliance burden. If your business has significant Canadian costs — hosting, contractors, marketing — consider registering under the standard regime via Form RC1 instead so you can recover input tax.
Apply the hierarchy: billing address > IP address > payment method. If multiple sources conflict, document your decision and the evidence used. This is important for audit purposes.
If you can't determine customer location despite reasonable efforts, you may apply your own country's GST/HST rate (5% in Canada). Document your evidence-gathering attempt.
Simplified GST/HST returns are filed quarterly online through the CRA portal for digital economy businesses. You report total Canadian taxable supplies and GST/HST collected, broken down by province. Payments can be made in CAD or USD.
If you're a Canadian-resident business selling only to Canadian customers, you use standard GST/HST rules: 5% federal GST plus any provincial HST or PST applicable to the customer's location. Register via Form RC1 and file through CRA My Business Account.
Explore our guides on GST/HST-exempt items, reverse charge rules, and digital service compliance.
Official sources: CRA: GST/HST for businesses