What is a buyer-created invoice (self-billing) and when is it permitted?
A buyer-created invoice (also called self-billing or self-billed invoice) is a VAT invoice issued by the buyer on behalf of the supplier, rather than the supplier issuing the invoice. Self-billing is permitted in most EU jurisdictions and in the UK where specific conditions are met: both parties agree in writing, the supplier agrees not to issue their own invoice, and the self-billing invoice meets all mandatory VAT invoice content requirements.
What are the requirements for a valid self-billing arrangement?
Self-billing requirements: (1) Written agreement between buyer and supplier before the first self-billing invoice is issued; (2) Agreement must state that the supplier will not issue VAT invoices for supplies covered by the arrangement; (3) Each self-billing invoice must clearly state 'self-billing invoice' or 'invoice raised by buyer'; (4) The invoice must meet all mandatory VAT invoice content requirements; (5) The supplier's VAT number must appear on the invoice; (6) Acceptance by the supplier of each self-billed invoice (deemed acceptance unless disputed within a defined period). The buyer is responsible for the VAT compliance of self-billed invoices.
Frequently Asked Questions
- What industries commonly use self-billing?
- Self-billing is common in: (1) Publishing and media (royalties and content licensing, where the buyer calculates the amount owed); (2) Agriculture (processors and retailers create invoices for goods purchased from farmers); (3) Recruitment (umbrella companies and agencies billing on behalf of contractors); (4) Insurance (insurers creating invoices for claims settlements); (5) Digital marketplaces (platforms creating remittance invoices for seller payments). Self-billing is used where the buyer has better information on the price (e.g., commodity prices, royalty calculations) or where the supplier cannot easily generate invoices.
- Can self-billing be used for e-invoicing under a mandate?
- Yes, self-billing can be used within e-invoicing mandates provided the arrangement meets the mandate's legal and technical requirements. For example, under Italy's SDI mandate, a buyer may issue a self-billing document (autofattura) on behalf of a foreign supplier not registered in Italy. Under ZATCA in Saudi Arabia, self-billing arrangements must meet ZATCA requirements for the relevant invoice type. The e-invoice format (XML) must be generated by the buyer and submitted through the required channel.