Finance Teams and AP/AR
How do self-billing arrangements work and what compliance requirements apply?
Self-billing is an arrangement where the buyer issues the invoice on behalf of the supplier. The buyer generates the invoice based on agreed quantities and prices and sends it to the supplier. For VAT purposes, the self-billed invoice is treated as if issued by the supplier. Self-billing is common in energy, agriculture, and publishing sectors. Formal agreements and specific invoice notations are required.
What conditions must be met for valid self-billing?
VAT authorities require specific conditions for self-billing arrangements to be valid:
- Prior agreement: A formal written self-billing agreement between buyer and supplier before invoices are issued
- Supplier acceptance: Supplier must agree not to issue their own invoice for the same supply
- Invoice notation: Each self-billed invoice must include the words 'Self-billing' or equivalent in local language
- Series control: Invoice number series must not overlap with supplier's own invoice series
- Supplier notification: Each invoice or periodic batch must be communicated to the supplier
- VAT number: Buyer must include the supplier's VAT number on the self-billed invoice
Frequently Asked Questions
- Can self-billing invoices be transmitted via Peppol?
- Yes, self-billing invoices can be transmitted via Peppol using the standard invoice format with the buyer-issued invoice document type indicator. The buyer acts as the sender and the supplier is the recipient. In Peppol, the invoice document type code for a self-billing invoice is the same as a standard invoice (380), but the self-billing notation in the invoice text is required to identify the arrangement.
- What are the VAT risks of self-billing arrangements?
- The main VAT risk is that if both the buyer and the supplier issue an invoice for the same supply, the tax authority may argue that two invoices exist and VAT is payable twice. The formal self-billing agreement and the supplier's commitment not to issue their own invoice prevent this. If a supplier inadvertently issues an invoice for a self-billed supply, immediate cancellation and coordination with the buyer is necessary.