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Law, tax and regulation

Self-billing

Also called self-billing invoice, self-billed invoice, settlement statement.

Short answer

Self-billing means that the buyer of a service issues the invoice on the seller's behalf. In affiliate marketing, the network creates a self-billed invoice for the affiliate's commission, so the affiliate does not have to send an invoice for every payout.

Definition of Self-billing.

Self-billing reverses the normal invoicing flow. Normally the seller invoices for its service; with self-billing, the buyer – the network or the advertiser – instead issues a document with amount, VAT and reference, and the seller receives the document together with the payment. In Danish, the document is called an afregningsbilag (settlement statement).

Example: a VAT-registered affiliate in Denmark has DKK 1,200 in approved commission. The network issues a self-billed invoice for DKK 1,200 plus DKK 300 in VAT, DKK 1,500 in total, marked as self-billing – and transfers the amount. The affiliate checks the document and books it as their invoice.

Self-billing is practical in affiliate networks because the buyer has the numbers. The commission depends on approved sales in the network's system, and if every affiliate had to invoice themselves, the amounts would first have to be looked up, copied and checked again. A self-billed invoice generated from the approved figures removes both the work and the reconciliation errors.

VAT rules set requirements: self-billing requires an agreement between the parties, the document must meet the ordinary invoice requirements and clearly state that it is self-billing, and VAT must be handled according to both parties' registration. If the network is based in another country, VAT is settled under the reverse charge rules.

How to check a self-billed invoice

Check four things when the document arrives: that the amount matches the approved commissions in the dashboard for the period, that your business details and registration number are correct, that the VAT treatment matches your registration, and that the document is marked as self-billing. If something does not add up, object straight away – corrections are easiest while the period is still open in both parties' books.

Keep the document like any other accounting record. Under the Danish Bookkeeping Act, accounting records must be kept for 5 years from the end of the financial year – that also applies to self-billed invoices you have received digitally from a network.

Self-billing vs. ordinary invoicing

AspectSelf-billingOrdinary invoicing
The document is issued bythe buyer (the network)the seller (the affiliate)
The basisthe network's approved sales figuresthe seller's own calculation
Your task as an affiliatecheck the document and book itissue an invoice with the correct amount and VAT
Typical source of errorerrors go unnoticed because no one checksthe amount does not match the network's figures

If your network uses self-billing, your role changes from invoicing to checking and booking – the network's terms tell you which model applies.

How it goes wrong

  • 01

    The document is not booked

    A self-billed invoice is your accounting record, even though you did not create it. The income must be booked and reported like any other revenue – the document belongs in your accounts, not only in the network's.

  • 02

    VAT status is not updated

    The document is issued from the information the network holds about you. If you become VAT-registered – or deregistered – without updating your details, incorrect documents are issued, which you then have to get corrected.

  • 03

    Foreign network, domestic VAT duties

    If the self-billed invoice comes from a network in another EU country, it is without VAT, because the VAT liability moves to the buyer under the reverse charge rules. You must still report the sale under the VAT rules – a document without VAT does not mean the VAT has gone away.

At Affilyflow

Self-billing in practice

Affilyflow buys the affiliate's marketing service and creates the document: before the first payout, the affiliate accepts a self-billing agreement, and each payout gets a self-billed invoice with a sequential number. If there is an error in the document, the affiliate can object directly on it within 14 days. If you are VAT-registered, VAT is added on top once your VAT number has been confirmed in the EU VAT register VIES.

Frequently asked questions

What is self-billing?

Self-billing is when the buyer of a service issues the invoice instead of the seller. The document must meet the ordinary invoice requirements, be marked as self-billing and be based on an agreement between the parties.

Do I have to send an invoice to the affiliate network myself?

Not when the program uses self-billing. The network instead issues a self-billed invoice for your approved commission when a payout is made. Your task is to check the document and book it in your accounts.

Is a self-billed invoice the same as an invoice?

Yes, for VAT purposes. The document must meet the same content requirements as an invoice – amount, date, the parties' details and VAT treatment – but it is issued by the buyer instead of the seller and must be marked as self-billing.

What if I am not VAT-registered?

Then the self-billed invoice is issued without Danish VAT. In Denmark you must register for VAT once your VAT-liable turnover exceeds DKK 50,000 within a calendar year – and the income is taxable whether or not you are VAT-registered.

Who is responsible if the self-billed invoice is wrong?

You have a duty to check the document and object if the amount or the VAT treatment is wrong. Self-billing moves the practical work to the buyer, but not the responsibility for your own accounts and VAT return being correct.

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