Selfbilling

Self-billing is a value-added tax (VAT) accounting arrangement in which the buyer, rather than the supplier, prepares and issues an invoice to reflect a sale of goods or services on behalf of the supplier. The arrangement generally requires the supplier’s written consent and, in many jurisdictions, approval or rules from the tax authority. Self-billing is used to streamline invoicing, reduce administrative errors, and accelerate payment in high-volume purchasing arrangements.

Under a self-billing agreement, the buyer uses purchase records to generate a VAT-compliant self-billed invoice that documents the supplier’s sale. The supplier reviews and approves the self-billed invoice; once approved, the buyer records output VAT on the self-billed document and the supplier accounts for the corresponding input VAT. Depending on local rules, the supplier may also continue to issue standard invoices for audit completeness.

Key elements of a self-billing arrangement include a written agreement of terms, data standards for invoice content, periods of invoicing, and procedures for amendments or corrections. The agreement should specify termination rights, confidentiality, and audit rights. Compliance considerations include maintaining accurate records, reconciling invoices with payments, and adhering to VAT reporting requirements. Self-billing is more common in industries with high transaction volumes and standardized purchasing, but it is not universally permitted and may be subject to formal approval by tax authorities and by the supplier.