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Glossary
Self Billing
Self billing is an arrangement where a customer issues the invoice for goods or services a supplier provided, built from the customer's own purchase and receipt records, under a prior agreement with the supplier. Procurement teams also use the related term evaluated receipt settlement (ERS). It isn't self-serve billing, and it has nothing to do with a customer portal.
Key Takeaways
Self billing changes who writes the invoice, and under HMRC's notice the VAT shown on it is the supplier's output tax.
Article 224 of the EU VAT Directive allows it only with a prior agreement and a procedure for the supplier to accept each invoice.
The invoice must say "Self-billing" under EU law, "SELF-BILLING" under UK rules, and "Gutschrift" in Germany.
Whether a marketplace self-bills depends on its model: a classic agency marketplace doesn't because the platform buys nothing, while platforms that buy from sellers or pay commissions can.
What do the VAT rules require before a customer can self-bill?
The supplier has to agree in advance and accept every invoice, and the customer has to keep the evidence. The table pairs each condition with its source and the party who carries it.
Condition | Source | Responsible |
|---|---|---|
Agreement exists before the first invoice, in writing in the UK | Directive Art. 224; HMRC Notice 700/62 para 3.1; UStG s.14(2) | Both parties |
Supplier accepts each invoice, explicitly or by processing it or taking payment | Art. 224; Commission explanatory notes B-4 | Supplier |
Supplier stops issuing its own invoices for covered supplies | Notice 700/62 paras 3.1, 6.3 | Supplier |
Invoice carries the self-billing mention | Art. 226(10a); Notice 700/62 para 4.2; UStG s.14(4) no. 10 | Customer |
Customer self-bills only VAT-registered suppliers, and the supplier reports registration changes at once (UK) | Notice 700/62 paras 4.1, 6.3 | Both parties |
Customer keeps a list of suppliers with names, addresses and VAT numbers, plus agreement copies (UK) | Notice 700/62 paras 4.1, 4.4 | Customer |
Corrections go on a debit note, not a reduced later invoice (UK) | Notice 700/62 para 4.5 | Customer |
Which fields does a self-billed invoice carry?
A self-billed invoice carries the fields a normal VAT invoice does, plus the self-billing mark, with the supplier named as the seller. The sample below shows the main fields from HMRC's UK list (VAT Notice 700, para 16.3) with illustrative values.
Field | Sample value |
|---|---|
Mark | SELF-BILLING |
Invoice number | SB-2026-000187 (sequential) |
Issue date / tax point | 2026-10-03 / 2026-09-30 |
Supplier | Name, address, VAT number |
Description, quantity, unit price | Valve kits, 1,200 at £4.50 |
Net amount | 1,200 x £4.50 = £5,400.00 |
VAT at 20% | £1,080.00 |
Gross total | £6,480.00 |
HMRC-advised statement | "The VAT shown is your output tax due to HMRC" |
Each priced row works like any other invoice line item, numbered from the customer's own series.
Do self-billing rules differ by country?
Yes, the EU sets a baseline and member states and the UK add their own conditions. The sourced differences:
EU baseline: the two parties set the agreement terms and the acceptance procedure. Member states can't prescribe the agreement type, but may require issue in the supplier's name and on its behalf.
UK: HMRC needs no authorization, requires the written agreement above, and advises reviewing it every 12 months.
Germany: the customer-issued document is a "Gutschrift", and only a business or legal-person customer can issue one. It stops counting as an invoice once the supplier objects. Despite the name, it's the invoice itself, not a credit memo refunding anything.
An e-invoicing mandate can add a structured electronic format on top of these conditions.
Where does self-billing show up in platform and SaaS billing?
It shows up when a platform pays a seller, creator or partner based on data only the platform holds. The common cases:
Agency marketplace: the seller invoices the buyer and the platform invoices its commission to the seller, so nobody self-bills because the platform buys nothing.
Platform buys from the seller: one-creditor setups, dropshipping, and the first leg where the law treats the platform as the supplier.
Commission and performance payouts: commission models and platform operators are typical uses of the German Gutschrift.
A payout summary isn't a tax document. A merchant of record selling in its own name is a different arrangement. For balances, see statement of account.
Related terms
Self-billed documents sit among several invoice types, and these pages cover the neighbors.
E-invoicing mandate covers when a self-billed invoice must also be a structured electronic file.
Multi-entity invoicing explains issuing from several legal entities, each with its own numbering series.
Invoice line item defines the rows a self-billed invoice prices.
Credit memo covers refunds, which the German "credit note" label is not.
Debit memo is the UK correction route for a self-billed invoice.
Merchant of record covers platforms that sell in their own name.
FAQ
Is self billing the same as evaluated receipt settlement?
Not always, because sources use the terms differently. Some treat the two as one procedure, where a weekly run turns goods received into a self-billing invoice. Others reserve ERS for payment based on the purchase order and goods receipt, with no invoice document at all.
Who pays the VAT on a self-billed invoice?
Under HMRC's notice, the VAT shown on a self-billed invoice is the supplier's output tax. HMRC advises adding the sentence "The VAT shown is your output tax due to HMRC". Without a compliant self-billed invoice, HMRC says the document won't evidence the customer's right to deduct input tax.
Can a supplier refuse self billing?
Yes, a supplier can refuse. HMRC won't insist on it, though a customer may make self billing a condition of doing business. In Germany, a supplier who objects to a received document strips its effect as an invoice.
What happens if a customer breaks the self-billing rules?
The documents stop being proper invoices. HMRC says they won't evidence the customer's right to deduct input tax, and the supplier has to issue its own invoices. HMRC covers this consequence in para 4.6 of Notice 700/62.
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