Buyer-Created (Recipient-Created) Tax Invoices and Self-Billing: Rules by Country

The rules side by side

New Zealand: buyer-created taxable supply information

"Where both parties agree, any GST registered buyer purchasing from a GST registered seller can provide buyer-created taxable supply information. You do not need our approval."

IRD's rules, quoted:

• Buyer-created taxable supply information must show: "standard taxable supply information", "the buyer and seller's GST numbers" and "GST added to the gross supply of goods or services".
• It can only be used if the buyer and the seller: "are GST-registered", "agree only the buyer will provide the taxable supply information", "record the reasons for agreeing to buyer-created taxable supply information (if the agreement is not part of the normal terms of business between the buyer and seller)" and "keep a copy of the taxable supply information".
• IRD "may invalidate the agreement before a supply" if the parties have not complied with it, or have not recorded the reasons where it is not part of their normal terms of business.
• "Any buyer-created tax invoice arrangement approved by Inland Revenue before 1 April 2023 can continue to be used as taxable supply information after this date."

Why the name changed: "New laws, which took effect on 1 April 2023, replaced the requirement to use tax invoices with a more general requirement to provide and keep certain records known as taxable supply information" (IRD, Taxable supply information for GST).

Australia: recipient-created tax invoices (RCTI)

The ATO lists four conditions. You can issue an RCTI if:

• "you and the supplier are both registered for GST at the time the RCTI is issued"
• "you and the supplier agree in writing that you may issue an RCTI and they will not issue a tax invoice"
• "the agreement is current and effective when you issue the RCTI"
• "the Commissioner has determined that the type of goods or services sold under the agreement can be invoiced using an RCTI"

"To be valid, an RCTI must contain enough information to clearly determine the requirements of tax invoices and show the document is intended to be a recipient-created tax invoice, not a standard tax invoice. It must also show the suppliers and purchaser's ABN. If GST is payable, it must also show that it's payable by the supplier."

Who is in a determined class

The current instrument is the A New Tax System (Goods and Services Tax): Recipient Created Tax Invoice Determination 2023. Section 6 allows two kinds of recipient: "A government related entity or a large business entity that is the recipient of a taxable supply", and "A business entity that is the recipient of a taxable supply" where "the recipient determines the value of the taxable supply acquired from the supplier". In both cases the recipient and the supplier must be registered for GST when the RCTI is issued.

What the recipient must do (section 7)

• Issue the RCTI "to the supplier within 28 days from when: (i) the taxable supply is made by the supplier; or (ii) the value of the taxable supply is determined by the recipient".
• "retain the original RCTI or a copy of it for five years".
• Have a written agreement that meets section 8, or one embedded in the RCTI that meets section 9.

What the written agreement must contain (section 8)

It must "specify the taxable supplies to which it relates", "be current when an RCTI is issued", contain acknowledgments that each party is registered for GST, and include conditions that the recipient can issue RCTIs, that the supplier "will not issue tax invoices in respect of the supplies", and that each party will notify the other if it ceases to be registered for GST.

An RCTI is not a fix for a supplier who has not sent a tax invoice. The supplier must provide a tax invoice within 28 days of a request, "unless it is for a sale of $82.50 (including GST) or less" (ATO).

UK: self-billing (VAT Notice 700/62)

HMRC: "Self-billing is a commercial arrangement between a supplier and a customer in which the customer prepares the supplier's invoice and forwards a copy to the supplier with the payment." And: "You do not need to seek HMRC authorisation to operate self-billing."

The agreement (paragraph 3.1)

"The agreement must be in place before self-billing commences." VAT regulations say a valid self-billing agreement must:

• "include the supplier's agreement to the self-biller raising invoices for their (the self-billee's) supplies"
• "specify that the supplier agrees not to raise VAT invoices for supplies covered by the agreement"
• "specify that the supplier will accept each self-billed invoice created by the customer for supplies made to them by the supplier"
• "contain a start date and expiry date, though the expiry date can be related to the term of any contract between the supplier and customer"
• "bind both you and your supplier — this means it should be in writing, either on paper or in electronic form"
• "be produced if you are asked to produce it by one of our visiting officers"
• include the supplier's agreement to tell the self-biller "if they cease to be registered, transfer business as a going concern or become registered under another VAT number"
• "make it clear if you intend to outsource responsibility for issuing the self-bills to a third party, such as an accounting bureau"

HMRC adds: "It is advisable to carry out a review every 12 months." An example agreement is at section 8 of the notice.

What each self-billed invoice must contain (paragraph 4.2)

"The invoices must contain all the data elements listed in paragraph 16.3 VAT guide (VAT Notice 700). The following sentence has the force of law. You must clearly mark each self-billed invoice you raise with the reference: 'SELF-BILLING'."

HMRC also advises this statement on each self-billed invoice: "The VAT shown is your output tax due to HMRC". The self-billed invoice shows "the supplier's name, address and VAT registration number" (paragraph 4.1). You must not self-bill "on behalf of suppliers who are not registered, or who have cancelled their VAT registration". Without an agreement, HMRC says, "the self-billed invoices you have issued are not evidence of your entitlement to input tax".

EU: self-billing under the VAT Directive

"Invoices may be drawn up by the customer in respect of the supply to him, by a taxable person, of goods or services, where there is a prior agreement between the two parties and provided that a procedure exists for the acceptance of each invoice by the taxable person supplying the goods or services. Member State may require that such invoices be issued in the name and on behalf of the taxable person."

"(10a) where the customer receiving a supply issues the invoice instead of the supplier, the mention 'Self-billing';"

In the French version the mention is «Autofacturation» (Article 226, point 10 bis). The invoice otherwise needs the normal Article 226 details. Each Member State transposes these rules into national law, so check your country's tax authority for any extra conditions.

Before you self-bill: checklist

1. Confirm your country's rule and term (table above). In Australia, confirm the supply is in a class under the RCTI Determination 2023.
2. Check that both parties are registered (GST or VAT), and keep checking. In Australia and the UK the agreement must provide for notice if a registration ends.
3. Put the agreement in writing before the first document: the supplies covered, that only the buyer issues invoices, and the start and end date (UK) or current status (Australia).
4. Put the required wording on every document: "SELF-BILLING" (UK), "Self-billing" (EU), a clear RCTI statement and both ABNs (Australia), both GST numbers (New Zealand).
5. Give the supplier the document on time: within 28 days in Australia; for EU Art. 138 goods and Art. 196 services by the 15th of the following month.
6. Keep the agreement and a copy of every document (Australia: five years).

Making the document

The simplest route is our blank VAT invoice template, which you can edit in Word or Excel. Change these labels:

• Title "VAT INVOICE": add your country's wording, for example "VAT INVOICE — SELF-BILLING" (UK) or "Self-billing" (EU). In Australia, retitle it so it shows the document is a recipient-created tax invoice.
• "From (seller — incl. VAT number)": this box stays the supplier, because the document is the supplier's invoice. In Australia, show the supplier's ABN; in New Zealand, its GST number.
• "To (buyer — VAT number if B2B)": you, the buyer. Show your own ABN, GST number or VAT number as your country requires.
• Add the UK statement "The VAT shown is your output tax due to HMRC" if you follow HMRC's advice, and send the supplier a copy.

This page explains the rules; it does not certify that a document meets ATO, IRD, HMRC or national EU requirements. Check the finished document against the sources linked above.

Buyer-created tax invoice FAQ