Self-billing

Also called reverse invoice, self-billed invoice

An arrangement where the customer, such as a merchant of record, issues the invoice for the supplier's sale to it, so the studio does not invoice the MoR itself.

Under a reseller MoR model, the studio sells its items to the MoR. That is a business-to-business sale and needs an invoice, and MoRs produce it for you. Paddle calls its version a “Reverse Invoice”, which “acts as an invoice from you to Paddle” (Paddle). Lemon Squeezy says its reverse invoice “means you don’t need to invoice Lemon Squeezy”.

VAT law allows this only on conditions. In the EU, Article 224 of the VAT Directive requires “a prior agreement between the two parties” and a procedure for accepting each invoice, and Article 226(10a) requires the words “Self-billing” on it. In the UK, VAT Notice 700/62 requires a written agreement in which the supplier agrees not to raise its own VAT invoices for the same supplies, with start and expiry dates.

For the finance team, the self-billed invoices are your sales invoices for VAT and audit. Tie them to the MoR’s transaction export each month. Don’t raise a second invoice for the same sales, or you double-count revenue and output VAT. See MoR accounting.