Guide
VAT on affiliate commissions: who invoices whom, and how
An affiliate commission is not a gift: it is the price of a service. It therefore calls for an invoice — and that invoice has a direction, a VAT treatment and a numbering scheme that cannot be improvised.
Updated
The invoice goes from the affiliate to the merchant
This is the first thing people get backwards. The affiliate is not receiving a bonus — they performed a service (bringing customers) and they are paid for it. So the affiliate is the supplier and issues the invoice; the merchant is the customer and receives it.
That direction is not a detail. It decides whose VAT rules apply, whose sequential numbering is used, and which of the two has to keep the document. Get it backwards and both sides have an accounting problem, not a formatting one.
Four situations, four treatments
For a service between businesses, what matters is where each party is established and whether they hold a valid VAT number.
- Same country— the affiliate charges their country's standard VAT rate. A French affiliate invoicing a French merchant adds 20%.
- Two EU countries, both with valid VAT numbers — reverse charge. The affiliate invoices without VAT and states that the customer accounts for it. This is the most common case on a cross-border marketplace.
- Two EU countries, one without a VAT number— no reverse charge is possible; the treatment depends on the affiliate's own status and exemption threshold.
- Merchant outside the EU — the service is outside the scope of EU VAT. The invoice carries no VAT.
Numbering, and why it cannot be rewritten
An invoice number has to be sequential and gap-free for the sequence to mean anything. Each affiliate therefore has their own counter: their first invoice is number 1, the next is 2 — across every merchant they work with, not one sequence per program.
Just as importantly, the details on an issued invoice are frozen. If an affiliate later changes their address or registers a VAT number, invoices already issued keep what was true on the day. An accounting document that changes retroactively is not an accounting document.
What happens automatically
The invoice is not a separate step someone has to remember. The moment a payout is marked as paid — whichever way it was paid, manually, through PayPal or through Stripe — the matching invoice is issued, numbered, and made available as a printable page to both the affiliate and the merchant.
That matters more than it sounds: an affiliate program pays many small amounts to many people, several times a year. Producing those documents by hand is exactly the kind of task that gets skipped until an audit asks for them.
What this does not replace
This page describes a mechanism, not your situation. It is not tax advice, and the invoice engine is explicitly a simplified one — it covers the common B2B cases with standard rates and nothing more.
Anyone whose situation involves reduced rates, an exemption threshold, a rate change, or a country-specific rule should treat each generated invoice as a draft and have an accountant confirm it. Every invoice the platform produces carries that same warning on its face.
Frequently asked questions
Who issues the invoice, the affiliate or the merchant?
The affiliate. They provided a service to the merchant — bringing them customers — and they invoice for it, like any supplier. That is the normal B2B direction, and the one the platform applies.
Do I have to charge VAT on my commissions?
It depends on three things: your country, the merchant's country, and whether you both hold a valid VAT number. Same country, domestic VAT. Two EU countries with valid numbers, reverse charge. Merchant outside the EU, outside the scope. The detail is below, and your accountant remains the authority.
I'm a small business exempt from VAT. What happens?
You invoice without VAT, with the corresponding wording. ⚠ The platform's engine does not know per-country exemption thresholds: if this applies to you, check the wording carried on your invoices and correct it with your accountant if needed.
Are the invoices numbered correctly?
Every affiliate has their own sequence, continuous and without gaps: the first invoice they receive is number 1, the next is 2, whichever merchant it comes from. That is what a legally meaningful numbering scheme requires.
What happens if I change my address or VAT number?
Invoices already issued do not move. The details are frozen at issue time: a profile change never rewrites a document already produced, which is precisely what an invoice must never do.
Are these invoices legally valid?
They carry the expected wording and a sequential numbering, but the engine is deliberately simplified: no reduced rates, no exemption thresholds, no tracking of rate changes. Treat every document as a solid draft to be validated by your accountant, not as the output of certified invoicing software. Every invoice carries that warning.
Invoices generate themselves
Every payout marked as paid issues its invoice, numbered and archived — on both sides of the transaction.