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I know this is off topic but I'm guessing that a lot of people on this board are using affiliate schemes so it seems a good a place as any ;)
I am trying to set up an affilate scheme. I have got the software to track sales and a couple of affiliates lined up.
My company accountant has now turned round and told me that due to VAT / Customs and Excise reasons all affiliates must send us an invoice every month to claim any money we owe them!
Surely, this can't be true. I can't see the 1000's of Amazon affiliates sending their invoices in for their £25 every month !
Is anybody running a scheme either as an affiliate or a company who can let me know if they've ever heard of this.
But I deal with similar situations here in NZ where we create a "buyer created invoice", ie, we are the client being invoiced and paying the bill, but the invoice is in fact created by us.
I can see that working very well in affiliate siutations, assuming it satisfied the authorities.
Might be worth asking about.
Interestingly we also have to include VAT on that invoice (which is also calculated for us). It makes sense I suppose, but having mostly dealt with US affiliate schemes before it came as a surprise.
I wonder how come Amazon and Tradedoubler get away with it? Maybe something to do with being an american company?
I can understand needing a vat invoice if the affiliate is v.a.t registered but for private individuals it seems ridiculous.
But hey, who am I to argue with the taxman !
I'd say get a second (or third) opinion on this ... I do some promotion for a UK company and they just send the commissions owed, without any hassle at my end here in Canada.
What they told me was that invoices were not necessary to make a claim for expenses etc.
They did however say that one should be able to provide evidence of claimed ammounts being paid out. When asked they agreed that a simple list of payments made which can be cross referenced with bank account cheque payments would suffice.
My own experience of government departments however is that you get a different answer depending on who you speak to. Always you fault of course when you follow the advice of one of their "experts" only to find later that they hadn't got a clue what they were on about. :)
The VAT thing won't apply to transactions across EC boundaries, of course.
Along a similar note, I recently figured out that according to german law, the entity owing the money can demand to get an invoice for their books. In the extreme case, if someone refuses to make me an invoice, then I don't have to pay them!
When I resell software (or components) written by other people, I normally send them a statement about what I have sold at which prices, and then they will in turn send me an invoice about the total sum and VAT. That way no further explanations are required for tax declarations on either side.
In an affiliate set up where everything is automated, I can imagine that it would be ok if the merchant generated the invoice, and sent it to the affiliates "for review". If the affiliate doesn't complain within a reasonable time, you can then assume that they accept that invoice as if they had written it themselves. You could even argue that the affiliate was really generating that invoice by sending referrals to the merchant.
There's no need for the seller or service provider to print out the invoice himself and send it per surface mail. All that is required is that the invoice exists to document the transaction, and that the copies on each side tell the same story. In fact, I send most of my invoices in PDF format, for my customers to print out on their own. The situation in the UK may be slightly different, but I don't expect any fundamental discrepancies.
If the affiliate is a vat registered company then they must send us a vat invoice prior to us sending payment. (I think Amazon already do this)
If the affiliate is a private individual we will pay them without an invoice as long as they do not earn over £500 per year. Over this figure and the affiliate will have to invoice us.
This is basically to cover us against claims of money laundering. Although how this will do it still seems a little suspect. Surely if we wanted to launder money I could just make up fake invoices myself?
Anyway, this clears the way for me to get the thing started. I'll argue about the £500 limit as and when it comes up.
Thanks for all the feedback.