On Behalf Of
What is it
A declaration that the invoice is issued by an agent or representative for another entity. It specifies the principal party who is the actual supplier.
When is it required
When acting as an intermediary, agent, or billing partner. For example, a marketplace billing a customer for a vendor.
Agent vs Principal
| Role | Description | VAT Responsibility |
|---|---|---|
| Disclosed Agent | Act in name of Principal. Invoice shows Agent "on behalf of" Principal. | Principal accounts for VAT on sale. Agent only VAT on commission. |
| Undisclosed Agent | Act in own name. Invoice looks like it's from Agent. | Agent accounts for VAT on sale (buy/sell model). |
Self-billing rules
If a customer (e.g. a large retailer) issues invoices on behalf of the supplier (Self-billing), there must be a formal written agreement in place beforehand. The supplier agrees not to issue their own invoices to avoid duplication.
Common pitfalls
- Failing to disclose the agency relationship. This can make the agent liable for the principal's taxes.
- Listing the agent's details as the principal supplier. This confuses the tax liability.
- Confusing the end-customer about who they are paying. Transparency is key to trust.
Common mistakes when filling the field
- Omitting the principal's legal name and address.
- Not stating "On Behalf Of" clearly.
- Using the agent's tax ID instead of the principal's.
Why is it there
It ensures legal transparency and correct tax attribution. It protects the agent from liabilities that belong to the principal. It complies with 'undisclosed agent' rules.