Paying a sole-trader affiliate is not the same as paying a company. Sole traders and small freelance businesses across the EU operate under simplified tax regimes that affect invoicing, VAT, and your record-keeping obligations as a merchant. Getting this right protects your deductible expenses and establishes that the relationship is genuinely commercial — not disguised employment.
This guide is written from the merchant's perspective. For background on how affiliates are classified legally, see affiliate legal status in the EU: independent contractor or employee?.
The Non-Negotiable First Step: Require an Invoice
Before processing any commission payment, you must hold a valid invoice issued by the affiliate. This is not optional.
A valid invoice is what allows you to deduct the commission as a business expense. Without it, the payment is either undeductible or, in a worst case, a flag for undeclared work under national labor authority rules. A pattern of uninvoiced payments to the same individual is exactly what an URSSAF audit (France) or an equivalent national labor authority check will scrutinize.
The rule is simple: no invoice, no payment.
What a compliant sole-trader invoice must include
While invoice requirements vary slightly by country, a compliant EU sole-trader invoice generally must contain:
- Full name and business address of the affiliate
- Registration number (SIRET in France, Handelsregisternummer in Germany, KvK in the Netherlands, etc.)
- Invoice date and sequential invoice number
- Description of service: "Affiliate commission — [period or campaign name]"
- Net amount (before VAT, if applicable)
- VAT status: either a VAT number with the amount charged, or a statement that VAT is not applicable under the affiliate's national threshold exemption
- Total amount due
- Bank details (IBAN and BIC)
Sole traders can cross the national VAT registration threshold during the year. Once they do, they are required to charge VAT on subsequent invoices. If an affiliate you have been paying without VAT suddenly starts charging it, verify their VAT number via the EU VIES system (ec.europa.eu/taxation_customs/vies/) before processing the invoice. An invalid VAT number on an invoice you accepted creates a problem in your own VAT returns.
VAT for Sole-Trader Affiliates: The Two Scenarios
Scenario 1: Affiliate below the national VAT threshold
Most small affiliates — especially those just starting out — fall below the VAT registration threshold in their country. These thresholds vary by member state and are updated periodically; always verify the current figure with the relevant national tax authority.
When an affiliate is below the threshold:
- They do not charge VAT
- Their invoice shows the net amount only, with a note that VAT is not applicable under the national small business exemption
- In France, the specific statutory reference is "TVA non applicable, art. 293 B du CGI" — this exact wording is required on French auto-entrepreneur invoices
- You pay the net amount on the invoice, with no VAT to recover or report
This is administratively straightforward for the merchant. The affiliate handles their own tax declarations independently.
Scenario 2: Affiliate above the VAT threshold or voluntarily registered
When an affiliate is VAT-registered (either because they exceeded the threshold or registered voluntarily):
If the affiliate is in the same EU member state as you: standard domestic VAT rules apply. The affiliate charges VAT at the applicable rate, you pay the total amount and recover the input VAT in your regular VAT return.
If the affiliate is in a different EU member state: this is where the reverse-charge mechanism applies for B2B services. The affiliate invoices you net of VAT and includes your VAT number on the invoice. You self-assess the VAT in your own country — you declare it as both output and input VAT in your return, which nets to zero for a standard deductible expense. The affiliate must verify your VAT number via VIES before issuing the invoice.
The reverse-charge mechanism is standard for B2B services across EU borders and applies to the vast majority of affiliate commissions paid from an EU merchant to an EU affiliate in another member state. A detailed breakdown is in the VAT on affiliate commissions in the EU guide.
Social Contributions: Not Your Responsibility
A common source of confusion: as a merchant paying an independent affiliate, you do not withhold or pay social contributions on commission payments. This is the affiliate's responsibility under their self-employment registration.
Sole traders across the EU declare their income and pay social contributions according to their national regime:
- France: auto-entrepreneurs declare turnover to URSSAF monthly or quarterly and pay social charges as a percentage of turnover
- Germany: Freiberufler pay into the Künstlersozialkasse (KSK) if applicable, or handle pension and health insurance privately
- Netherlands: ZZP workers handle their own social insurance independently
- Spain: autónomos pay a monthly flat contribution to the Seguridad Social
Your obligations as a merchant are:
- Pay the amount on the invoice
- Keep the invoice in your accounts
You do not retain any amount, file any contribution report on the affiliate's behalf, or withhold income tax. The moment you start withholding amounts from commission payments, you are behaving like an employer — which is precisely the signal a misclassification review looks for.
Platform reporting obligations (such as DAC7) are a separate matter and apply to qualifying digital platforms, not to merchants paying affiliates directly. See DAC7 and affiliate platforms for the distinction.
Providing an Invoice Template to Your Affiliates
The most reliable way to receive correct invoices is to give affiliates a compliant template. Many sole traders, especially new ones, are uncertain about the exact required elements — particularly the VAT exemption wording.
The affiliate invoice template in RefCampaign's resources is pre-filled with the mandatory elements for sole traders and freelancers, including the correct VAT exemption statements for France and generic EU variants.
Note that commission statement exports from an affiliate platform (showing commissions earned in a period) are not invoices. They are a useful reference for the affiliate to prepare their invoice, but they do not substitute for the affiliate's own invoice in your accounts.
Payment Methods
SEPA credit transfer
For affiliates in France and the eurozone, the SEPA credit transfer is the most cost-effective option:
- Low cost: typically €0.20–0.50 per transfer depending on your bank
- Settlement in one business day
- Full audit trail via bank statements
- No cost to the affiliate on receipt
You need the affiliate's IBAN and BIC, which should appear on their invoice. SEPA reaches 36 countries, including all EU member states plus several non-EU countries (Switzerland, Norway, Iceland, UK, and others).
Stripe
For programs that automate payouts, Stripe Payouts (via Stripe Connect for marketplace-style flows, or standard bank transfer for direct payouts) handles commission disbursements at scale. Affiliates complete a KYC onboarding step (identity verification, IBAN). Once onboarded, payouts are automated per commission cycle.
Stripe generates individual payout records, which simplify reconciliation and provide the payment-side documentation you need alongside the affiliate's invoice.
Payment schedule and minimum thresholds
The payment schedule should be defined in the affiliate agreement. Standard approaches for B2B SaaS programs:
- Net-30: payment 30 days after the end of the commission validation month. This window covers potential refund reversals under a standard 14 or 30-day refund policy.
- Minimum payout threshold: a floor of €50–100 avoids processing micro-transfers. State this clearly in the affiliate agreement — affiliates need to know when to expect payment.
For a full discussion of payment timing and methods, see how to pay affiliates in a SaaS program.
Record-Keeping Requirements
As a merchant, you must retain the following documentation for each affiliate commission payment:
- The original invoice issued by the affiliate (PDF with date, amount, registration number, VAT treatment)
- Payment confirmation (bank transfer confirmation or Stripe payout record)
- The affiliate agreement (signed or electronically accepted)
Retention periods vary by member state, but a minimum of 10 years is required in France (Article L. 123-22 of the Code de commerce) and similar periods apply in Germany (10 years for accounting records under § 147 AO) and the Netherlands (7 years). Structure your archiving accordingly if you operate in multiple jurisdictions.
Never pay a commission without a corresponding invoice, even if the affiliate asks for an exception. A payment without an invoice cannot be recorded as a deductible expense and may constitute evidence of undeclared work in a labor or tax audit. The inconvenience of chasing an invoice is significantly smaller than the cost of a compliance failure.
Summary: Merchant Compliance Checklist
| Step | Obligation | Risk if omitted |
|---|---|---|
| Before payment | Obtain a valid invoice with registration number | Non-deductible expense, undeclared work risk |
| VAT check | Verify VAT status: exempt note or valid VAT number | VAT anomaly in your returns |
| Cross-border payment | Apply reverse-charge for EU affiliate in another member state | VAT reporting error |
| Payment | Transfer the net invoice amount without withholding | Payroll compliance trigger if withholding occurs |
| Record-keeping | Archive invoice + payment proof + affiliate agreement | Audit exposure over the legal retention period |
Further Reading
- How to pay affiliates in a SaaS program
- Affiliate program compliance: FTC, GDPR, and DAC7
- Affiliate legal status in the EU: independent contractor or employee?
- VAT on affiliate commissions in the EU
- Affiliate invoice template
- DAC7 and affiliate platforms
How RefCampaign Helps
RefCampaign processes affiliate payouts through Stripe with native SEPA support for eurozone affiliates. Commission payments are conditional on invoice validation, which enforces the merchant's first compliance obligation automatically. All data is hosted in Europe, in line with GDPR requirements.