Tax and VAT on cross-border affiliate income: the basics

Affiliate income has a habit of arriving from everywhere at once: commissions in several currencies, from networks established in different countries, landing on irregular dates. That makes the tax and VAT picture feel daunting, and it is genuinely more involved than it is for a single domestic salary.

This guide is general information only. It is not tax or legal advice, and it cannot tell you what applies to your situation, because that depends entirely on where you are established, where each network is established, and how your business is structured. Read it to understand the concepts and the questions to ask — then confirm your actual position with a qualified accountant or tax adviser before you act on anything.

Income arrives cross-border and multi-currency

The first thing to understand is that affiliate income rarely looks like ordinary domestic earnings, and that shape is what makes the tax treatment more involved.

• Multiple currencies. One network pays USD, another EUR, another GBP. For tax purposes income usually has to be recognised in your home currency at an appropriate rate, so the figure your country taxes is not always the figure that hit your account.
• Multiple jurisdictions. Networks established in different countries can change how a payment is characterised and what reporting may apply.
• Irregular timing. Income recognised in one tax period may be paid in another, which matters for when it is taxable.

The practical takeaway is that you almost certainly have a reporting position to get right, and it is specific to your circumstances. Treat the points below as a map of the questions, not as answers for your case, and confirm each one with a qualified adviser.

You usually invoice the network

In most setups, affiliate commission is revenue you earn for a service, and you typically raise an invoice to the network for it. Thinking of yourself as a supplier of marketing services — rather than a recipient of windfalls — tends to make the tax picture clearer.

• Commission is generally service revenue. That framing usually drives both how income tax applies and how VAT or its equivalent may need to be considered.
• Invoices create the paper trail. A consistent invoice per network, in the currency it pays, supports your accounts and any later questions about what your income is and where it came from.
• Network reporting may not match yours. A network's statement is its record, not your accounts. You still need your own invoices and figures recognised on the right basis.

Exactly how to invoice, what to put on each invoice and whether any VAT applies depends on your jurisdiction and the network's — which is, again, a conversation for a qualified adviser rather than a rule you should infer from a guide.

VAT treatment varies — reverse charge and more

VAT (or the equivalent consumption tax where you are) is the area where general guidance is least able to give you an answer, because the treatment depends entirely on where both parties are established and how they are registered.

• Cross-border B2B services are treated specially. In many systems, services supplied to a business in another country are handled differently from a domestic sale, and the place-of-supply rules decide what happens.
• Reverse charge is a concept you may meet. In some cross-border B2B situations, responsibility for accounting for VAT shifts to the customer rather than the supplier. Whether this applies to you is entirely situation-specific.
• Registration thresholds and rules differ. Whether you need to register, and what for, depends on your jurisdiction and your turnover.

Please treat all of this as conceptual vocabulary, not instructions. Reverse charge, place of supply and registration are real ideas worth knowing the names of so you can have an informed conversation — but whether and how any of them apply to your business is a question only a qualified adviser who knows your full circumstances can answer.

Set aside money for tax as you earn

Whatever your eventual position turns out to be, one habit is almost universally sensible: do not treat the full balance that lands in your account as yours to spend. Some of it will likely be owed in tax, and the gap between earning and paying is where many otherwise healthy affiliate businesses get caught.

The practical move is to estimate a reasonable proportion of income to set aside and to separate it from your working capital as it arrives, rather than scrambling at a deadline. Keeping that money apart, in the currency it was earned where helpful, means a tax bill is a transfer rather than a crisis. What proportion to set aside, on what basis, and when it actually falls due are all specific to you — so set aside conservatively and let a qualified adviser confirm the real numbers. Clean records of income and the amounts you have reserved make that conversation, and any filing, far easier.

How Altery fits

Altery's role in tax is indirect, and it is worth being honest about that: Altery does not calculate, file or advise on tax, and nothing here is tax or legal advice. What a multi-currency business account can do is make the surrounding admin cleaner. You can receive commissions from foreign networks and hold balances in USD, EUR and GBP, so income lands and stays in the currency it was earned in, and you convert on your own timeline rather than at whatever rate happens to apply when money arrives — which keeps your records tidy when figures eventually need recognising in your home currency.

Ring-fenced reserves let you set aside an estimated proportion for tax as a visible balance distinct from spendable funds, so the money you may owe is not money you accidentally spend. Clean, referenced transaction records support your own invoicing and bookkeeping, mass payouts and business cards run your outgoing spend from the same account, and multi-entity management keeps separate companies cleanly apart. Altery is not a bank, and this is general information rather than advice. Use it to keep good records and to hold tax money aside — but always confirm what you actually owe, where, and how to treat VAT with a qualified accountant or tax adviser who knows your full circumstances.

Frequently asked questions