Self-Invoice for Foreign Vendor

Self-invoice is an invoice that the company itself issues internally and is the one that reports the transaction to the tax authorities, both VAT on purchase, VAT on sales & payment (form 102).

According to the Israeli Tax Authority, a self-invoice to overseas vendors should be used as follows.

During the month, bills from foreign vendors will be entered and paid normally. Once a month, the company issues a self-invoice for all payments to foreign vendors that provide service or intangible assets (not suppliers who sold products).

Below are the steps that need to be taken in order to produce a self-invoice:

Setup for Overseas Self-invoice

With the Israel Localization SuiteApp, it is possible to set up an overseas self-invoice.

To set up customer for self-invoice:

  1. Go to Setup > Company > Subsidiaries and click View next to the applicable subsidiary.

  2. Ensure that the Tax Registration Number and Taxpayer ID fields have been populated.

  3. On the Financial subtab, from the Terms list, select Immediate.

  4. Note the Tax ID.

  5. Click Save.

To set up the VAT code for overseas self-invoice:

  1. Go to List > Relationships > Vendors.

  2. Click the Edit link next to the applicable vendor.

  3. On the Subsidiaries subtab, from the Tax Code list, select the correct tax code to define the default VAT on purchase self-invoice.

  4. Click Save.

To set up vendor for overseas self-invoice:

  1. Name the vendor. The name of the vendor should be the same as the Company name on the customer subsidiary record set up in ‘Setting up the Customer’.

  2. Ensure the tax registration number should match the details populated on the subsidiary record.

  3. Leave the Taxpayer ID empty.

To set up withholding tax definitions:

  1. Go to Lists > Relationships > Vendors.

  2. Click the Edit link next to the applicable vendor.

  3. On the Israeli Tax Certificates subtab, clear the כלול בדיווח מס במקור box.

  4. Click Save.

To create an offset account:

  1. Go to Setup > Accounting > Manage G/L > Chart of Accounts > New.

  2. From the Type list, select Other Current Liability.

  3. In the Name field, enter Self Invoice.

  4. Fill in the relevant fields, and then click Save.

To define item for self-invoice:

  1. Create a new Item of the Non-inventory Item for Sale type.

  2. From the Account & Income Account list, select the Self Invoice account.

To set up the VAT code:

  1. Check that the following VAT codes are set up

    • VAT on purchase self-invoice

    • VAT on sales self-invoice

    • VAT not to report

  2. Go to Setup > Accounting > Tax Codes, and then click the New Tax Code button.

  3. Click Israel.

  4. Create a new VAT code:  VAT not to be reported which is available for both transactions and inputs. This guide refers to the use of the above VAT code. Fill out the fields as follows:


    שם שדה

    IL- מע"מ לא לדיווח

    Tax Code

    IL- מע"מ לא לדיווח




    IL Subsidiary


    Default Tax Agency IL

    Tax Agency


    Tax Type


    Available on

To create a customer overseas self-invoice:

  1. Go to Transaction > Sales > Create Invoices.

  2. Select the Customer set up in Setting up a Customer.

  3. Ensure that the customer invoice and vendor bill date, currency, VAT periods, amounts and invoice number are the same.

  4. Enter lines with each of the Vendor numbers of the overseas vendors paid during the month.

  5. Select the item created in Defining an Item for Self-Service. Ensure the correct tax code is populated.

  6. Re-add the same item, and select Self-Invoice Sales Tax. Set the amount as a minus amount.

  7. The last line which offset the invoice balance should use Zero Percentage Sales VAT. At the end of the process the total invoice is zero and fully paid.

To create a vendor bill for overseas self-invoice:

Example of the second option to close customer invoice through payment:

  1. Go to Transaction > Payables > Enter Bills.

  2. Select the vendor created in Setting up the vendor for Overseas Self-Invoice procedure.

  3. Add the Vendor Bill number to match the Invoice number created in the Creating a customer invoice for Overseas Self-Invoice procedure.

  4. Click the Expense subtab, and on the first line do the following:

    1. From the Account list, select the offset account.

    2. In the Amount field, enter the sum of all payments or payments per line (as done in customer invoice).

    3. From the Tax Code list, select VAT on purchase self-invoice.

    4. Click Add.

  5. On the second line, do the following:

    1. From the Account list, select the offset account.

    2. In the Amount field, enter the gross amount, including VAT, which should be a negative value (-).

    3. From the Tax Code list, select VAT not to report. At the end of the proccess, the vendor bill total is zero (0) and fully paid.

    4. Click Add.

  6. Click Save.

Links to external sources in Hebrew:


NetSuite Transaction

Line #



Self Invoice

AR Invoice

Accounts Receivable



Self Invoice Account



Self Invoice VAT (Sale)



Self Invoice Account



Self Invoice VAT (Sale)


Customer Payment

Self Invoice Account


Account Receivable




Self Invoice Account



Self Invoice VAT (Expense)



Self Invoice Account



VAT (not for reporting)


Accounts Payable


When using the Vendor Bill Form in Israel, ensure that you use the IL Vendor Bill custom form.

On the IL Custom subtab, you can select the tax period that the VAT is related to, and the ILS Tax Amount. The Exchange rate can also be overridden to change the default exchange rate.

Israeli Bank Information is derived from the vendor level.

General Notices