How to provide access to external users to invite other external users?

Dear @Martijn SWG,

I understand that you want to enable external users (who have Owner rights on a SharePoint page/site) to invite other external users to the site using their email addresses. Despite having permissive settings at the organization and site levels, your external owners are still unable to do this. I am glad to help you address this problem.

The core issue here is that SharePoint Site Owners cannot add guest users directly to Microsoft 365 Groups or invite new guests if they are external accounts (guests) themselves. By default, external users do not have permission to invite other guests into a tenant's directory, and Microsoft 365 Group membership modifications are generally restricted to internal users.

To achieve your goal and fix this visibility block, you will need to apply a few specific configurations across Microsoft Entra ID and the Microsoft 365 Group settings.

To allow your external owners to successfully invite other external users, please verify and implement the following settings:

Option 1: Enable Guest Invitations in Microsoft Entra ID

By default, only administrators and members can invite guests. You must explicitly allow guests to invite other guests. Changes to Microsoft Entra ID external collaboration settings and cross-tenant policies are massive structural changes. According to official Microsoft documentation regarding B2B troubleshooting, modifications made to these specific external settings do not take effect immediately.

• It typically takes 15 to 60 minutes for the tenant directory to fully replicate these new rules to all linked apps, including SharePoint.
• In some heavy traffic scenarios, full cross-tenant policy changes can take up to a few hours.
• Please ask your customer to wait roughly an hour and try again using a fresh browser session (or an Incognito/InPrivate window).

Option 2: Configure Microsoft 365 Group Settings

Since your SharePoint site is backed by a Microsoft 365 Group, external users cannot be added straight through the standard SharePoint site permission box in many scenarios if they aren't already in the directory. You need to ensure group settings allow external access:

• Go to the Microsoft 365 admin center
• Navigate to Setting > Org Setting > Microsoft 365 Group
• On the Microsoft 365 Groups page, choose whether you want to let people outside your organization access group resources or let group owners add people outside your organization to groups. 

Please refer to this guide: Manage guest access in Microsoft 365 groups - Microsoft 365 admin | Microsoft Learn

Even with those enabled, adding external members to a group-connected site can occasionally fail for an external owner via the SharePoint interface because of directory lookup limitations. To circumvent this effortlessly, have your external site owner share the site directly instead of adding them as group members:

• The external owner should go to the SharePoint site.
• Click the Gear icon (Settings) > Site permissions.
• Under the Invite people dropdown, select Share site only (instead of adding them to the Microsoft 365 group).
• Enter the email address of the new external user.

Please follow this guide for your issue: Share a site - Microsoft Support

You can review the step-by-step administrative requirements for external sharing in the official article on Microsoft Learn: Collaborate with guests in a site.

If the external users still get an error after these configurations are adjusted, it's possible a Conditional Access policy is actively blocking new guest provisioning.

I hope this provides a clear path forward for your team. Please let me know if you need any further general information.

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External users can invite other external users only if both Microsoft Entra External collaboration settings and Microsoft 365 group/SharePoint sharing settings allow it. The key control is in Entra External collaboration settings.

To allow guests to invite other guests:

1. In Microsoft Entra admin center, go to Entra ID > External Identities > External collaboration settings.
2. Under Guest invite settings, select:
   • Anyone in the organization can invite guest users including guests and non-admins (most inclusive).
   This option explicitly allows B2B collaboration guest users to invite other external users.

With this setting enabled and SharePoint/Microsoft 365 group external sharing already set to allow guests, external users who are owners of the Microsoft 365 group/SharePoint site can invite new external users by email.

If instead one of the more restrictive options is selected (for example, only members or only specific admin roles can invite guests), then guests will not be able to resolve or invite new external email addresses, which matches the behavior shown in the screenshots.

Also ensure that collaboration restrictions do not block the external users’ domains (for example, if using Allow invitations only to the specified domains or a deny list), because these restrictions can prevent invitations even when guest invite settings are permissive.

References:

• Configure external collaboration settings for B2B in Microsoft Entra External ID
• Secure external access to Microsoft Teams, SharePoint, and OneDrive with Microsoft Entra ID
• Govern access for external users in entitlement management
• Overview: B2B collaboration with external guests for your workforce
• Add and manage B2B collaboration users in the Microsoft Entra admin center
• Assign Azure roles to external users using the Azure portal