Creating an Invoice Correctly – Guide for Germany
Creating an Invoice –
the correct way to do it!
Whether you have a business, are self-employed, or are a private individual
The legal basis for issuing an invoice is § 14 of the Value Added Tax (VAT) Act.
In order for the tax office to recognise an invoice document, the following information must be shown:
- Name and address of the company providing the service
- Name and address of the beneficiary
- The date on which the product or service was issued
- Quantity and description of the delivered product/service or the type and scope of the service
- Net amounts broken down by tax rates, if applicable
- Respective tax amounts attributable to net amounts
- The date of issue (invoice date)
- An invoice number – to be assigned only once
- The tax number or the VAT identification number of the exhibitor
The information is self-explanatory and must be provided so that the accounting department as well as the tax office can process the invoice as quickly as possible. Please also have a look at the sample invoice in order to see examples.
Important: Describe the services/products you provided as accurately as possible! For example, if you have added a contact formula to a website, but only write “Processing of examplewebsite.com” as the service description on the invoice, you may be liable for damages/errors/rework which were not necessarily caused by you. It would be more beneficial to write “Adding a contact formula to examplewebsite.com”. Be specific!
This protects your legal rights, so be sure to take your time. Over time and numerous invoices created, it is not uncommon to become a little careless and provide only short or simplified information. Don’t forget to include the following:
- Details which are not mandatory but you should nevertheless provide
- Details of your bank account and the preferred payment method
- Personal contact information
- Payment deadlines
- When appropriate, reference to the fact that VAT is not shown, and provide corresponding reason(s)
Here we have prepared a sample invoice as reference for you. It contains all necessary information and more. Please note that this is an invoice which includes sales tax.
For an invoice without sales tax, simply remove the line in which the tax is calculated. Your total amount is then equal to your net amount. In addition, the note on the application of the small business regulation is added.
Do I have to show VAT on my Invoice?
In short: Yes, if you do not fall under the regulation category of small businesses.
Small business owners (businesses with an annual turnover of less than 22,000€) do not have to show VAT. This should give them a competitive advantage over already established companies.
Instead, a corresponding note must be made on the invoice. Below, you fill find some examples as to how to formulate such a note:
“As a small business within the means of § 19 paragraph 1UStG, no Value Added Tax is charged”
“No turnover tax will be charged due to application of the small business regulation according to § 19 VAT Act”
“Pursuant to § 19 UStG, no sales tax will be charged”
“No sales tax statement due to application of the small business rule pursuant to § 19 VAT Act”
“Pursuant to § 19 of the VAT Act, the invoice amount does not include sales tax”
“No sales tax shown, as small businesses are exempt under § 19 of the VAT Act”
“In accordance with § 19 UStG, the invoice amount shown does not include sales tax”
To find out whether you are considered to be a small business owner or not, you can fill out the “Form for Tax Regsitration” (this is the name of the document in Berlin), which you will fill out and send to your tax office if you are looking to work as a freelancer, for example.
All other companies and self-employed individuals who do not fall under the Small Business Regulation Act must declare VAT.
Creating an Invoice as a Private Individual
Private individuals – much like freelancers – are allowed to write an invoice without a business.
There are a few points to consider here:
- No commercial/business interests qualify
- There must be no regular activity or regular payments
- The invoice must be considered a one-time-thing
As a private individual you also fall under § 19 UStG. This means that the small business regulation applies to you. Therefore, you do not have to include VAT; add one of the above wording choices to your invoice.
Aside from this, the invoices must contain all the information described.
Important to remember: as a private individual you do not have to provide a tax number. You receive a tax number when you register a business (private individuals do not have one). Please never confuse the tax number with the tax identification number (tax ID).
We have made an effort to keep this guide as short and concise as possible in order to avoid making a complex subject more difficult than necessary.
If you have any further questions, please do not hesitate to contact us!