Part 4: Being self-employed in Germany – How to create legally correct invoices!

After rendering services to your client or after selling a product you need to prepare an invoice. The invoice can be sent to your client via post or electronically. To avoid any mistakes in the following we will inform you about the mandatory contents which should be included in an invoice to be legally correct.

General information on invoices

• Invoices need to be stored for 10 years
• Invoices do not require a signature
• When being a small-business entrepreneur, the invoice should not contain VAT
• Don’t forget to mention your bank details as well as the term of payment
• Small amount invoices (not exceeding 250 €) have different and less requirements

Mandatory invoice details

Acc. to § 14 VAT law an invoice should contain the following information:

• Full name and address of invoicing party and service recipient
• Tax number or VAT ID
• Invoice date
• Consecutive invoice numbers – each invoice number only may be used once
• Description of kind of services or amount and kind of delivered goods
• Date of service performance, delivery or other services provided (month is sufficient)
• Invoice amount: net amount, VAT rate, gross amount
• Discount/cash discount: When you grant a cash discount to your client, you do not know whether your client will use this possibility. Therefore you should add a sentence: “3% cash discount for payment within 2 weeks as of receipt of invoice.”

Mandatory invoice details for small amount invoices up to 250 € (Kleinbetragsrechnungen)

As of 12th May 2017 the amount for small amount invoices has been increased with retroactive effect to 1 January 2017 to 250 €. Those invoices should contain the following mandatory information:

• Full name and address of invoicing party
• Invoice date
• Description of kind of services or amount and kind of delivered goods
• Invoice amount including the VAT amount as well as information on the applicable VAT rate or in case of tax exemption indication that for delivery/service performed a tax exemption is applicable

Invoices for small-business entrepreneur

When being a small-business entrepreneur you are not allowed to show VAT on your invoices. Furthermore you need to add the sentence :”According to Art. 19 VAT Law this invoice does not contain VAT”.

Invoices to clients abroad

When you send invoices to clients abroad but within Europe, it should be checked whether the requirements for a tax free intra-community delivery or tax free intra-community service are fulfilled. In this regard it has to be considered whether the invoice is sent to another entrepreneur (so called B2B invoice) or to a private person (so called B2C invoice).
When you send invoices to clients abroad outside of Europe, it also has to be checked whether it is possible to invoice excluding VAT.
In the above mentioned cases it is advisable to check the VAT liability in each single case.

Please feel free to contact when we should check the requirement of a possible VAT exemption.