Mandatory information for an invoice
The mandatory information on an invoice is binding for every entrepreneur . A valid invoice that the tax office should accept must contain the following mandatory information:
- the name and address of your company
- the name and address of your customer
- the tax number or the VAT number of your company
- the date on which the invoice was issued
- a one-time, consecutive invoice number
- the quantity and type of products delivered and / or other services
- the time of delivery or service
- the net amount , the applicable sales tax, the tax rate and the resulting gross amount
- instead of the tax rate, the reference to the tax exemption
The above mandatory information is valid for an invoice amount of € 250 gross. If the invoice amount is lower, the invoices are small-value invoices for which relief applies.
According to DICTIONARYFORALL.COM, the following mandatory information is required for small amount invoices:
- the name and address of your company
- the day the invoice is issued
- the quantity and type of products delivered and / or other services
- the net amount, the applicable sales tax, the tax rate and the resulting gross amount
- instead of the tax rate, the reference to the tax exemption
To ensure that all details are correct, you can also use our free small-value invoice sample .
As part of the input tax deduction, your tax office will only accept invoices that have a correct invoice number. The sequential invoice number should also ensure that each of you an invoice unique and clearly and the respective business transaction comprehensible can be assigned. This plays a major role in a tax audit by the tax office . If you, as an entrepreneur, fail to add an invoice number to an issued invoice, the auditor can question the factual accuracy of the bookkeeping.
Benefits of invoicing
Invoicing has many advantages. On the one hand, you meet legal requirements and receive transparency about all prices, incoming payments and outstanding invoices. On the other hand, you improve your liquidity. The required payment period helps you to plan incoming payments and thus better manage your budget.
By you the Mahn – auslagerst and accounting, for example, a software for billing, can you save also a lot of work and time. Outsourcing lowers your costs and ensures that you automatically keep track of things.
Pre-invoicing offers a particular advantage. Whenever this is possible, you should opt for it, because this way you have less effort and save postage costs, as you don’t have to send the invoice separately. With subsequent invoicing, on the other hand, precise billing of all goods sent and services provided is possible, which, depending on the context, also offers many invoicing advantages.
Disadvantages of invoicing
Invoicing is not an option for most companies, but is mandatory. Therefore, you should come to terms with any disadvantages that may exist as well as possible and find a practical solution.
One disadvantage is that invoicing gives you more work. If you make mistakes, it creates a lot of effort and in the worst case even legal consequences. It is therefore all the more important that you deal well with the requirements for an invoice.
Invoicing for foreign business
The usual mandatory information for national invoices also apply to foreign invoices. In addition, the following rules apply:
- If you invoice private customers or small businesses, you have to show the sales tax with the corresponding German tax rate.
- If your customer is an entrepreneur within the EU , sales tax does not have to be shown. Both your VAT number and your customer’s VAT number must be stated on the invoice. Your customer is then obliged to pay the sales tax to his tax office. In return, he receives the input tax back. This process is called the reverse charge procedure . Exceptions apply to telecommunications services. You are also obliged to note the note “Tax liability of the service recipient” on the invoice.
- If your customer is an entrepreneur from a third country, you do not have to charge German sales tax. Since the invoice is taxable in a third country, the invoicing must formally comply with the requirements of the respective country.
Example for foreign invoicing
If you are a German company based in Germany and sell biscuits to an Italian company, for example, then you submit an invoice in German. This should contain all mandatory information and the German sales tax.
In our example we assume that the Italian company is complaining because it does not understand the invoice. It asks you for an Italian or at least an English invoice and also doesn’t have much to do with specifying your VAT ID number.
In order not to upset the partner company, you should look for a good solution. This could be, for example, that you propose to settle with a credit note. You would be relieved of the invoicing and the Italian company could settle in its own language and according to the taxes applicable in Italy.
What types of invoices are there?
You have different types of invoices to choose from:
- invoice
- Partial bill
- Prepayment invoice
- Partial invoice
- Down payment invoice
- Financial statements
- Cancellation invoice
- Credit
Small business invoicing
You may think you’re fine because you’re a small business owner and don’t charge sales tax anyway. But the accounting rules also apply to you. Only the information on the tax ID is omitted.
Your checklist looks like this:
- your full name and the address of your company and your customer
- your tax number or, if available, your sales tax identification number
- the date of issue of your invoice
- the consecutive invoice number
- the quantity and description of the delivered products and / or other services
- the time of delivery / service
- the amount
You are under no obligation to indicate that you are a small business owner. However, it is recommended. The wording should be designed as follows:
- “No tax ID due to the application of the small business regulation ( § 19 UStG )”
- “In accordance with § 19 UStG, no sales tax is included in the invoice amount.”
- “Invoicing takes place without showing the sales tax according to §19 UStG.”
Retention periods of 10 years apply to all invoices .
