Offer (also: quotation) refers in business transactions to the unilateral declaration of intent by an entrepreneur or freelancer aimed at concluding a contract, in which goods or services are offered on specified terms. An offer may be legally binding or marked as non-binding; for accounting the main question is when an offer gives rise to a transaction that must be recorded.
Legal classification and binding effect
Under German law an offer is generally binding. The German Civil Code (Bürgerliches Gesetzbuch, BGB) governs the offeror’s obligation: if an offer is made, the recipient can create the contract by accepting it. Practically important is the distinction between a binding offer and a mere invitation to submit an offer (invitatio ad offerendum), for example in catalogs, on websites or in advertisements.
As a subsidiary form, the term “non-binding” is often used. An offer marked as non-binding is not legally binding and serves informational and negotiating purposes. For subsequent accounting: a legal transaction arises only upon acceptance or order confirmation.
Relevance for accounting and tax practice
An offer alone does not trigger VAT liability nor an accounting entry. For tax and accounting purposes revenues become relevant only upon performance of the service or through actual economic events (e.g., advance payments). The following points are important:
- No VAT effect: Offers do not create an obligation to remit value added tax; VAT arises only when the service is performed or an invoice is issued in accordance with the German VAT Act (UStG).
- No accounting voucher: Offers are not accounting vouchers for bookkeeping purposes as long as no order and no payment occur.
- Documentary value: Offers that lead to an order are part of the business records and can be relevant as evidence during audits.
Practical notes for freelancers and small businesses
For day-to-day handling of offers in accounting and organization, simple rules are recommended to ensure legal certainty and traceability:
- Clear labelling: Indicate whether an offer is binding or non-binding and include an expiry date (e.g., “valid until …”).
- Version control: Number offers sequentially (offer number) and save both the sent version and any later changes.
- Order confirmation: After acceptance request an explicit order confirmation or send one yourself; this establishes the basis for later invoicing and recording of performance.
- Workflow in accounting: Keep offers in your CRM or accounting software as “Offers” and switch their status to “Order”/“Invoice preparation” when an order is placed.
Concrete example
A web designer issues an offer of EUR 2,500 plus 19% VAT for the creation of a website and sets the validity to 30 days. The client confirms the offer in writing after 10 days. For accounting the following applies:
- No entry until acceptance.
- After acceptance: mark the project as an order, possibly agree a down payment (e.g., 30% = EUR 750). Receipt of the down payment is subject to recording and is relevant for VAT purposes.
- After completion: issue and record an invoice for the remaining amount.
Retention obligations and GoBD
Legally, offers fall into the category of business documents; retention periods are derived from commercial law (HGB) and the Fiscal Code (Abgabenordnung, AO). According to §257 HGB business papers must generally be retained for six years. For accounting-relevant documents the retention period can be ten years, as set out in §147 AO and the GoBD. Practical advice:
- Keep offers that led to orders for at least six years.
- If in doubt about relevance (e.g., for larger projects or when offers serve as a contract basis), choose the longer ten-year period.
- Archive electronic offers in a GoBD-compliant manner (complete, unalterable, searchable).
An orderly filing of offers makes tax audits and the traceability of your business transactions easier.
Conclusion: Offers are primarily an instrument for customer acquisition and contract preparation. For accounting they become relevant only upon acceptance and when payments occur. Clear labelling, systematic filing and observance of retention periods under HGB, AO and the GoBD protect you from later queries by the tax office or auditors.