Invoice is a written document by which a business asserts its claim for payment from a recipient for goods delivered or services rendered. In Germany, formal requirements, deadlines and retention obligations are governed in particular by the Value Added Tax Act (UStG), the Commercial Code (HGB) and the Fiscal Code (AO). For freelancers and small businesses, correct invoice issuance is central for input VAT deduction, bookkeeping and tax audits.
Mandatory information and structure of an invoice
Under §14 UStG an invoice must contain certain minimum information so that the recipient can claim input VAT deduction. If information is missing, the invoice does not entitle the recipient to input VAT deduction.
- Full name and address of the supplying business and the recipient
- Tax number or VAT identification number (USt-IdNr.) of the issuer
- Date of issue of the invoice
- Consecutive invoice number (unique, traceable)
- Quantity and type of goods supplied or the scope and nature of the services
- Date of supply/performance (or period of service provision, if different)
- Consideration (net), applicable VAT rate and tax amount, or a note on tax exemption
- Total amount (gross)
For special cases (e.g. reverse charge under §13b UStG or application of the small‑business regulation under §19 UStG) clear additional notes are required, e.g. “Tax liability of the recipient pursuant to §13b UStG” or “No VAT shown due to the small‑business regulation (§19 UStG)”.
Practical rules for daily bookkeeping
For everyday bookkeeping a structured approach is recommended so that invoices are recognized for tax purposes and payment processes are completely documented.
- Invoice numbering: Use consecutive, unique numbers; subdivide by year or business area if necessary.
- Deadlines: The invoice should be issued promptly; under §14 UStG issuance is generally envisaged within six months after performance.
- Electronic invoices: Electronic invoices are permitted provided authenticity and integrity are ensured. Formats such as ZUGFeRD or XRechnung facilitate structured processing; for invoices to public contracting authorities XRechnung is often mandatory.
- Low‑value invoices: For invoices up to €250 (gross) simplified information is permitted; nevertheless name, address, date, description of the service, consideration and VAT amount or a note should suffice.
Practical examples
- A freelance graphic designer issues a client an invoice for €1,200 net: the invoice contains his tax number, date of performance, invoice number, net amount, 19% VAT and the gross amount.
- A small business owner who does not show VAT adds the note: “No VAT shown due to the small‑business regulation (§19 UStG)”.
- For services to a foreign entrepreneur within the EU it is important to include the VAT‑ID numbers of both parties; where applicable the invoice must be issued without VAT with a note referring to an intra‑community supply.
Corrections, retention and tax relevance
Incorrect invoices must be corrected. Common procedures are cancellation invoices and re‑issuance or an accompanying credit note, whereby the original invoice must remain documented for accounting purposes.
Retention periods are crucial for businesses:
- Outgoing and incoming invoices must generally be retained for 10 years (§147 AO, §257 HGB).
- Electronic invoices must remain permanently readable and be archived in the original format or as an exact one‑to‑one copy.
During tax audits complete and correctly filed invoices are a prerequisite for recognition of input VAT claims and to avoid tax disadvantages. Payment terms and dunning procedures are also tax‑relevant for liquidity planning and realization of receivables.
Practical checklist for your invoice preparation
| Checklist item | Why important |
|---|---|
| Consecutive number | Traceability, legal requirement |
| Date of performance | Allocation to the correct taxation period |
| Tax number/VAT‑ID | Enables input VAT deduction for the recipient |
| Note for small business/reverse charge | Prevents misunderstandings and back‑claims |
| Archiving (10 years) | Fulfillment of tax retention obligations |
With a standardized invoice template and controlled processes in bookkeeping you avoid formal errors, secure input VAT claims and simplify audits. If in doubt (e.g. cross‑border services or reverse‑charge cases) seek tax advice to minimize risks.