A Central Question in Accounting: What Must Appear on an Invoice?

You only issue a proper invoice if you satisfy these minimum requirements as to form and content. The consequences of a defective invoice are borne primarily by the recipient, as it puts their input tax deduction at risk. However, this also affects you as the issuer: your client will not be pleased, and customer satisfaction will suffer. It is therefore in your own interest to issue a complete and correct invoice.

What must appear on an invoice? This is also a question you should examine carefully, because as a business owner you receive many incoming invoices. The reasons mentioned above apply here too: the tax office requires a proper invoice before allowing an input tax deduction or accepting business expenses. Check all incoming invoices for completeness and accuracy — and request a correction if necessary.

The VAT Act (UStG) sets out detailed minimum requirements for proper invoices (§ 14 UStG). This standardisation is designed to facilitate the work of the tax authorities and enable them to verify the correctness of accounting records and tax returns.

This is particularly important with regard to VAT and input tax deductions. In addition, invoice recipients post the corresponding invoice amounts as business expenses: tax officials use invoices to check whether the items billed satisfy the conditions for a business expense.

VAT law requires invoices to be issued in written form: digital invoices also satisfy this requirement. In terms of content, an invoice must contain a wide range of particulars. The following paragraphs set out these mandatory details.

Invoices must state your address and the address of the invoice recipient. Your address need not be the location of your business premises — a PO box address is sufficient, for example. Bear in mind that the billing address and the delivery address may differ.

State the exact date of issue on your invoices. You must also indicate when you deliver goods or provide a service. The calendar week or month is sufficient here — you do not need to specify the exact day. If this date lies in the future, give an estimated date. Add the payment due date to your invoice.

VAT law requires your invoices to be numbered sequentially. You have considerable freedom in how you structure this numbering; the important thing is that tax officials can navigate it easily.

For sequential numbers you may use both digits and letters. A simple approach is to use the current year and append ascending numbers — for example 2022-01 and 2022-02 for the first two invoices of 2022.

The type of goods or services must be clearly identifiable on your invoices. The same applies to the quantity of goods and the extent of services. For the scope of services, the number of hours worked is one possible measure, among others. When describing goods or services, it is better to err on the side of detail rather than brevity.

List the agreed consideration for each line item on the invoice. State the VAT rate and the tax amount separately. If you invoice goods or services at different tax rates, the rates and amounts must be set out separately. For tax-exempt goods and services, you must explicitly indicate the tax exemption. Also state on the invoice document any price reductions agreed in advance, such as early-payment discounts (Skonti).

A percentage figure is sufficient. If the invoice recipient makes use of the early-payment discount option, you are not required to issue a separate invoice for this.

Note your tax identification number (Steuernummer) or your VAT identification number (Umsatzsteuer-Identifikationsnummer) on your invoices. For the Steuernummer, the eight digits of your personal number suffice — you do not need to include the digits for the tax office or the regional code.

For low-value invoices with a gross total of up to 250 euros, the legislature reduces the number of mandatory particulars. The following items may be omitted from such invoices:

• You do not need sequential invoice numbers.
• You do not need to state the address of the recipient.
• Your tax identification number is also not required.
• State the total amount (consideration and VAT) as a single sum and add the tax rate. There is no need to show the tax amount separately.

Knowledge of the minimum requirements also enables you to check your incoming invoices. This is strongly recommended: by carrying out such checks, you ensure that no problems arise with your input tax deductions or business expenses.

If tax officials discover incomplete or incorrect incoming invoices during a tax audit, they may, for example, refuse to allow the input tax deduction. This is costly. If you identify deficiencies in an invoice, ask the issuer to supplement or correct it.

Deficiencies in an invoice can generally be remedied without difficulty. As the issuer, you have two options: supplementation or correction.

• Supplementation: In this case you subsequently send the missing particulars without issuing a new invoice. When doing so, it is best to reference the relevant invoice number.
• Correction: You issue a new invoice. At the same time, cancel the previous invoice.

Proper invoices: ask your tax adviser!

The legislature requires a range of mandatory particulars on invoices, and at first glance this may seem complicated — but you can meet these requirements even without specialist knowledge of tax law.

Nevertheless, situations can arise in connection with invoicing where professional advice is needed: this applies, for example, to invoices issued to clients abroad or to cases where corrections are required. In these and other situations, please contact your Guhr Steuerberatung.

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