Under the German VAT Act, invoices that entitle the recipient to deduct input tax must contain certain minimum information. In addition, special rules apply when issuing invoices for construction services. Below, I will outline the mandatory elements of an invoice and explain what you must observe — both as the issuer of an invoice and as a recipient entitled to deduct input tax.
If you are unsure whether your invoices meet legal requirements or whether risks exist regarding input tax deduction, I am happy to assist you with personal guidance.
If the exact date of supply or service is not yet known — for example, with advance or prepayments — a specific performance date is not required. Instead, the invoice must explicitly state that it relates to a service not yet performed. For regularly recurring payments under long-term obligations, the payment is — for simplification — allocated to the period in which it is made.
To ensure that recipients may already claim input tax from advance payment invoices, VAT must also be shown on these invoices. When the final invoice is issued later, all advance payments received — including the VAT attributable to them — must be deducted accordingly.
In a personal consultation, I will explain how advance payment and final invoices can be optimally implemented in your company.
A credit note is an invoice issued by the recipient of the service. Whether the contractor or the customer issues the invoice can be freely agreed by contract. If it is agreed that the recipient will issue the invoice, this must be made explicitly clear — in particular through the mandatory use of the term “credit note.” To avoid misunderstandings, the term “credit note” should not be used for refunds, cancellations, or discounts.
Tax-exempt transactions or transactions by small businesses may also be invoiced via the credit note procedure. In such cases, the tax number or VAT identification number of the service provider must always be included. The issuer of the credit note must therefore obtain this information from the business partner in advance. The issuer also assigns the consecutive invoice number.
Under small-value invoices, one understands invoices with a total amount of up to €250. In the context of invoicing, simplified requirements apply: neither a consecutive invoice number nor further formal details are required. For tax recognition and the right to deduct input tax, it is sufficient if the full name and address of the supplying business, the date of issue, the quantity and type of goods supplied or the scope of the service provided, as well as the remuneration including the VAT amount and the applicable VAT rate are stated. For VAT-exempt transactions, an appropriate reference is sufficient.
Errors in invoicing can also jeopardize the input tax deduction for small-value invoices — feel free to contact me.
For intra-Community supplies, proper invoicing requires both your own VAT identification number as the supplier and the VAT identification number of the recipient. Additionally, the invoice must explicitly reference the reverse charge mechanism. The established wording is:
“Steuerschuldnerschaft des Leistungsempfängers”
(“Reverse charge – VAT payable by the recipient”)
If you would like to clarify which information your cross-border invoices must contain, I will gladly guide you through the requirements.
If you invoice cross-border on a regular basis, I can support you in ensuring legally compliant invoicing.
When invoicing construction services, it is particularly important to note that the reverse charge mechanism frequently applies. In such cases, it is not the supplying business but the recipient of the service who owes the VAT. This reversal applies especially when the recipient is an entrepreneur who performs or has performed construction services on a sustained basis.
If the recipient presents a valid exemption certificate, it can generally be assumed that the service purchased will be used for their own construction work and that the VAT liability therefore shifts. The same applies if the recipient holds the tax authority’s temporary three-year certificate “USt 1 TG,” which confirms their ongoing activity in the construction sector.
If the recipient is liable for VAT, the supplier may invoice only the net amount. The invoice must also include the mandatory note: “Steuerschuldnerschaft des Leistungsempfängers” (reverse charge — VAT payable by the recipient).
If you are the recipient of a construction service and liable for VAT, you must not pay the VAT to the supplier; instead, you must remit it directly to the tax authorities. Special rules apply to declaring such transactions in your VAT advance return and annual return. I will gladly explain how to properly record the VAT paid and claim it as input tax.
Proper invoicing is more than a formal requirement — it determines whether revenues are recognized for tax purposes, whether input tax can be claimed, and whether tax audits proceed smoothly. Different types of transactions — such as construction services, intra-Community supplies, advance payments, or small-value invoices — each require specific information and careful handling. Those who understand and consistently apply the legal requirements avoid financial risks, reassessments, and unnecessary disputes with the tax authorities.
If you would like to review whether your invoicing is complete, legally compliant, and optimized from a tax perspective, I am happy to assist you personally — feel free to contact me at any time.
