Client newsletter

© ECOVIS 12/08/2010

Recapitulation of accounting regulations from a VAT perspective As a businessman, one would think that writing out

invoices for goods supplied and services rendered is

child's play. But the requirements on a proper invoice

are by now so strict that correct writing of an invoice

will soon be akin to a science. That is why we are

once again summarising all of the current compo-

nents of an invoice from a tax-law perspective here. If

the basic principles are all observed there is nothing

to be afraid of. But if a component is missing, a po-

tential prepaid VAT deduction is no longer allowed.

Checking incoming invoices by the customer must

therefore be taken seriously. In like manner, outgoing

invoices for intra-Community deliveries or other intra-

Community services have to conform to the rules of

correct invoice writing.

1. What information must invoices basically con-tain (Sample invoice 1)? a) The complete names and complete addresses of

the supplier and the recipient

b) The taxpayer ID or the value-added identification

number (VAT ID no) of the supplier

c) The date of issue

d) A uniquely attributed invoice number

e) The quantity and nature of the items delivered or

the scope and nature of another type of service

f) The date of delivery or service (designation of a

month suffices) or the date of collection of prepay-

ments, if the latter date is known and is not identical

with the issue date of the invoice

g) The remuneration charged (net amount), broken

down by tax rates and specific tax exemptions as well

as any price reduction agreed in advance if the latter

has not already been taken into account in the remu-

neration amount

h) The applicable tax rate as well as the tax amount

attributable to the remuneration amount or, if there is

any tax exemption, a reference to it

i) In case of work supply or other services in connection

with real estate property, a reference to the obligation of

a non-entrepreneur to save the invoice.

2. What additional information is necessary in spe-cial cases? a) The VAT ID numbers of the supplier and the recipient

in intra-Community deliveries or other intra-Community

services

(Sample invoice 2)

b) In case of tax exemption or shift (reversal) of the tax

obligation to the recipient a reference to this

(Sample invoices 2 and 3)

c) In case of intra-Community delivery of new motor

vehicles identification of the motor vehicle's features and

the fact that the motor vehicles are new

(Sample invoice 4)

d) In case of taxation of travel services and differential

taxation (e.g. in passenger car retail) as well as with

intra-Community triangular transactions a reference to

the application of these special regulations

(Sample invoice 5)

e) In case of taxable work supply or other services in

connection with real estate property a reference to the

recipient separate obligation to keep the invoice

(Sample invoice 6)

3. Which minimum information must a minimal amount invoice (total amount not over € 150) contain (Sample invoice 7)? a) The complete name and the complete address of the

supplier

b) The issue date

c) Quantity and nature of the items delivered or scope of

another service

d) The remuneration (net amount) and the tax amount

attributable to it in one sum

e) The applicable tax rate or, in case of tax exemption, a

reference to it.

© ECOVIS 12/08/2010

4. Must all information be included in one invoice? An invoice may consist of several documents from

which the required invoice information emerges as a

whole. In the document where the remuneration (net

amount) and the tax amount attributable to it are

contained all other documents must be designated

with an identification feature (e.g. name, number

and/or date of the document).

5. Indication of the invoice number The invoice number must be unique. In accordance

with this requirement, the formation of different nu-

merical series is possible (e.g. according to periods,

geographic or organisational characteristics). For

rental leases entered into after 1 January 2004 the

property or residential unit number may be used as

an invoice number. In minimum amount invoices no

serial invoice number is required.

6. Indication of the time when the delivery or service occurred This information is necessary even when the issue

date of the invoice is the same as the date of delivery

or service. The date may emerge from other docu-

ments to which a reference must be made (absolute-

ly indispensable) on the invoice ("We supplied you

according to delivery ticket number ... with the follow-

ing items"). For indication of the time of delivery or

service the notation on the delivery ticket "The date

of the delivery ticket corresponds to the date of deliv-

ery" will suffice. According to the opinion of the Fed-

eral Ministry of Finance, the date of the receipt con-

firmation of the recipient on the delivery ticket should

also suffice.

The date of collection of the remuneration or a por-

tion of it for a delivery or service that has not yet oc-

curred (down payment, advance payment) must be

indicated if the date is known and is not identical with

the invoice date.

7. What is the procedure with bonuses, early payment discounts and discount agreements? Basically, there must be a reference to every reduc-

tion of remuneration agreed in advance unless it has

already been factored into the remuneration. In case

of bonus, early payment discounts or discount

agreements the concrete reference to the corresponding

agreements, available to the involved parties in written

form, will suffice.

8. What must be observed where there are deliveries or services subject to different tax rates or tax ex-emptions? If the deliveries or services subject to different tax rates

or tax exemptions are billed in the same invoice the rel-

evant amounts must be broken down and indicated sep-

arately, indicated by tax rate and specific tax exemption

(cf. Sample invoice 1). Remuneration subject to the

same tax rate or the same tax exemption may be indi-

cated in one sum.

9. When may and when must the entrepreneur issue an invoice? a) For taxable work supplies or other services in connec-

tion with real estate property there is an obligation on the

entrepreneur to issue an invoice within six months of

performing the service.

b) If the entrepreneur delivers or supplies anything else

than indicated in a) to private individuals he is entitled to

issue an invoice. For deliveries or services to an entre-

preneur for the latter's business or to a legal entity there

is, by contrast, an obligation to issue an invoice within

six months of delivery or service.

Where there is an obligation to issue an invoice, tax-free

deliveries or services must mandatorily also be billed.

The same applies to deliveries or services by a small

scale entrepreneur (cf. Sample invoice 8).

© ECOVIS 12/08/2010

10. What information is the recipient of the invoice normally not in a position to check? Checking to see if the taxpayer ID or the domestic

VAT ID no is correct as well as checking the invoice

number is normally not possible for the invoice recip-

ient. If the provider gives false information about this

the prepaid VAT deduction remains valid if the other

information is complete. If the other information is

also incorrect or missing prepaid VAT deduction

lapses. Mere inaccuracies (e.g. mistakes in the ad-

dress or the name) do not then make prepaid VAT

deduction inadmissible if unambiguous identification

of the parties is still possible.

A foreign VAT ID no may, however, be checked via

the Central Federal Office for taxes (www.bzst.de).

Check your incoming invoices for correctness and, if

need be, on the basis of the samples given here. Ask for

a corrected invoice if there are errors eliminating the

possibility of prepaid VAT deduction. Pay, pending cor-

rection of the invoice, only the net amount on the in-

voice.

In case of further questions, please contact our team of

advisors.

ECOVIS WWS Steuerberatungsgesellschaft mbH

office berlin

Frankfurter Allee 111

10247 Berlin

030/ 31 98 51 16

IMPRINT Publisher: ECOVIS AG Steuerberatungsgesellschaft Ernst-Reuter-Platz 10, 10587 Berlin, Tel. +49 (0)30-31 00 08 55, Fax +49 (0)30-31 00 08 56 Editorial board: StB Ernst Gossert, StB Ulf Knorr ECOVIS client newsletter is based on information which we consider relia-ble. Any liability, however, due to the constantly changing laws will not be accepted.

IMPRINT Publisher: ECOVIS AG Steuerberatungsgesellschaft Ernst-Reuter-Platz 10, 10587 Berlin, Tel. +49 (0)30-31 00 08 55, Fax +49 (0)30-31 00 08 56 Editorial board: StB Ernst Gossert, StB Ulf Knorr ECOVIS client newsletter is based on information which we consider relia-ble. Any liability, however, due to the constantly changing laws will not be accepted.

IMPRINT Publisher: ECOVIS AG Steuerberatungsgesellschaft Ernst-Reuter-Platz 10, 10587 Berlin, Tel. +49 (0)30-31 00 08 55, Fax +49 (0)30-31 00 08 56 Editorial board: StB Ernst Gossert, StB Ulf Knorr ECOVIS client newsletter is based on information which we consider relia-ble. Any liability, however, due to the constantly changing laws will not be accepted.

© ECOVIS 12/08/2010

Sample invoice 1 Landhandel Mustermann AG Musterstrasse 123 12345 Musterstadt VAT ID no: DE 123456780 to: Gärtnerei Moritz Mustermann Musterweg 321 12345 Musterstadt

Invoice no: NM 2010-00120 Date: 12 August 201 Date of delivery 10/08/2010 Items Merchandise 7% Merchandise 19% 10 Topcut lawn mowers € 10,000.00 60 kg Needlegreen fir tree compost € 100.00 15 kg StampProof lawn seed € 60.00 Total merchandise 0% Total merchandise 7% € 60.00 Total merchandise 19% € 10,100.00 Value-added tax 7% € 4.20 Value added tax 19%← € 1,019.00 Total invoice amount € 11,183.20 For payment period to 12 August 2010, early payment discount of 2%

Taxpayer ID or VAT ID no

Invoice number

Issue date

Date of delivery

Breakdown of remuneration by tax rate and

tax exemtion

Applicable tax

rates

Any remuneration reduction agreed in advance

© ECOVIS 12/08/2010

Sample invoice 2 Landhandel Musterstadt, 12/08/2010 Mustermann AG VAt ID no: DE 123456789 Musterstrasse 123 Invoice no.: 050815 12345 Musterstadt to:

Tree Nursery

Ole Olsen

Long Stocking Street 1

12345 Böllerbü

Sweden

Date of pick-up: 12/08/2010 VAT ID no of recipient: SE 987654321 2 Topcut lawn mowers“ € 2.000,00 Total € 2.000,00 Tax exempt intra-Community delivery / Reverse charge

Note: With transport of the lawn mowers by the buyer, a written assurance that the lawn mowers

will be transported to the remaining Community zone must be filed with the documents.

Sample invoice 3

Fensterbau GmbH & Co. KG Hausstadt, 12/08/2010 Hausstrasse 1 VAt ID no: DE 123456789 12345 Hausstadt Invoice no: 0502001 to:

Bau AG

Baustrasse 1

12345 Baustadt

Property: Baustadt, Hauptstrasse 1 Final acceptance: 10/08/2010 For delivery and installation of 10 Thermal windows, we are billing you € 15.300,00 Recipient is liable for tax under § 13b VAT Act.

© ECOVIS 12/08/2010

Sample invoice 4

Fahrzeughandel Dieselstadt, 12.08.2010 Otto Diesel VAT ID no: DE 123456789 Dieselstrasse 1 Invoice no: 050060 12345 Dieselstadt to:

Tree Nursery

Ole Olsen

Long Stocking Street 1

12345 Böllerbü

Sweden

Date o fpick-up: 12/08/2010 VAt ID no of recipient: SE 987654321 1 Minivan (new) € 35.000,00 Brand: Mercedes Sprinter 208 CDI Displacement: 2148 ccm Mileage: 12 Tax-free intra-Community delivery / Reverse charge

Note: Ensure written assurance by the buyer as in Sample invoice 3

Sample invoice 5

Fahrzeughandel Dieselstadt, 12.08.2010 Otto Diesel VAT ID no: DE 123456789 Dieselstrasse 1 Invoice no: 050060 12345 Dieselstadt Medical Practise

Dr. Lisa Tablette

Pillenweg 1

12345 Dieselstadt

Invoice date corresponds to delivery date 1 Used car BMW 316i € 16.500,00 Margin scheme taxation as per § 25 (1) VAT Act

© ECOVIS 12/08/2010

Sample invoice 6 Hausmeisterservice Sorgenfrei Gartenstadt, 12.08.2010 Gartenweg 1 Taxpayer ID: 123/456/78901 12345 Gartenstadt Invoice no: 50/04 to:

Ms Liesel Müller

Parkstrasse 2

12345 Gartenstadt

For the month of 2010 we are billing you for the following services: Services provided to a private real estate property As per contract dated 2/01/2010 € 110,00 Value-added tax 19 % € 20,90 Total € 130,90 Note: Non-entrepreneurs and entrepreneurs making use of these services for the non-entrepreneurial sector must under § 14 b (1) (5) VAT Act retain the invoice, any pay-ment receipt or any other evidentially relevant document for two years. The deadline period begins to run as of the end of the calendar year in which the invoice is issued.

Sample invoice 7

Landhandel AG Musterstadt, 12.08.2010 Musterstraße 123 12345 Musterstadt 25 kg Richbloom flower compost 58,00 € The invoice amount includes 19% VAT.

Note: In case of any tax exemption a reference must be made to it, e.g. "Tax exempt delivery or

service."

© ECOVIS 12/08/2010

Sample invoice 8

Part-time plumber Rohrstadt, 12.08.2010 Max Klein Taxpayer ID: 123/456/8901 Rohrstrasse 1 Invoice no: 1/07 12345 Rohrstadt to:

Bauunternehmer

Karl Bau

Baustrasse 1

12345 Rohrstadt

For the following work carried out in January, I am hereby billing you Replacement of three radiators 150,00 € Total 150,00 € Note: The provider is a small scale entrepreneur according to § 19 VAT Act.