VAT invoice requirements in Germany

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Tax Services / Leaflet, October 2013

VAT invoice requirements in Germany

Businesses trading in Germany should ensure using the correct VAT rate to account for German VAT. The standard VAT rate is currently 19%, which applies to most taxable supplies. Regional public transport services, supplies of almost all kinds of food, books and newspapers are subject to a reduced VAT rate of currently 7%.

In particular situations the supply of goods may be exempt from German VAT:

supply of goods from Germany to a VAT-registered business in another EU member state (“intra-EC supplies”) or to a business based in another country outside the EU (“exports”),

 health services provided by certain professionals (e.g. doctors or therapists),

 financial services (e.g. private banking services),

 insurance services,

 buying and selling real estate,

 long-term property letting

1. General VAT invoice requirements a) Invoice requirements

For goods and services supplied in Germany, suppliers must ensure that the following invoice requirements are met:

 full name (including legal form) and address of the supplier and the customer

 supplier’s German tax registration number (“Steuernummer”) or German VAT-ID (“Umsatzsteuer-ID-Nummer”)

 invoice date and invoice number

 a description of the goods or services supplied as well as the quantity of the goods or extent of the services

 date of supply of the goods or services

 net amount charged for the supply

 discounts agreed beforehand

 each rate of VAT charged and the amount of VAT charged (or a note that the supply is exempt from German VAT)

< complete name and address of the supplier >:

Supplier Ltd., 13 Sample Street, London SW1E XXX, UK

< German reg. no. or German identification no. >

25/246/XXXXX or DE 111 2222 33

Invoice

invoice number: 4412 date of issue: 10/01/2013

date of supply: 05/01/2013 place of supply: Berlin, Germany

< complete name and address of the customer >

Customer GmbH, Street, 10117 Berlin, Germany

quantity description identifying the goods supplied net amount VAT rate VAT 200 print media (books) - price per unit: € 50.00 € 10,000.00 19 % € 1,900.00 40 audio books (CD) - price per unit: € 25.00 € 1,000.00 7 % € 70.00 total net amount € 11,000.00

VAT 19 % € 1,900.00

VAT 7 % € 70.00

total gross amount € 12,970.00

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If the invoice amount is less than € 150 there are fewer requirements:

 full name (including legal form) and address of the supplier

 invoice date

 a description of the goods or services supplied as well as the quantity of the goods or extent of the services

 net amount charged, the amount of VAT charged in one sum and each rate of VAT charged

 a note that the supply is exempt from German VAT and reason for any exemptions

b) Invoices in a foreign currency

All amounts chargeable can be expressed in any currency. When calculating the German VAT liability, VAT amounts expressed in a foreign currency can also be converted into Euro by using the monthly exchange rate published by the German Federal Ministry of Finance (“Bundesministerium für Finanzen”).

c) Electronic transmission of invoices

Prior to the changes introduced on 1 January 2013, the EU rules for electronic invoicing allowed individual member states to impose additional conditions on suppliers wishing to use electronic invoicing, such as the use of electronic signatures and Electronic Data Interchange (EDI). Under the new simplified rules individual member states can no longer impose conditions in relation to the use of electronic invoices. In this sense, paper and electronic invoices are now treated equally.

For example, an electronic invoice can be sent as a PDF-file by e-mail without the need to use an electronic signature attached to the e-mail. It is important to note that the e-mail and the PDF-file have to be stored for at least 10 years according to German VAT law.

d) Discounts for prompt payment and other discounts

If supplier and customer agree on a discount or a bonus or any other kind of price reduction, the terms as well as the agreed amount have to either be stated on the invoice where the VAT amount and the net amount are shown or there must be a note identifying the document where all required information of the reduction is detailed (e.g. “The indicated price is subject to a discount agreement made by the contract partners”). The document with the additional information has to be at disposal of both the issuer of the invoice and the recipient and all details mentioned must be easy to verify.

If there is a discount offer for prompt payment, it is sufficient to mention the percentage, e.g. “2 % discount if payment is made within 8 days”. Neither the amount of the discount nor the net amount or gross amount after deduction of the discount has to be shown on the invoice.

e) Language

Invoices can be issued in other languages than German. The German tax authorities will try to translate the document.

Only if they are unable to translate the invoice they may request a translation from the issuer or the recipient of the invoice.

2. Goods supplied within the European Union a) Intra-EC supplies and intra-EC acquisitions

Intra-EC supplies of goods are exempt from VAT in Germany when they are made to a taxable person in another EU member state, who will account for the VAT on acquisition. Suppliers must show their German VAT identification number (this starts with the abbreviation DE and is followed by 9 digits) and the valid VAT identification number of the customer (this starts with the abbreviation of the country of destination) on their sales invoice. Furthermore, suppliers should inform their customers of the intra-EC supply and the exemption from German VAT as shown in the illustration below.

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<complete name and address of the supplier>

Supplier Ltd., 13 Sample Street, London SW1E XXX, UK

<supplier’s German identification no.>

DE 111 2222 33

Invoice

invoice number: 4412 date of issue: 10/01/2013

date of supply: 05/01/2013 country of dispatch: Germany country of destination: UK, England

>complete name and address of the customer<

Customer Ltd., 20 Sample Str., Edinburgh EH XXX, UK

>customer’s UK VAT identification no>

GB 444 5555 66

quantity description identifying the goods supplied net amount

200 print media (books) - price per unit: € 50.00 € 10,000.00

40 audio books (CD) - price per unit: € 25.00 € 1,000.00

total net amount € 11,000.00

“This is an intra-EC supply exempt from German VAT according to sec. 6a German VAT Act (UStG)”

In Germany an intra-EC supply of goods is exempt from VAT only if it complies with the requirements that the sale is supported by evidence from the supplier’s accounting records as well as by the delivery documents.

On 22nd March 2013 the Federal Council of Germany agreed on changes regarding the required evidence for tax free intra-Community trade in the EU. These new regulations will come into effect on 1 October 2013.

Until 30 September 2013 the supply of goods to another EU member state could only be exempt if the following requirements were met:

1. The so called “Buchnachweis” requires that the intra-EC supply must be easily identifiable as such in the accounting records of the business (state the correct VAT number of the customer, proof that goods are sent from one EU member state to another, show that the customer accounts for VAT in country of destination).

2. Sections 17a and b of the implementary regulation of the German VAT Act (UStDV) require a proof of arrival of the goods in the country of destination. Currently it is sufficient to provide supporting documents, such as order documents, delivery note, supplier's invoice or transport documentation.

From 1 October 2013 onwards the supplier must provide documentary evidence that he, or the customer, has sent or transported the goods to another EU member state. In accordance with Section 17a UStDV, this information must be provided in a clear and easily verifiable manner in the documentation. The confirmation of arrival (the so-called

“Gelangensbestätigung”), in combination with a copy of the invoice, is the primary method of providing this evidence.

However, in certain cases the new regulation also permits other forms of documentation and evidence.

 Confirmation of arrival

o The supplier owns the document confirming arrival of the delivery.

o The document states the month of arrival of the goods in another EU member state.

o Signature of a person authorised by the recipient to take delivery of the goods. In the case of an electronic confirmation, no signature is required – however, evidence is required to show that the transmission was initiated by the customer.

o Collective confirmations for a calendar quarter are permitted.

o The confirmation of arrival can be submitted in any form.

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 Confirmation of dispatch (e.g. the so called “CMR-Frachtbrief”) Confirmation must show the signature of the shipper (box 22) and the customer (box 24 – confirmation of receipt).

 Carrier’s receipt

Carrier’s receipt must show the signature of the carrier together with a confirmation that the business records are available within the EU.

 Carrier’s receipt and proof of payment

If the goods are collected by a carrier - as evidence of an intra EC-supply – a carrier’s receipt with proof of payment is also permitted.

Please note:

The changes mainly affect the requirements for self-collection of an item by the recipient. Unlike previously, confirmation from the customer on the receipt for an item at the time of collection is no longer sufficient. An additional confirmation on the receipt of the item must be issued once the item has reached its destination.

Businesses receiving goods in Germany from other EU member states are liable to account for acquisition tax in Germany by using the appropriate VAT rate. In general, the tax value of the acquisition tax is the amount paid to the supplier. The acquisition tax is deductible as input tax on condition that evidence of receipt of the goods can be provided.

c) Chain of transactions and simplified procedure of triangulation

Businesses may become part of a chain of transactions in which three or more taxable or non-taxable persons are involved and goods are delivered directly from the first supplier to the customer.

A chain of transactions can cause administrative difficulties to the intermediate supplier (“second supplier”). Generally the intermediate supplier is required to register for VAT in the country of destination as the intermediate supplier is deemed to acquire the goods before they are supplied to the customer. However, the intermediate supplier can avoid registering for VAT in the country of destination by using the simplified procedure of triangulation if the following conditions are fulfilled:

 the goods are delivered directly from the first supplier to the customer within the EU,

 the first supplier or the second supplier takes the risk and expense of the transport of the goods,

 all businesses involved in the chain of transactions are registered for VAT in a different EU member state and use a VAT identification number of different EU member states,

 the intermediate supplier is not VAT registered in the EU member state of destination (although Germany would still allow the application of the simplified procedure),

 the customer is VAT registered in the EU member state of destination.

Suppliers acting as intermediary of a triangulation supply, for which the simplified procedure applies, are obligated to notify their customers of using the simplified procedure and the customer’s liability to account for VAT in the country of receipt.

goods Germany

first supplier

invoice invoice

France second supplier

UK customer

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3. Exports

Exports from Germany to countries outside the EU are exempt from German VAT if certain requirements are met.

Suppliers should notify their customers of the exemption from German VAT as shown in the illustration below.

<complete name and address of the supplier>

Supplier Ltd., 13 Sample Street, London SW1E XXX, UK

<German tax no.>

25/246/XXXXX or DE 111 2222 33

Invoice

invoice number: 4412 date of issue: 10/12/2008

date of supply: 05/12/2008 country of dispatch: Germany country of destination: USA, Ohio

>complete name and address of the customer<

Customer Ltd.

20 Sample Street

Columbus, Ohio 44XXX, USA

quantity description identifying the goods supplied net amount

200 print media (books) - price per unit: € 50.00 € 10,000.00

40 audio books (CD) - price per unit: € 25.00 € 1,000.00

total net amount € 11,000.00

“This is an export exempt from German VAT according to sec. 6 German VAT Act (UStG)

For further information please contact us:

German-British Chamber of Industry and Commerce Tax Services

Tel: +44 (0) 20 7976 4160 Fax: +44 (0) 20 7976 4104 Email: tax@ahk-london.co.uk

Internet: www.germanbritishchamber.co.uk

This leaflet contains general information and cannot substitute professional advice. Therefore no liability can be accepted for any loss or expense incurred as a result of relying on information provided in this leaflet. © German-British Chamber of Industry & Commerce. January 2013

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