With foreign trade sales of €251.8 billion, China was Germany's most important trading partner in 2025. German businesses exported €81.3 billion worth of goods to China this year. However, working with Chinese customers comes with many invoicing requirements.

In this article, you'll learn what mandatory information must be included on invoices sent to China, how value-added tax (VAT) is handled, and the differences between invoices issued for commercial clients and private individuals, as well as for goods and services. We will also explain what German businesses need to keep in mind when exporting goods to China, issuing invoices in foreign currencies, and dealing with payment methods and terms for Chinese customers.

Key takeaways

• To the extent that German invoicing regulations apply, invoices sent to China must include the relevant mandatory information specified in Section 14(4) of the German VAT Act (UStG).
  
• Whether German VAT appears on an invoice to China depends mainly on the type of transaction and the place of performance.
  
• Different VAT regulations apply when issuing invoices to Chinese companies and individuals.
  
• When exporting goods to China, businesses must comply not only with invoicing requirements but also with customs regulations, export declarations, and any necessary permits.
  
• German businesses can also issue invoices to China in Chinese yuan (CNY), taking exchange rates, payment terms, and international payment methods into account.
  

What information is required on an invoice to China?

When a German company issues an invoice to China, it has to meet the general requirements for a valid invoice. The key mandatory details are outlined in Section 14(4) of the UStG:

• Full name and address of the business supplying the goods or service
  
• Full name and address of the recipient of the product or service
  
• Invoice issue date
  
• Date of delivery or other supply, or the performance period
  
• The tax ID issued to the seller by the tax office or the VAT identification number (VAT ID) issued by the Federal Central Tax Office
  
• A sequential, unique invoice number
  
• Quantity and type of products supplied or the scope and type of service rendered
  
• Cost for the delivery or service
  
• The applicable tax rate and the corresponding tax amount, or a reference to the tax exemption
  

Practical tips for invoices to China

When issuing invoices to Chinese business partners, German businesses also have to ensure that the documents are clear and internationally understandable. That means, among other things, using full company names in their official spelling. A clear description of the goods delivered or services rendered makes it easier to classify the business transaction. In addition, all billing details must match the underlying contract documents. This information helps Chinese business partners process the invoice.

What VAT rate applies for invoices to China?

For German companies issuing invoices to business partners in China, VAT treatment depends on whether the transaction is taxable in Germany under German VAT law. China is not part of the community territory and is classified as a third country for VAT purposes. Special rules therefore govern transactions with Chinese customers.

As a general rule, a German company includes German VAT on an invoice to China when the transaction is taxable in Germany. For many cross-border sales with China, either no German VAT is due, or a tax exemption applies. The applicable classification depends on the type of revenue, the place of supply or service, and the relevant legal requirements.

When is German VAT applicable?

The decisive factors are the transaction type, the status and place of business of the recipients of the goods or services, and the location where the supply of goods or services is deemed to have taken place for VAT purposes. Sections 3 and 3a of the UStG govern the place of supply and the location of other services.

For cross-border sales, German businesses first determine the place of supply for VAT purposes. They can then establish whether they must charge German VAT, whether a tax exemption applies, or whether the transaction is not subject to tax in Germany.

The specific rules vary, depending on whether the recipient is acting in a business or personal capacity and whether goods or services are being invoiced.

What's the difference between invoices issued to private individuals in China and those issued to businesses?

When issuing invoices to China, determine whether the recipient is a business or an individual. This distinction affects VAT processing and determines which invoicing requirements apply. For invoices sent to China, VAT is determined by more than the recipient's place of business; the recipient's status and where the service is performed are the primary factors.

Invoices to Chinese businesses

If a German company provides a service to a Chinese company, Section 3a(2) of the UStG determines the place of supply. Accordingly, other services provided to business owners for their businesses are generally performed where the recipients conduct their operations. If the service is provided to a permanent establishment, that establishment's location is the relevant place of supply.

If, under these regulations, the place of supply is in China and thus outside the German VAT jurisdiction, the service is not subject to tax in Germany. In this case, the German business does not charge German VAT. It has to be able to show that the recipients are business owners and that the requirements for determining the place of supply in China are met. If, by contrast, the place of supply is in Germany and the revenue is subject to tax there, the relevant invoicing requirements of the UStG apply.

Different rules apply to the delivery of goods than to services. Section 3 of the UStG is the primary basis for determining the place of delivery. If goods are shipped from Germany to China, Section 4 No. 1(a) could provide an import tax exemption, in conjunction with Section 6 of the UStG. In this case, the invoice will show no German VAT. Eligibility for the exemption is that the legal requirements for an export shipment are met and properly documented.

Invoices to private individuals in China

If a German company provides a service to a private individual in China, Section 3a(1) of the UStG determines the place of supply. Accordingly, a service provided to a person not engaged in business activities is generally deemed performed at the location from which the providing company operates. If the place of supply is in Germany, the revenue might be subject to German VAT. In this case, the relevant invoicing provisions of the UStG apply. If, instead, the place of supply is outside Germany, the revenue is generally not subject to tax there.

However, place-of-supply rules could apply to certain services. Examples include consulting, advertising, and translation services, as well as services provided electronically. The nature of the service is decisive.

For deliveries of goods to Chinese private individuals, Section 3 of the UStG determines the place of delivery. If goods are shipped from Germany to China, a tax exemption for export shipments could apply. This depends on meeting the legal requirements and providing appropriate proof of export.

Whether an invoice is required and what information it contains therefore depends on the specific nature of the transaction and its classification for VAT purposes. Contractual requirements, as well as Chinese tax, import, or documentation regulations, might affect it as well.

What must businesses consider when exporting goods to China?

Anyone shipping goods from Germany to China has to comply with customs export requirements and provide an invoice. Because China is outside the European Union's customs territory, this shipment is an export to a third country. For this reason, the invoice, customs, and export data must be consistent.

Export declaration and EORI number

Customs declarations are required to export goods. German companies have to follow the applicable export procedures and reporting requirements. They generally file the export declaration electronically through the customs system.

For customs processing, companies need an EORI (Economic Operators' Registration and Identification) number in applicable cases. It identifies economic operators in customs procedures and has to appear in the designated data fields when filing an electronic export declaration.

After the goods have been released for export, they are transported to the dispatching customs office. The electronic procedure documents the confirmed dispatch from the customs territory. You can use the dispatch receipt as proof of export for VAT purposes.

What information is required for customs processing?

The information on the commercial invoice must match that on the customs declaration and other export documents. A precise, standard commercial description of the goods facilitates customs classification and further processing.

Depending on the goods and the export process, the following information, among other measures, could be relevant:

• Exact name and description of the goods
  
• Quantity and, if applicable, weight
  
• Value of goods and currency
  
• Country of origin
  
• Customs tariff number or product code
  
• Information about the seller and buyer
  
• Terms of delivery
  
• Additional required permits or documentation, if applicable
  

The information and documents required in a specific case depend on factors such as the type of goods, their value, and the applicable customs regulations and foreign trade regulations.

Export controls and permit requirements

Before exporting, companies based in Germany must also check whether any specific restrictions or permits apply to the goods. Such rules can affect certain technical products, machinery, dual-use goods, or other controlled items.

An export declaration alone does not mean goods can be exported to China without further inspection. Before shipping, businesses need to determine whether the product requires approval or falls under other export regulations.

Can invoices sent to China be issued in CNY?

German businesses can generally issue invoices to Chinese business partners in a foreign currency, such as the Chinese yuan. Doing so can be useful when Chinese business partners are expected to pay the invoice in their local currency. If amounts require conversion for German VAT purposes, Section 16(6) of the UStG applies.

Invoices in foreign currency

German VAT law does not specify an invoice currency. Businesses can use currencies other than the euro. For invoices in foreign currencies, the invoice has to clearly specify the currency used, for example, "CNY."

To calculate the tax and deductible advance tax amounts, convert foreign-currency values to euros. Pursuant to Section 16(6) of the UStG, the monthly average exchange rates published by the Federal Ministry of Finance generally apply. The decisive factor is the month in which the service is performed or in which the payment – or a portion of the payment – was received before the service was performed. Under certain conditions, the tax office could also allow a conversion based on the daily exchange rate. You must provide proof of this exchange rate in the form of a bank statement or a rate sheet.

Businesses need to document the exchange rate used for VAT and the basis for the conversion transparently. Doing so makes it easier to record transactions correctly in the accounting system and for the tax authorities to audit them.

Practical information

To improve traceability and simplify accounting and reconciliation of incoming payments, it can help to show the corresponding amount in euros alongside the invoice amount in CNY. The additional amount must be clearly identifiable as a conversion or informational value so that the agreed-upon payment currency remains distinct.

Businesses also have to consider that exchange rate fluctuations between invoicing, payment, and posting can lead to discrepancies. The conversion rate specified in Section 16(6) of the UStG governs the VAT calculation.

Which payment methods and terms are the most useful when invoicing Chinese customers?

When it comes to payment methods and terms, German businesses have several key points to consider when doing business with Chinese customers. These cover, among other things, the payment currency, the payment deadline, and any applicable fees.

Clear payment terms

The invoice must clearly specify when and how the invoice amount is due. Key details include the payment terms, the agreed-upon currency, and, if applicable, who covers transaction fees.

For international payments, businesses need to confirm as well what costs apply to wire transfers or currency conversions and who pays them. A clear agreement can prevent follow-up inquiries and discrepancies when payments are received. Ideally, the contractor proposal specifies the currency, terms, and fee structure, and the invoice states them consistently.

Suitable payment methods

International wire transfers or digital payment services are particularly suitable for payments from China. For German businesses, the preferred option depends on the invoice amount, costs, and desired processing speed.

For ongoing business relationships, consider a payment method that makes it as straightforward as possible to integrate currency conversions and international payments into your existing accounting system.

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FAQs about VAT on invoices to China