If you run a business in Germany and sell products or offer services, the German Value Added Tax Act requires you to issue invoices for these transactions. This article covers Section 14 of the German VAT Act (“Umsatzsteuergesetz”, or UStG), detailing who must issue invoices, when they need to be issued, and the information they must include. We also cover what small-scale entrepreneurs need to consider when issuing them and explain what small-value invoices are.

What’s in this article?

• What does Section 14 of the UStG involve?
  
• When does Section 14 of the UStG require businesses to issue an invoice?
  
• What mandatory information must an invoice contain according to Section 14 of the UStG?
  
• What do small-scale entrepreneurs need to consider when issuing invoices?
  
• What are small-amount invoices?
  

What does Section 14 of the UStG involve?

Section 14 of the UStG sets the rules for issuing invoices under German tax law. It explains what an invoice is, when it must be issued, and the required details it must include.

Section 14 of the UStG contains seven paragraphs. Here is a summary of the key points:

• Section 14, paragraph 1 of the UStG: This paragraph explains what an invoice is according to the VAT Act. An invoice is any document used to finalise a delivery or service, no matter what the document is called. It’s also important to ensure the invoice’s origin is authentic, its content remains intact, and it is always readable. They can be sent either on paper or electronically.
  
• Section 14, paragraph 2: Paragraph 2 specifies the time frame within which business owners must issue an invoice after delivering goods or providing a service. It also states that service recipients can issue an invoice as a credit note if both parties have agreed to this in advance and the service providers do not object.
  
• Section 14, paragraph 3: This paragraph sets the rules that ensure the authenticity and integrity of electronic invoices’ content. This is achieved with a qualified electronic signature or through electronic data exchange that complies with legal standards.
  
• Section 14, paragraph 4: Paragraph 4 specifies the mandatory information that must be included in an invoice.
  
• Section 14, paragraph 5: Paragraph 5 states that the rules in paragraphs 1–4 also apply if business owners have already received full or partial payment for goods or services that have yet to be delivered. If you issue a final invoice later, any partial payments already received and the corresponding taxes must be deducted.
  
• Section 14, paragraph 6: This paragraph gives the Federal Ministry of Finance several rights to streamline the tax process with the approval of the Bundesrat (the German parliament). For example, the Ministry of Finance can decide when certain documents are valid as invoices, when businesses can spread required information across multiple documents, or when businesses can omit specific details on their invoices.
  
• Section 14, paragraph 7: Paragraph 7 permits foreign entrepreneurs without a German business location to issue invoices according to their home country’s rules, as long as they provide their service in Germany and the service recipients are responsible for paying value-added tax (VAT) under Section 13b of the UStG. However, this rule does not apply if they have issued a credit note instead of an invoice.
  

When does Section 14 of the UStG require businesses to issue an invoice?

Under Section 14 of the UStG, the recipient must receive the invoice within six months of when the business provides the service. All business owners based in Germany who supply taxable services to other companies or legal entities within the country must issue invoices as per Section 14 of the UStG. Legal entities include corporations such as limited liability companies (GmbHs) or public bodies such as universities, social insurance providers, or public institutions. As defined in Section 19, paragraph 1 of the UStG, the requirement to issue invoices also applies to small-scale entrepreneurs. However, they are not allowed to include VAT on their invoices.

If the sales are tax-free, businesses usually don’t need to issue invoices, unless the sales fall under specific exceptions listed in Section 4, paragraphs 1–7 of the UStG. In this situation, an invoice needs to be issued without including VAT. This rule also applies to cross-border trade in goods and services, such as intracommunity supplies within the European Union or export deliveries to countries outside the EU. In these situations, an invoice must always include a note about the non-taxable revenue.

For services provided to private individuals, businesses can usually choose whether to issue an invoice according to Section 14 of the UStG, use a different format, or not issue one at all. However, private customers can specifically ask for one. In this situation, businesses must fulfil the customer’s request. Additionally, businesses are only required to issue invoices according to Section 14 of the UStG for taxable work deliveries or other services related to a property.

Note that Section 14 of the UStG affects not only the companies issuing invoices but also the recipients, especially if they can deduct input tax. A correct invoice is necessary for the recipient of the service or invoice to claim input tax.

For more details on this topic, see our article about small-value invoices. Additionally, Stripe Invoicing can help you create and send small-value and other types of invoices that comply with the law. With Stripe Invoicing, you can create and send invoices online in just a few clicks. What’s more, Invoicing can also help you simplify and automate your invoicing, speeding up your accounting processes.

What mandatory information must an invoice contain according to Section 14 of the UStG?

According to Section 14, paragraph 4 of the UStG, an invoice must include the following required information:

• The full name and address of both the supplier and the recipient
  
• The supplier’s tax number issued by the tax office, and the VAT registration number issued by the Federal Central Tax Office
  
• The date of issue of the invoice and the date of delivery
  
• A unique, sequential invoice number
  
• The quantity and type of goods delivered or the scope and type of service
  
• The date of delivery or other service
  
• The payment for the services provided, itemised by tax rates and exemptions
  
• The tax rate applied or a note about a tax exemption
  
• If applicable, a note about the recipient’s legal obligation to keep the documents
  

A business can spread the required information across multiple documents as long as they are clearly connected to each other. For example, you could list the delivery date, a detailed description of the goods, and the quantity on a separate delivery note.

For more information, see our article on invoicing.

What do small-scale entrepreneurs need to consider when issuing invoices?

Entrepreneurs with an annual turnover of less than €22,000 in the previous year and who don’t expect to exceed €50,000 in the current year can benefit from the small-scale entrepreneur rule. This exempts them from having to pay VAT. As a result, small-scale entrepreneurs must issue invoices, but they cannot include VAT on them. This is because they don’t pay VAT to the tax office.

Invoices from small-scale entrepreneurs must contain all the required information mentioned earlier, except for the VAT. Additionally, small-scale entrepreneurs must include a note on the invoice about the small-scale entrepreneur rule. For example, the following sentence could be included: “In accordance with Section 19 of the UStG, no VAT is charged.”

For more information, see our article on invoicing for small-scale entrepreneurs.

What are small-amount invoices?

Issuing invoices is an administrative task for businesses. For small amounts, you can issue a small-value invoice with fewer required details than a standard one, as per Section 14, paragraph 4 of the UStG. The legal basis is Section 33 of the UStDV (German VAT Implementation Ordinance).

Examples of small-amount invoices include cash register receipts, restaurant bills, and purchase receipts. The total gross amount of a small-value invoice cannot be more than €250. This means the highest net amount at a 19% tax rate is €210.08. If the VAT rate is 7%, the highest is €233.63. For more information, see our article on the difference between gross and net in Germany.

A small-value invoice must contain the following mandatory information:

• The full name and address of the supplier
  
• The date of issue
  
• The quantity and type of goods delivered or the scope and type of service
  
• The payment for the services provided, itemised by tax rates and exemptions