In 2024, Germany exported goods worth over €1.5 trillion overseas. Despite a slight year-on-year decrease, international trade remains one of the key pillars of the German economy. But an increase in cross-border sales also means more administrative and tax requirements for businesses, such as invoicing.

In this article, we provide an overview of key regulations German businesses should know when issuing invoices to foreign countries in Europe and beyond. We also provide information on the applicable documentation and reporting obligations, including two example invoices.

What’s in this article?

• What do German businesses have to consider when invoicing to other EU countries?
  
• What do German businesses have to consider when invoicing to non-EU countries?
  
• Example of a German company invoicing to Austria vs. Switzerland
  
• What are the documentation and reporting requirements for German businesses when invoicing to foreign countries?
  
• B2B invoicing to EU vs. non-EU countries
  

What do German businesses have to consider when invoicing to other EU countries?

There are a few points that companies headquartered in Germany have to consider when issuing invoices to other EU countries. Although trade on the European domestic market has been largely simplified, there are special rules when it comes to cross-border transactions. Value-added tax (VAT), in particular, is a key factor in invoicing to foreign countries. Different regulations determine whether VAT has to be declared or the delivery can remain tax-free.

Mandatory basic information

In order to satisfy the requirements of the German Tax Office, invoices issued to businesses in foreign countries and in Germany must include the mandatory information in Section 14 of the German VAT Act (UStG):

• Full name and address of the company supplying the goods or services
  
• Full name and address of the recipient of the goods or services
  
• A consecutive, unique invoice number
  
• Date of invoice
  
• Delivery date of goods or services
  
• Tax number issued to the supplying company by the tax office or the VAT identification number (VAT ID) issued by the Federal Central Tax Office (BZSt)
  
• Quantity and type of goods supplied or the scope and type of services rendered
  
• Net and gross amount
  
• Applicable tax rate and the corresponding tax amount or, in the case of a tax exemption, a reference to the tax exemption
  

However, there are special rules that apply to some types of cross-border transactions.

VAT exemption on supplies of goods

German companies can deliver goods to businesses in other EU countries as VAT-exempt deliveries. This is designated as an intracommunity supply, according to Section 4 and Section 6a of the UStG. Both businesses must have VAT IDs, and the item being delivered must move from Germany to the other country. If the German business meets and documents these preconditions, tax exemption is guaranteed.

In such cases, the invoicing company in Germany is only required to state a net amount on the invoice. There is no requirement to state a tax rate and gross amount. Unlike an invoice issued to a company headquartered in Germany, the VAT ID of the receiving company must also be indicated. In addition, a written reference to the tax exemption must be added (e.g., “Tax-free intracommunity supply”).

VAT exemption on supplies of services

When German companies invoice businesses in other EU countries for services, this is considered an intracommunity supply of services, according to Section 3a of the UStG. In this case, taxation is generally determined by the location of the service recipient. The service is taxable in the customer’s country, not in Germany. Therefore, the German company invoices for the service exclusive of VAT. The receiving company is liable for tax according to the reverse charge procedure.

Just as with an intracommunity supply of goods, an intracommunity supply of services requires the businesses involved to be headquartered in different EU countries and to each have VAT IDs. The invoice issued by a German company rendering services only needs to contain net amounts. The invoice must also contain a written reference, such as, “Any tax due is the responsibility of the recipient.”

Reverse charge procedure

The reverse charge procedure is the principle underlying intracommunity supplies of goods and services. According to this procedure, the receiving party—not the company supplying the goods or services—is required to pay VAT to its local tax office. Therefore, the invoice only states the net amount.

The legal basis for this procedure is Article 196 of the EU VAT Directive and Section 13b of the UStG. The aim of the directive is to prevent tax fraud and reduce administrative requirements for cross-border transactions. Stripe Invoicing can help with invoicing to foreign countries. With Invoicing, you can send compliant invoices online in just a few clicks and automate your invoicing. If you need support with recurring billing and subscription management, Stripe Billing can help.

What do German businesses have to consider when invoicing to non-EU countries?

While trade within the EU is structured by common tax regulations, different rules apply when invoicing to non-EU countries, also called “third countries.” Non-EU countries are all countries that do not belong to the territory of the European Community (EC). This means they are not member states of either the EU or the European Economic Area (EEA). This includes countries such as Switzerland, the US, China, and Brazil. Some states that are located geographically within Europe are also treated as non-EU countries if they are not in the territory of the EC (e.g., Andorra, San Marino, and Vatican City).

VAT is also a key factor when dealing with third countries. However, different regulations apply than in the European domestic market. For example, there are no unified tax rules for third countries, so German businesses are subject to different requirements depending on the country. Many countries—including Switzerland, the UK, Australia, China, and Singapore—use the reverse charge procedure. With other countries, Germany has concluded bilateral tax treaties. And in some cases, German businesses have to register for tax in the non-EU country or hire fiscal representatives to assume their tax obligations at the local level. Therefore, it is important that German businesses carefully check specific national requirements.

Tax-exempt goods exports

Under certain conditions, supplies of goods from Germany to non-EU countries can be treated as tax-exempt exports, according to Section 4, No. 1a and Section 6 of the UStG. This happens if the item being delivered leaves Germany or the EU customs union and the delivery is documented through corresponding export documentation. In particular, this documentation must include customs documents or electronic export notices from customs authorities.

If the export has been properly documented, the German business can issue an invoice without VAT. A corresponding note is mandatory, such as “Tax-exempt export supply pursuant to Section 4, No. 1a of the UStG in conjunction with Section 6 of the UStG.”

Supply of services to non-EU countries

For B2B services, it is necessary to check where the place of performance is located. According to Section 3a(2) of the UStG, the place of performance is the receiving company’s headquarters. If the service is not rendered there, the place of performance is the receiving company’s business premises.

If the place of performance is located in a non-EU country, the service is nontaxable in Germany. This means the corresponding sales invoice issued by the German company does not include VAT. It is advisable to add a written note on the invoice, such as, “Nontaxable pursuant to Section 3a(2) of the UStG—Place of performance in third country.” If the non-EU country has a reverse charge procedure, the German business can also add: “Reverse charge—The recipient in the third country is liable for any tax.”

Example of a German company invoicing to Austria vs. Switzerland

When a company in Germany sends an invoice for the supply of a product to another company in Austria, this is a tax-exempt intracommunity supply. When a German company issues a supply invoice to a company in Switzerland, this is an export supply. This supply is tax-free, provided the preconditions under Section 4, No. 1a of the UStG in conjunction with Section 6 of the UStG are satisfied.

What are the documentation and reporting requirements for German businesses when invoicing to foreign countries?

Companies based in Germany that issue invoices abroad are subject to special documentation and reporting requirements. These serve to ensure correct VAT treatment and transparency with regard to the tax authorities. It is important to note whether the invoice will be sent to a country within or outside the EU, as different requirements apply depending on the destination country.

Within the EU

For intracommunity supplies, German companies have clear obligations to fulfill to keep the supply VAT-free:

• They must demonstrate that the recipient is a business. This can be done using a valid VAT ID.
  
• They must provide documentation certifying that the goods have been delivered to another EU country. This documentation might take the form of shipping documents or delivery slips.
  

Intracommunity supplies of services are subject to similar requirements. On the invoice, the German business must use the VAT ID of the recipient and add a note that indicates the recipient is liable for any tax.

All intracommunity sales must also be recorded in a recapitulative statement and submitted electronically to the BZSt, according to Section 18a of the UStG. The information submitted must match what is stated in the preliminary VAT return (UStVA) and annual VAT return. A supply must satisfy all of these conditions in order to be exempt from tax.

Outside the EU

German companies also have clear obligations to fulfill when delivering to third countries if they want to claim tax exemption for their export deliveries:

• Export documentation is important. The German company must verify that the goods have moved from Germany to a non-EU country. Generally, this documentation includes export documents confirmed by customs authorities.
  
• The invoice must also explicitly indicate that the export is exempt from tax.
  In certain cases—such as when requested to do so by the financial authorities—proof of payment might also need to be presented.
  

The most important element to add to an invoice when supplying services to non-EU companies is a note stating that the non-EU company’s place of performance is in a third country.

Recapitulative statements are not required for transactions with non-EU countries. However, tax-exempt exports must be reported carefully in the UStVA and annual VAT return.

Why documentation is important

The documentation and statements described above are not just formalities. They form the legal basis for taking advantage of tax privileges. If export documentation is missing or the recapitulative statement is not submitted correctly, this can lead to retroactive taxation of sales. Default interest and financial penalties can also be applied in some cases. Therefore, companies in Germany should systematically document their cross-border transactions and store any documents they are required to keep for at least ten years, according to Section 147 of the German Fiscal Code (AO).

B2B invoicing to EU vs. non-EU countries