Businesses in Germany continuously work on making their bookkeeping more efficient. Large businesses benefit from simplifying their workflows because they simultaneously manage many processes and customers. Small and medium-sized enterprises (SMEs) look for ways to ease the strain because they typically have limited resources.

With that in mind, it’s important to understand recurring invoices because they can help bundle repeat invoicing processes, reduce administrative burdens, and make liquidity easier to plan. In this article, we explain recurring invoices, including their requirements within Section 14 of the German Value-Added Tax (VAT) Act (UStG) and their practical implications for business processes. We also outline how to post recurring invoices to your books and how to use modern subscription solutions to reduce administrative workloads.

What’s in this article?

• What are recurring invoices?
  
• What recurring invoice requirements are outlined in Section 14 of the UStG?
  
• How do recurring invoices impact business processes?
  
• How are recurring invoices posted?
  
• How to improve recurring invoicing with modern subscription solutions
  

What are recurring invoices?

Recurring invoices—sometimes called “repeat invoices”—are a special type of invoice for performances rendered on a regular, recurring basis. They apply to a fixed period of time and replace multiple individual bills with a single invoice. Therefore, a recurring invoice is valid for multiple billing periods. It is generated once and then used across the entire agreed upon period.

This is the case as long as the service and the invoice amount remain unchanged throughout the defined period. Recurring invoices are well-suited for lease and rent payments, lease installments, maintenance and servicing agreements, ongoing subscriptions, and other regular services.

Here’s an example: an information technology (IT) service provider invoices a set amount each month for maintaining server infrastructure. Instead of generating a new, individual invoice every month, the service provider issues a recurring invoice at the start of the year, covering the period January 1–December 31. This invoice is valid for all maintenance undertaken during the calendar year, provided the price and scope of service do not change.

Advantages of recurring invoices

Recurring invoices have advantages for issuers and recipients. For the issuer, recurring invoicing reduces administrative workload because only one invoice must be generated, rather than many individual ones. For example, a company that issues one recurring invoice at the start of the year does not have to generate 11 additional invoices throughout the year. The benefits are even greater for businesses that bill more often, such as weekly or biweekly. Using recurring invoicing can save time and reduce the likelihood of errors. At the same time, recurring invoicing gives businesses plannable earnings because invoice amounts and payment terms are fixed in advance.

For recipients, recurring invoicing provides greater certainty around financial planning. Because the costs and scope of service are fixed for a defined period, recipients can factor this recurring expenditure into their budgeting. Another upside for recipients of recurring invoices is that they don’t have to review a new invoice every billing period. This simplifies internal signoff processes and frees up resources.

What recurring invoice requirements are outlined in Section 14 of the UStG?

Recurring invoices must be clearly identified. A common way of doing this is to add this note: “Section 14 UStG recurring invoice” (Dauerrechnung im Sinne des § 14 UStG). The time period of the invoice must also be clearly indicated. Even if the period of performance or validity is a full calendar year, it’s advisable to avoid vague wording, such as, “Valid for the entirety of 2026.” Instead, specify exact dates, such as, “Valid from 01/01/2026–12/31/2026.”

A recurring invoice also has to satisfy the same requirements as a standard invoice. That means it must contain all the mandatory information stipulated in Section 14 of the UStG. This includes the following:

• Full name and address of the company supplying the goods or services
  
• Full name and address of the recipient of the goods or services
  
• Sequential, unique invoice number
  
• Issue date of invoice
  
• Tax number issued to the seller by the tax office or the VAT identification number (VAT ID) issued by the Federal Central Tax Office
  
• Quantity and type of goods delivered or the scope and type of services rendered
  
• Net and gross amount
  
• Applicable tax rate and the corresponding tax amount or a reference to the tax exemption, in relevant cases
  

How do recurring invoices impact business processes?

Recurring invoices can prompt changes to internal processes because businesses no longer have to reinvoice identical performances in every billing period. This can simplify the invoicing process.

Invoice accuracy

Setting up recurring invoices requires a high degree of diligence and accuracy to ensure that the performance period, invoice amounts, and billing cadence are set correctly. Incorrect invoices can result in incorrect payments, delayed earnings, issues with input tax deductions, or time-consuming corrections to accounts.

Invoice timing

Businesses also need to ensure that they issue recurring invoices by the statutory deadline. In general, they can issue a recurring invoice either prior to or after rendering a performance. However, according to Section 14.2 of the UStG, invoicing must occur within six months of a performance rendered to a legal entity or entrepreneur in Germany.

Structure of dunning workflow

Recurring invoices impact dunning and debtor management. Since a recurring invoice includes multiple billing periods, some overdue payments can go unnoticed. Therefore, businesses must set up processes for regular review of incoming payments to quickly flag open invoices.

Structured accounts receivable (AR) management is also important. Businesses must make sure that payment reminders, dunning letters, and other possible AR management processes are correctly coordinated and triggered. At the same time, accounting systems should be set up to fully document all partial, outstanding, and unclear payments. This is the only way a business can keep an overview of outstanding items and react quickly, especially before liquidity bottlenecks or increased administrative costs arise.

How are recurring invoices posted?

Recurring invoices are generally treated the same as regular invoices regarding accounting. However, they have a few unique features that result from their ongoing use. Initially, the invoice total must be recorded when the invoice is issued. At the same time, the performance period is important for allocating revenues and costs to the correct period. This is the only way to ensure that earnings and expenditures are reported in the correct billing period, which is particularly important for preparing preliminary VAT returns and annual financial statements.

GoBD-compliant documentation

Similar to other tax documents, recurring invoices must satisfy the requirements of the principles for the proper management and storage of books, records, and documents in electronic form (GoBD). Therefore, businesses must retain complete, tamper-proof copies of their invoices. Changes, cancellations, and corrections must be clearly documented to guarantee audit-proof bookkeeping.

Input tax on recurring invoices

As with typical inbound invoices, recurring invoices can also be used to deduct input tax. This is contingent on the VAT and performance period being clearly indicated on the recurring invoice. The invoice recipient can only deduct the VAT on this invoice as input tax in the billing period when the performance was actually rendered. In addition, the application for input tax deductions must be filed with the tax office in a timely manner as part of the relevant preliminary VAT return. Incorrect tax amounts or performance periods can result in an input tax deduction being rejected.

How to improve recurring invoicing with modern subscription solutions

Recurring invoices are a proven means of efficiently billing recurring services. However, generating, monitoring, and posting recurring invoices requires time and diligence. In addition, the number of invoice recipients and billing intervals can significantly increase the effort required for monitoring, dunning, and tax documentation.

Stripe Billing can help. As a modern subscription solution, Billing is built on the principle of recurring invoicing and can consistently automate repeat billing processes. By using Billing, businesses can reduce errors and increase efficiency. Correct, GoBD-compliant invoices are generated automatically at specified intervals, and payments can be directly monitored.

In addition to simplifying recurring invoicing, Billing can also be used for usage-based billing and individually negotiated contracts. You can also offer customers vouchers, free trials, discounts, and other add-ons via Stripe.