Any business that uses an electronic checkout system in Germany must provide a checkout receipt to its customers as proof of payment. This requirement is imposed by the German Cash Security Ordinance (Kassensicherungsverordnung) and came into force from January 1, 2020. Our article explains the aspects that merchants need to bear in mind, what exceptions there are to this statutory regulation, and how to issue a digital checkout receipt.

What’s in this article?

• What is a checkout receipt?
  
• Who is required to issue a checkout receipt?
  
• What is the difference between a checkout receipt, receipt document, and other types of sales receipt?
  
• What information does a checkout receipt need to include?
  
• What are the penalties for failing to comply with the requirement to issue a receipt?
  
• Is it possible to obtain an exemption from the requirement to issue a checkout receipt?
  
• Can a checkout receipt also be issued purely in digital format?
  

What is a checkout receipt?

A checkout receipt is a receipt printed out to serve as proof of a transaction at the checkout. For example, a checkout receipt for retail customers is proof that they have paid for the goods purchased, either in cash or through a cashless payment. In both cases, customers receive a printed checkout receipt from the retailer as proof of their purchase.

A checkout receipt not only represents proof of purchase for the goods, but it also shows the type of goods purchased, the number of items, and the purchase price. The checkout receipt is printed out on the checkout roll for the customers, and the transaction is stored for the merchant in the electronic checkout system.

Who is required to issue a checkout receipt?

As of January 1, 2020, businesses in Germany that use an electronic checkout system must issue a receipt document to their customers in accordance with Section 146a (2) of the German Fiscal Code (AO) of the Cash Security Ordinance (Kassensicherungsverordnung). This applies to every transaction regardless of the purchase amount; the customer must receive a receipt, including if they just buy, say, a bread roll for 25 cents. Electronic checkout systems in Germany must be equipped with a certified technical security device as part of this regulation on mandatory checkout receipts.

What is the purpose of issuing mandatory checkout receipts?

The statutory obligation to provide checkout receipts is intended to prevent tax evasion by companies aiming to bypass cash receipts at the checkout. Every single business transaction that runs through an electronic checkout system is stored and can therefore be traced. Auditors at the tax office can read the memory of the electronic checkouts as necessary, and they can determine as part of a checkout audit whether a company is complying with the requirement to issue checkout receipts. From an economic perspective, the checkout receipt therefore provides proof that a transaction was implemented in accordance with the regulations.

Are there any exemptions from the requirement to issue a checkout receipt?

Only small business owners with “manual checkouts” (operated manually with no data stored) are exempt from the obligation to issue receipts. The German Federal Ministry of Finance provides detailed information on the precise legal requirements for the obligation to issue receipts within the scope of the Cash Security Ordinance.

Are you still required to issue a receipt if you have a manual checkout?

As a merchant, if you have a manually operated checkout instead of an electronic checkout system at the point of sale (POS), you are exempt from the obligation to issue receipts. However, you are still obliged to issue customers with a standard receipt instead of a printed checkout receipt if they request a receipt from the checkout.

What is the difference between a checkout receipt, receipt document, and other types of sales receipt?

Checkout receipts are produced automatically from an electronic checkout system. They serve as proof of a business transaction for a company’s customers. At the same time, electronic checkout receipts also provide proof for companies to the tax office that revenue has been transacted correctly. The checkout receipt contains information about the purchase of services or goods and payment for them.

Although checkout receipts are considered to represent proof of purchase in this respect, they are generally not recognized as standard sales receipts, as they do not contain all the required information that a standard sales receipt needs to contain. A standard sales receipt is issued manually and confirms through the issuer’s handwritten signature that a payment or service has been received and that there are no further claims outstanding.

What information does a checkout receipt need to include?

Section 6 of the German Cash Security Ordinance (KassenSichV) lists the mandatory information that a checkout receipt must contain:

• Full name and address of the issuing company
  
• Type and quantity of the product or the service sold
  
• Exact time that the document was issued, including the date
  
• Amount by respective payment type
  
• A number that can be uniquely assigned to the completed transaction
  
• Total amount of all products or services, including the applicable tax rate
  
• Serial number of the checkout system
  
• Signature counter of the checkout or the security module
  
• True and faithful verification value of the invoice
  

This information must appear on the receipt document as a text and number combination. In particular, each receipt document must be provided with a unique identification number which the tax office can use to trace the end-to-end process for issuing the receipt. Modern electronic checkout systems fulfill these requirements.
There is also an option for QR codes to be displayed on the checkout receipt. This is not mandatory, but it does simplify the checkout audit process considerably.

What are the penalties for failing to comply with the requirement to issue a receipt?

The German statutory Fiscal Code (AO) does not state any penalties for violations of the obligation to provide checkout receipts. There are no direct legal consequences if a business uses an electronic checkout and fails to comply with the obligation to issue checkout receipts. However, the tax office may carry out test purchases and order a checkout audit in the event of any irregularities.

If there are any gaps found in issuing receipt documents, the tax office will consider this to be a violation of Germany’s proper accounting principles (GoBD). If the auditors estimate that additional revenue and profit has been received, this can result in considerable additional tax payments for a business that has not complied with its obligation to issue receipts.

What can you do if customers do not accept a checkout receipt?

Section 146a(2) of the German Fiscal Code stipulates that a business with an electronic checkout system must issue a receipt document to customers for every business transaction. Whether the customer takes the receipt away with them or not is irrelevant. A checkout receipt must be issued in each case, even if customers refuse to accept a receipt upon request.

Is it possible to obtain an exemption from the requirement to issue a checkout receipt?

Only businesses that do not use an electronic checkout system and instead use a manually operated checkout are exempt from the obligation to issue a checkout receipt.

However, businesses that do use an electronic checkout system are still able to obtain an exemption from the obligation to issue receipts in accordance with Section 146a(2) sentence 2 of the German Fiscal Code. The Fiscal Code states the requirements for this as follows: “In cases involving the sale of goods to large numbers of unknown persons, revenue authorities may use due discretion and, on grounds of reasonableness and in accordance with section 148, waive the obligation to issue receipts in accordance with section 146(2) sentence 1 AO. This waiver may be revoked.”

In plain language, this means that businesses with passing trade and an electronic checkout system may be exempted from the obligation to issue receipts (e.g., retail businesses). These types of businesses can submit an application to the competent tax authority for an exemption from the obligation to issue receipts. However, this should not be requested based on cost grounds, as the tax authorities only consider applications on grounds of unreasonableness. The tax office may consider it unreasonable to issue receipts in individual cases, but it will decide this on a case-by-case basis. Businesses must show that it is unreasonable for them to issue receipts based on the service or product that they offer.

If an application is rejected, the business concerned should appeal this decision. This is the only way of ensuring in the long term that the tax authorities will allow a general exemption from the obligation to issue receipts for certain sectors, such as food retailers. However, even if an application for exemption from the obligation to issue receipts is granted, a business must still comply with the following obligations:

• The business must still create its own receipts for accounting purposes.
  
• The mandatory requirements regarding technical security devices remain applicable.
  
• Any customer who demands a receipt must be provided with one.
  

Can a checkout receipt also be issued purely in digital format?

One of the reasons why there is criticism of the obligation to issue receipts is that in many sectors, checkout receipts have to be printed for just a few cents. However, many of these receipts are thrown straight into the trash.

Under section 6 sentence 3 of the Cash Security Ordinance, digital receipts may also be created for customers. The digital receipts can be sent by email or via Bluetooth to the customer’s smartphone as a JPG, PNG, or PDF file. However, this solution is not a practical one for businesses with passing trade, such as for bakers or butchers. Additionally, this causes problems with regard to data protection requirements. A general exemption from the obligation to issue receipts is still the best solution for these businesses. However, digital checkout receipts are perfectly practical in some other sectors, such as the hospitality industry.

How is a digital checkout receipt created?

Digital checkout receipts can be created and transmitted using different types of technology: the most common forms are QR codes, NFC (“near field communication”), SMS, or emails.

The disadvantage with email and SMS methods is that a business has to request data from its customers, such as their email address or mobile number. The customers must agree to the data protection provisions in providing their data. The business has to overcome the hurdle with this that not every customer will be willing to disclose their own data. With both methods, customers receive a link to download the checkout receipt.

The simplest way of creating a digital checkout receipt is with NFC: corresponding chips are built into the items with this technology. The customers simply hold their smartphone up at checkout to pay and receive the receipt on their smartphone following the transaction (e.g., via Apple Pay or Google Pay). However, this technology is not very widespread yet.

Transmission via QR code is also quick and easy, and it does not involve any data protection problems. A business does not need to obtain consent from its customers or their data with this technology. Merchants just need to have a customer display of the QR code at the checkout, and have the corresponding checkout software installed. The customer simply scans the QR code displayed at the checkout using their smartphone, and they receive the receipt on their smartphone in PDF format.

Benefits of digital checkout receipts

Digital checkout receipts have some benefits compared with paper receipts:

• Fully digitized checkout processes: businesses are responding to the growing trend of issuing digital receipts to customers
  
• Clear and simple administration: paperless receipts generally involve less effort and provide customers with a better overview of their expenses and payments
  
• Durability of digital receipts: conventional paper receipts, especially so-called thermal paper receipts (such as fuel receipts and hospitality receipts), fade after just a few months and become barely legible
  
• Environmentally friendly and cost-effective: paperless checkout receipts preserve resources and save carbon dioxide emissions as well as the costs of recycling
  

Disadvantages of digital checkout receipts

Companies meet all the requirements of the obligation to issue receipts by using digital receipts. However, there are also some disadvantages:

• Skepticism: shoppers are still currently skeptical about digital receipts. Although acceptance of these is increasing, many customers still demand a printed receipt.
  
• Data protection problems: data protection requirements are the main obstacle to widespread use of digital receipts: issuing a checkout receipt without having to request the customer’s personal data represents the greatest challenge here.
  

For further information on similar topics, you will find more articles in our collection of specialist articles in the Payments section. Thinking of getting started with Stripe or have any questions? Get in touch with our sales team.