Creating a fee invoice – what you should pay attention to when it comes to VAT

If you create a fee invoice, orientate yourself to § 14 III Value Added Tax Act. There, the legislature named the formalities that he expects from a proper invoice. Only an invoice that complies with the law is recognized by the recipient as an invoice that can be used for business purposes and entitles him, as a commercial or freelance person, to claim the input tax from your invoice.

Note the formalities of a fee invoice

When creating an invoice, you must observe two specifications.

• Either you are a small business owner and have declared to the tax office that you want to make use of the sales tax exemption. Then you are not allowed to show any sales tax/VAT in your fee invoice and must create the invoice gross for net. In this case, you are required to refer to § 19 UStG.
• The alternative and the actual rule is that you do not claim the sales tax exemption and show the sales tax / value added tax as normal in your fee invoice. Of course, as a small business owner, you can also waive the VAT exemption.

How to build your claim

• If you show the sales tax in your fee invoice, you must first state the net amount that you charge for your service in addition to the other invoice formalities of § 14 UStG.
• You must also note that you should represent services that may be subject to different tax rates separately.
• You must specify the applicable tax rate.
• Ultimately, you must show the tax amount due on the net amount, i.e. the value added tax, as an amount.
• Finally, you state the total amount consisting of the net amount and VAT that the invoice recipient has to pay to you.

Don’t forget to enter your tax number

• Make sure that you also state your personal tax number issued by the tax office or a sales tax identification number issued to you in your fee invoice.
• If your fee invoice contains all of this information in addition to the otherwise required specifications, the invoice recipient can easily claim it as an operating expense if he is a commercial or freelancer himself and have the VAT shown on your invoice reimbursed as input tax by the tax office.