CURRENT DEVELOPMENTS

Germany: new mandatory information on invoices and/or self-billing invoice from January 1st, 2014

Following the Act of June 30th, 2013 implementing the Mutual Assistance Directive, new mandatory information requires to be provided on invoices and/or self-billing invoices. The new provisions must be complied with from January 1st, 2013.

The mandatory details are regulated by section 14, subsection 4, sentence 14a of Germany's Value-added Tax (VAT) Act (UStG). The said mandatory information is of particular importance for the deduction of input tax.

In accordance with tax law, a self-billing invoice is defined as an invoice which is issued by the recipient of a service (or by a third party who has been authorised by the recipient of the service). Self-billing invoices are more often used when it is more simple for the recipient of the services to provide the necessary information required for deduction.

Henceforth, a self-billing invoice requires to be expressly specified as such. The financial authorities also recognise wording in other official languages. Notwithstanding this, such wording requires to be identical to that used for the words “self-billing invoice” in the respective language versions of Article 226. Nr. 10a of the Council Directive on the common system of value added tax. However, it is sufficient if the chosen description is adequately clear (e.g. own invoice), if the self-billing invoice is properly issued and there exists no doubt as to its accuracy.

In the case of the so-called “commercial self-billing invoice” (the cancellation or correction of the original invoice), such self-billing invoice is not one within the meaning of value-added tax (VAT) law. If such documents are described as “self-billing invoice”, this shall be irrelevant for value-added tax (VAT) purposes. The specification as “self-billing invoice” does not alone lead to the creation of tax liability due to it constituting an unauthorised tax statement under section 14(c) of Germany's Value-Added Tax (VAT) Act (UStG).

Moreover, the specification “self-billing invoice” is necessary when services which have been received as well as those which have been performed are deducted in the same document. In such cases, it must be made clear to which category the respective services belongs. A balancing of the account in such cases is not permissible.

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