The legislature has tightened the formal requirements for invoices in recent years. At first, the tax offices turned a blind eye to missing or incomplete information. In the meantime, tax audits and special sales tax audits mean that “no more funny”: The tax authorities have not only cleared up the remaining ambiguities about the separate specification of a delivery date , but also underlined that the input tax deduction is consistently removed for non-statutory invoices.
Checklists and sample letters
Some time ago we published a number of practical aids for everyday business under the heading ” Checklist: Checking invoices for complete information “. With their help:
Create perfectly shaped outgoing invoices, check incoming invoices for complete information and ensure if necessary in a friendly, but determined manner, improvements by suppliers and service providers.
Original sound law
Back to the initial question: is an invoice admissible that says “VAT” instead of “VAT”? Since the obligation to indicate the “fee (s) broken down according to tax rates and individual tax exemptions” and the “applicable tax rates” in Section 14 of the Sales Tax Act, the correct description in Germany is sales tax without any doubts.
However, our inquiries to tax consultants, tax offices, regional tax offices and the Federal Ministry of Finance have shown that there is no need to fear that the input tax deduction will be withdrawn simply because the term “VAT” is used. So you can rest assured that the popular expression VAT will also be tolerated by the tax authorities in the future. As you calculate sales tax you can find the best opportunities right there.
The best way to deal with this question of doubt is as follows:
- Use the correct term “sales tax” on your outgoing invoices. So you are definitely on the safe side and identify yourself as a professional.
- You do not need to correct past invoices. If a fussy customer insists on the word “sales tax”, do them a favor.
- However, if “VAT” is mentioned on your incoming invoices, you do not need to ask your suppliers or service providers to make any improvements.
By the way: In most of our neighboring European countries, sales tax has long been referred to as value added tax, as the examples of England, France, Italy and Spain show:
German tax law is complicated enough. If VAT is mentioned on an otherwise faultless invoice instead of VAT, this does not endanger tax recognition. In case of doubt, you do not need to be more papal than the tax office pope.