Do I have to create an invoice?
Annoying paperwork? As an entrepreneur, you may often ask yourself whether you absolutely have to create an invoice. However, every entrepreneur is obliged to issue an invoice or a comparable document in order to comply with the principle of proper accounting. This principle requires that no entry may be made without a receipt. The invoice, in turn, must contain certain mandatory information, including the correct invoice address of the invoice issuer and the invoice recipient.
The correct billing address – Why is it important?
Since the billing address is one of the mandatory components of an invoice, it must meet the legal requirements. But which components belong to a correct invoice address? On the one hand, the invoice address contains the personal data of the invoice recipient, i.e. the person who is to pay the invoice. It is important that the address is correct and complete. Sometimes mistakes creep in and this can lead to unpleasant situations. If the address of the recipient on the invoice is incorrect, the customer may not receive the invoice and therefore will not pay. For the company issuing the invoice, this may be a problem that can affect liquidity. The request for payment or reminder may then again be sent to the wrong address, so that payment is again significantly delayed. On the other hand, the billing address has been corrected in the meantime and the reminder has been sent to the correct address, which can lead to annoyance on the part of customers who did not receive the invoice in the first place. Invoicing and payment are sensitive issues that can jeopardize valuable customer relationships in the long run.
Secondly, the correct address of the issuer of the invoice is important in this context. For a company, this document is the basis for the input tax deduction. This is because the tax office only recognizes documents that contain the corresponding mandatory information according to § 14 (4) UStG and this includes, among other things, the correct invoice address.
Accordingly, the input tax deduction is only possible if the invoice contains the full name and address of the supplying trader. If these or other mandatory details are missing from an invoice, or if they are incorrect, there is no entitlement to an input tax deduction. However, what exactly is meant by the full address was not clear for a long time. In 2018, the Federal Fiscal Court (Bundesfinanzhof, BFH) adjusted its case law in terms of Section 14 (4) Sentence 1 No. 1 UStG to the extent that the address is to be understood as any address at which the performing entrepreneur or the service recipient can be reached. This also means that the business activities of the company do not necessarily have to be carried out there, i.e. a P.O. Box address, mailbox address or a c/o address are now also sufficient. This applies in the same way to a branch office or additional operating facilities of a company.
Mandatory information in the billing address
- For Individuals
- Firstname and last name
- Street and house number
- Zip code and place
- Country if applicable
- For companies
- Company name
- Company name and legal form of the company
- First name and last name
- Street and house number
- Zip code and place
- Country (optional, but important for foreign invoices)
- If necessary, also the name of the person
- Possibly the name of the affected department of a company
Invoices by mail – What requirements?
As a general rule, electronic invoices must meet the same requirements as paper invoices and comply with the legal requirements for invoices. Accordingly, this also applies to the invoice address of the invoice recipient and invoice issuer.
Billing or shipping address
The delivery address is the address to which the goods are delivered and in some cases this is not identical to the billing address. For example, there are companies that have a warehouse in a different location than their other business premises. Some companies have specific billing addresses that are used as post office boxes to ensure a smooth process of recording and filing. Or, a person other than the one receiving the goods may be expected to pay for the product. An example of this could be gifts.
Correcting an incorrect invoice – What should I bear in mind?
You have issued an invoice incorrectly? Then you may of course correct it. However, it should be noted that an invoice can only be corrected for the purposes of input tax deduction if it contains information on the issuer of the invoice, the recipient of the service, the description of the service, the remuneration and the separately stated VAT. If these conditions are not met, there is a risk of costs that the company did not expect. Even if input taxes do not have to be repaid after the invoice is corrected, the input tax assessed when the incomplete invoice was originally issued may accrue interest at six 6 percent per year until the date of the invoice correction. Because these invoice corrections often occur as a result of tax audits, the interest penalty can be enormous. In these cases, legal advice is certainly advisable, all the more so as there have also been divergent rulings by the European Court of Justice (ECJ) in this context.
easybill supports you in issuing invoices correctly, taking into account mandatory information such as the invoice address: The information stored once in the system is automatically transferred via the invoice templates and can thus be adopted at any time without errors. In this way, you avoid errors and additional costs and also save valuable time during processing.