How to create the perfect invoice in Germany
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So you’ve got your first client, you’ve delivered your first project, and you’re ready to get paid! Now it’s time to write your invoice! Managing invoices is an important aspect of freelance life, and if you’ve worked as a freelancer before, you may already be familiar with the process. But when freelancing in Germany, it’s important to make sure you invoice according to the governing laws here in order to get paid and be prepared to handle any future audits or questions from the tax office.
An invoice is a legal document that needs to include a range of important information, whether it’s an invoice you receive for business expenses, or one that you create and send to your clients. In order to send a legally compliant invoice as a freelancer in Germany, your invoices must include specific information about you, your client, and the service or product you delivered. In this article, we’ll go through everything that must be included on an invoice, so that you can create the perfect invoice.
What information should your invoices include?
You’re obliged to include the following information on every invoice you send:
- Your full name
- Your business address (this is the address you gave when you registered your freelance business)
- The full name of the person receiving the invoice (this could be the main contact you deal with for each of your clients)
- The address of the invoice recipient
- Your tax number or your VAT ID
- The date the invoice was created
- An invoice number (they should be numbered consecutively)
- A description of the goods delivered or services provided
- The quantity or scope of the goods or services provided
- The price for the goods or services listed
- The date or time period in which the goods or services were rendered
- The VAT rate applied to the items listed, or information on why VAT is not applied
- Invoice amounts, including Net amount, VAT amount, and Gross amount
- Payment instructions: Your bank account details or other payment options
Where relevant, you might also include the below information:
- Any discounts agreed upon with the client
- Payment terms: Most people choose to ask for payment within two weeks or 30 days of receipt
Invoicing for small business owners
Self-employed people who earn less than € 22,000 a year may apply to be classified as small business owners, or “Kleinunternehmer”. Anyone with this classification is exempt from the obligation to pay VAT and must not charge VAT on invoices. However, in this case, you do need to add a sentence to explain why you are exempt from charging VAT. It might look something like this: Gemäß § 19 UStG wird keine Umsatzsteuer berechnet. (In accordance with §19 of the German VAT law, no VAT has been added to this invoice).
💡 Tip from Accountable If you expect to earn less than €22,000 a year, make sure you indicate this by ticking the right box when you submit your tax registration as a freelancer.
Invoicing overseas clients
If you’re sending an invoice to a client with headquarters abroad, you need to find out whether or not VAT should be applied and, if not, include the right exemption statement.
Clients within the EU
For clients outside of Germany, but still within another member state of the European Union, you do not need to apply VAT or show it on your invoice. Trade within the EU is regulated by tax law and is referred to as intra-community delivery or service. In this case, both you and your client must have a VAT ID, and the invoice recipient must pay tax on the goods or services in their own country. This process is known as the Reverse Charge procedure, and must be indicated as such on the invoice: Steuerschuldnerschaft des Leistungsempfängers (§13b Abs. 5 UStG). (VAT has not been charged, according to §13b Abs. 5 UStG, subject to reverse charge in the country of receipt).
💡 Tip from Accountable: If you create an invoice for an intra-community service using our free invoice template, the use of the Reverse Charge procedure will be automatically noted on the invoice.
Clients outside of the EU
If your client is based in a country outside of the EU, such as the USA or Australia, reporting VAT becomes a little more complicated. Some countries have a tax treaty with Germany, while others don’t. It’s best to seek advice from a tax advisor if you have to send invoices to a country outside of the EU.
General information on invoicing
To make sure you’ve got all bases covered, here are some extra things to keep in mind when freelancing in Germany:
- You’re legally required to issue an invoice for any service provided
- You’re obliged to keep invoices for 10 years
- You may send an invoice by post or electronically
- You must invoice a client within six months of the date you provided the service or goods, unless the recipient is a private individual
- There are fewer requirements for invoices that total less than €250 (including VAT), but it’s good practice to treat these small invoices the way you would a larger one, and include all elements
Create the perfect invoice with just a few clicks
Now that you know the basics of invoicing and what must be included on a legally compliant invoice, you’re on your way to being paid for your first project. However, invoices can be time consuming and even when you know what you’re doing, there’s plenty of room for small mistakes. Our free invoice template can help! All you have to do is enter your details and in a matter of seconds you’ll receive a professional invoice, designed according to legal requirements.