Tax identification number: mandatory information on the invoice
Your tax number as a fingerprint of your company
Creating a correct invoice is often a headache. At the latest when the tax inspector is at the door, unpleasant surprises can arise if mandatory information is missing from the invoice, and this may have been the case for some time. This can be expensive and lead to high administrative costs, because the tax office has no mercy when it comes to sales tax. Your tax number is virtually the fingerprint of your company.
In addition, there are the special regulations for intra-Community deliveries, where the VAT identification number is an important part of the invoice.
But what exactly must appear on the invoice to ensure that it is legally correct?
The tax number or VAT ID
So what exactly is the difference?
Definition: What exactly is the tax number?
Does a tax number have to be on the invoice? And if so, which one? What exactly do these numbers mean and what is the difference? In principle, both tax number and VAT ID serve to identify a company for tax purposes. An invoice without a tax identification number is therefore inadmissible.
If you issue invoices to persons or companies that have their place of residence or business in Germany, it is sufficient to indicate the tax number (tax ID) on the invoice.The tax number consists of 11 digits: The first 2 or 3 digits are identical to the last digits of the federal tax office number and identify the responsible tax office. The following 3 digits (4 in North Rhine-Westphalia) indicate the responsible area within the tax office. The next sequence of digits (usually 4, 3 in North Rhine-Westphalia) is the personal distinguishing number of the taxpayer. The last number is a one-digit check digit calculated from the preceding digits. Alternatively, you can enter your sales tax identification number (Umsatzsteuer-ID) instead of the tax number. Many entrepreneurs prefer to specify your VAT ID because it is more secure in terms of data protection.
Obligation to verify the VAT identification number
Pursuant to Section 6a (4) of the German Turnover Tax Act (UStG), the supplying company is obliged to check the information provided by the recipient with the “due diligence of a prudent businessman”. If the supplying company fails to comply with its duty of care with regard to checking the accuracy of the VAT registration number and it later transpires that the VAT registration number of the recipient of the supply provided by the supplying company was incorrect, the supplying company must reckon with additional tax payments.
In order to avoid this risk and to comply with the “duty of care of a prudent businessman”, it is generally advisable to provide evidence of a check of the recipient’s VAT ID number (USt ID check) for individual receipts. However, failure to comply with this obligation to provide proof may have tax consequences.
You must check your customer’s VAT ID and document this check. Otherwise, you may be subject to additional VAT claims.
Legally compliant on the way: easy with easybill
Curious now? Then simply take a look at the corresponding function in our invoicing software. Check the sales tax ID directly with the customer.
Value added tax identification number or value added tax ID
Does every company need a VAT number? No.
It is mandatory to use the VAT identification number (VAT ID) as soon as products and services are to be sold to or purchased by business customers in the EU.
These business relationships between EU companies are also referred to as intra-Community supply. The legal basis for this is regulated in detail by the VAT Act (§4 and §6 UStG). The VAT ID (USt-IdNr.) is therefore required if you, as an entrepreneur liable for VAT, write an invoice to an entrepreneur in another EU country (B2B business).
How to obtain the VAT identification number?
Once your business registration is successfully completed, you can submit the application for a sales tax ID.
Advantages of the VAT ID:
Different rates for VAT, correct display on the invoice and then also a temporary VAT rate that is lower than normal – quite a lot of things to consider there.
If both parties provide a VAT number, the supplier or service provider does not have to charge VAT.
Because of the tax-free invoices, no sales tax has to be paid to the tax office.
This eliminates the cumbersome VAT refunds for
intra-Community supplies and services.
Attention small business owners!
As a small entrepreneur within the meaning of § 19 UStG, you are generally not entitled to VAT-exempt invoices from other entrepreneurs in the EU. A small entrepreneur is defined solely on the basis of its turnover and must meet the following criteria:
Sales in the previous year must not have been greater than 22,000 euros (until 2019: 17,500 euros) and planned sales in the current fiscal year must not exceed the limit of 50,000 euros.
With regard to the stated turnover limits of the small business regulation, it should be noted that these refer to the turnover actually received.
You therefore do not have to add any fictitious sales tax. Sales that are generally exempt from VAT are deducted from your total sales with regard to the small business regulation.
Small business owners must also indicate the reason for the absence of the VAT amount, such as “In accordance with §19 UStG, the invoice amount does not include VAT”.
Other mandatory information on an invoice
For a correct invoice, the following details must also be provided. It is recommended to include the following 10 components in the invoices as a matter of principle.
For price reductions, you should also point out rebates or discounts.
Complete name and address of the company (billing address)
Tax number or the Value added tax identification number (german: USt-IdNr.)
Complete name and address of the customer
Date of issue / date of invoice
Ongoing Invoice number
Time of delivery / service
The quantity and the type of delivery or the scope and the type of performance
Payment for the delivery / service in net
The amount attributable to the net Sales tax rate
The amount attributable to the net Sales tax amount
Create your correct invoices with easybill and ensure that these mandatory details always appear on your invoices: The details are automatically transferred via the invoice templates and can therefore no longer be forgotten. Another advantage: With easybill, the VAT identification number is automatically checked as soon as an invoice is written. In this way, you save yourself the additional administrative effort and can avoid unpleasant subsequent VAT demands.
