I am an online merchant - do I need to create an invoice?
Yes and no. In principle, every merchant is obliged to keep proper accounts and to provide appropriate supporting documents. Among other things, this is done by means of an invoice.
If your customer is a private person, it is not necessary to issue an invoice. However, it can offer many advantages, since according to §312f paragraph 2 BGB as a trader in distance selling transactions with private individuals - i.e. transactions via the Internet or telephone - you must provide the consumer with a confirmation of the contract with all mandatory information according to Art. 246a §1 EGBGB, at the latest upon delivery of the ordered goods.
However, if your customer is an entrepreneur - i.e. it is a B2B business - you are obliged to issue an invoice as soon as the amount exceeds 250 euros. In this case, the obligatory information according to § 14 paragraph 4 UStG must be observed.
What do I have to pay attention to when I invoice in online commerce?
Even with an invoice in online trade, it is important that all legally required mandatory information appears on the invoice. If this is not the case, it can lead to unpleasant situations for your company.
If a mandatory entry is missing, the document may not be accepted by the tax office and may not be recognised in the pre-tax or VAT registration.
This can have legal and financial consequences, both for the issuer of the invoice and for the invoice recipient.
If invoices are repeatedly incorrectly issued, the customer relationship can be permanently jeopardized. It is therefore important to carry out a precise check before sending the invoice and to be supported by automated invoicing software.
Which mandatory information should be included on the invoice?
- the full name and address of both the supplier and the recipient
- The tax number (Tax ID) or the Value Added Tax identification number (UID) of the invoice issuer
- The date of issue of the invoice (invoice date)
- The time of delivery or service
- One consecutive, unique invoice number
- quantity or scope and type of service to be invoiced
- the remuneration for the supply of goods or services, broken down by tax rates and exemptions, and the tax rate applicable
- Agreed reductions in remuneration (e.g. rebates, bonuses, discounts, etc.)
- In case of a credit note, the indication "credit note" instead of "invoice
An invoice can be classified as incorrect by the tax office if the following information is missing or incorrectly listed:
- Missing or incorrect invoice number or tax number
- Missing or incorrect indication of VAT rate or date of performance
- Incorrect or incomplete name, company or address details
Incorrect information regarding the tax number or the tax rate on the invoices endangers above all the invoice recipient's input tax deduction.
However, this in turn also has an impact on the invoice issuer, who may have to correct the invoice subsequently. If this is done at a later date, for example during a tax audit, the relevant legal requirements under § 14 (4) UStG must be observed.
In turn, an invoice for the purposes of deducting input tax can only be corrected if it contains the following information:
- Invoice issuer
- Service description
- Separately identified Value Added Tax
If these conditions are not met, the company may face costs that it had not anticipated. Even if the input tax does not have to be refunded after the invoice has been corrected, under certain circumstances the input tax assessed when the incomplete invoice was originally issued earns interest of six 6 percent per year until the time of the invoice correction. Since these invoice corrections are often made as a result of tax audits, the interest loss can be enormous.
Automated invoices for online merchants
It is particularly important for online merchants to automate the invoicing process to ensure that all mandatory information appears reliably on the invoice.
The cloud-based invoicing software from easybillwith which you can easily and quickly create correct invoices. Once you have entered the details in the customer master, they are automatically pulled into the document. This saves you time and ensures that you or your customer will not have any problems with the tax office later. The invoice number is also assigned automatically, so that no errors or gaps can occur.
In addition, many online traders use different sales channels such as Amazon, eBay, Zalando, etc., because marketplaces such as Amazon or eBay now account for half of the total turnover in online trading. It is therefore all the more important that invoices can be generated automatically across all sales channels.
For Amazon it is necessary that the created invoices are uploaded within 24 hours. An automated procedure is essential here, as this can no longer be done manually if the number of sales is higher. Easybill supports the connection to numerous market places and online shops such as Amazon, eBay, WooCommerce, etc.
Electronic invoices - What is to be considered?
More and more online merchants are opting for electronic invoicing or e-invoicing, as both sending and storing invoices requires little effort and costs compared to paper forms.
Electronic invoices must contain the same mandatory information as paper invoices. The ten-year storage period must also be guaranteed for these documents.
A special feature is to be noted here: Invoices must always be stored in the original. Since the e-invoice is an electronic document, it must therefore be archived electronically. It is therefore not sufficient to print out the documents and store them in paper form, i.e. it must be ensured that the files can be opened and read within this period. If an e-mail is used as a means of transport (similar to an envelope) for sending the invoice, it does not have to be stored additionally. However, e-mails with the function of a commercial or business letter or accounting document must be stored in electronic form. Easybill supports you in archiving and automatically sending your invoices. With just a few clicks you can ensure that your invoices are sent to your customers correctly and on time.
Invoices for cross-border deliveries
While Value Added Tax is shown on the invoice for domestic transactions, other regulations apply for transactions with customers from the EU or the European Economic Area (EEA).
Here it depends on whether your customers are companies or private individuals. If your customer is a business and can provide a VAT number, you will not show Value Added Tax on the invoice. You have to make sure that both your UID and that of your customer appear on the invoice. In this case, the delivery is VAT-exempt and the invoice must be marked with the wording Tax-free intra-Community delivery according to § 4 No. 1b UStG.
However, the country of origin principle applies to trade with private individuals or companies such as small entrepreneurs who do not have a UID. In the case of a supply of services to a non-entrepreneur (B2C), the place of performance is the place where the company providing the service is established.
In this case, you issue your invoice to other EU countries in the same way as for a domestic invoice, i.e. you list the applicable VAT rate (19% or 7%, or 16% or 5% until the end of 2020 according to the Corona Tax Assistance Act) on your invoice.
Note: However, if you frequently sell to other EU countries and the value of your sales to the EU is accordingly high, it is important to pay attention to certain regulations.
According to the so-called mail order regulation according to § 3 a para. 1 UStG, mailings to private individuals within the EU are taxable in the country of the recipient if the delivery threshold has been exceeded in that country.
This means that the delivery is subject to taxation in the country of destination and you must therefore pay attention to the VAT rate of the country of destination. In this context, the delivery thresholds of the respective receiving countries apply.
What are delivery thresholds?
Delivery thresholds determine the net value of goods sold above which a VAT registration is required in the respective country of destination for import into the EU member states.
If you, as an online trader, sell your goods to private individuals within the EU, you must therefore pay sales tax on them in the respective country from a certain amount - which is based on the net value of the goods in a calendar year. This amount is determined by the delivery threshold.
By waiving the delivery threshold, an entrepreneur can also register for tax and pay taxes immediately in the respective country.
The respective values of the delivery threshold vary from country to country and are adjusted from time to time, which can lead to an unpleasant tax trap. You should therefore monitor these values regularly, otherwise you could be threatened with considerable additional payments or even criminal proceedings. In 2016, for example, France has lowered the threshold from 100,000 euros to just 35,000 euros net value of goods per calendar year. Anyone who overlooks such information can get into big trouble.
With Taxdoo your delivery thresholds are monitored automatically and daily, so that you don't miss any overrun!
Innovations of the delivery threshold regulation in 2021
In 2021, however, the above-mentioned delivery threshold regulation is to be abolished. This was originally planned for 01.01.2021, but the introduction has now been postponed to 01.07.2021.
So until then, stay alert.
The so-called distance selling arrangement will then replace the previous delivery threshold regulation. There will still be a shift of the place of delivery and thus Value Added Tax to the country to which dealers deliver their goods.
However, only a uniform, new threshold value of 10,000 euros per year for consignments of goods within the EU will apply.
Sales to customers in third countries - Export delivery
The supply to a customer in a third country is VAT-exempt in Germany according to § 4 no. 1 letter a UStG. The invoice for a VAT-exempt export delivery is therefore issued without Value Added Tax .
Apart from the known mandatory details, the invoice must contain a reference to the VAT exemption of the delivery: Tax-free export delivery according to § 4 No. 1a UStG
About the author:
Business Developer & Head of Support of easybill GmbH.
The easybill Ltd is specialized in document management in the B2C, B2B and e-commerce sector on the entire output side. In easybill you will find a maximum of flexibility and at the same time maximum security, coupled with perfect customer service. Companies like Flyeralarm, FTI and E-Commerce sizes like Fintie have been relying on easybill for many years.
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