Germany amends rules on invoices for small transactions with retroactive effect

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Germany amends rules on invoices for small transactions with retroactive effect

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Germany has simplified the VAT procedure for the invoicing of small amounts, but practical problems remain for taxpayers on how the rules should be applied.

On May 12 2017, the law to decrease administrative burdens (Bürokratieentlastungsgesetz II) introduced an increase in the threshold for so-called invoices for small amounts from €150 ($165) to €250 (gross). This has been done with a view to simplifying, in particular, cash transactions, the trade in everyday consumer goods and billing through automatic machines.

Simplification for input VAT deduction from invoices for small amounts

The provisions on invoices for small amounts pursuant to section 33 of the German VAT Implementation Code (UStDV) contribute to simplifying input VAT deduction in daily business. According to section 15 of German VAT Act, input VAT can only be deducted where the recipient is in receipt of an invoice that meets the standard invoice requirements of section 14 paragraph 4 of the German VAT Act. As regards to input VAT deduction from so-called invoices for small amounts, the provisions of section 33 of the UStDV provides for only very basic requirements concerning the information stated in an invoice. Contrary to the information provided on regular invoices in accordance with section 14 paragraph 4 of the German VAT Act, it is, in particular, not necessary to state the recipient and the separate VAT amount. The provisions on small amounts do not apply in cases of distance selling, intra-Community supplies of goods or, as regards the reverse-charge mechanism.

Retroactive effect

The amendments have retroactive effect from January 1 2017. However, taxable persons who have received invoices for the amount of €150-€250 (gross) since this date can claim input VAT deduction even if the invoices merely contain the information of section 33 of the UStDV.

Practical problems for application remain

The practical problems associated with the application of the new law continue to exist. Information, which is not required but yet stated in invoices, might jeopardise the input VAT deduction, in particular, incomplete or incorrect information concerning the recipient appearing in the invoice. The fiscal authorities may basically deny input VAT deduction on the grounds that the invoice does not meet the requirements of section 33 of the UStDV. This then leads to the paradoxical conclusion that where the address field is empty input VAT can be deducted. However, where the address field is incompletely or incorrectly filled out, the deduction will be denied.

Recommendations

Invoices for small amounts should merely contain the invoice details required in accordance with section 33 of the UStDV. Any additional information carries with it the risk of being incomplete or incorrect and may consequently jeopardise the recipient’s input VAT deduction.

This article was written by Dr Matthias Oldiges, lawyer at Küffner Maunz Langer Zugmaier in Munich.

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Dr Matthias Oldiges

T: +49 89 217501266

E: matthias.oldiges@kmlz.de

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