As an entrepreneur, you always come into contact with the topic of final invoices when you want to settle large deliveries or when you finish larger projects. As a rule, an advance invoice or a partial invoice is incurred within these deliveries or project services . This is always necessary if you are making advance payments, payments on account or partial payments with your customers and clients. At the end of a service provision, you must then create a final invoice. Everyone can do something with this term, but from a legal point of view, the term final invoice is not entirely correct. This term is not known in German tax law. In the sales tax law, the term final invoice is used instead. Everything you need to know and consider about the final invoice can be found in the following article.
Definition: what is a final invoice?
According to HEALTHKNOWING, a final invoice is always issued when a complete service has been provided. For example, this can be the case after the construction of a house, a service over a long period of time or after the completion of a long project. Before you can deal with the subject of the final invoice, you need to know which other invoices are directly related to the final invoice. A distinction is made between the following terms:
- the down payment
- the partial final invoice or down payment invoice
- the final invoice or final invoice
Part payments or partial payments always take place before the completion of an order. The final invoice is only issued when everything is finished and done. In this case, you practically create a cumulative advance invoice. This means that all payments already made are recorded in this cumulative invoice. Final invoices are created very often, especially for construction work. A final invoice VOB is then used here. In this case, VOB is the abbreviation for “ Procurement and Contract Regulations for Construction Services ”.
Final invoice = final invoice
As already mentioned at the beginning, you will not find the term final invoice in German tax law . Rather, the sales tax law speaks of the final invoice. Specifically, this means that the final account and the final account are the same in their meaning. The total amount of all services is finally summarized in the final invoice. A final calculation must be preceded by the fact that the following points have been met:
- Agreement of partial or partial payments
- Invoicing carried out via partial or partial invoices
Issue a tax-correct final invoice
The tax office certainly has a certain interest in every invoice. Regardless of whether it is a partial payment invoice or an invoice on account. The final calculation, however, deserves special attention. For you, this means that your final invoice must above all be comprehensible and therefore verifiable . A verifiable final invoice does not mean that you satisfy the tax office. You have to set up your final invoice in such a way that each of your customers is able to understand this invoice. This should be within a reasonable range, both in terms of effort and time. For this reason, you have to make sure that your final invoice amount is correct.
Display sales tax individually & correctly
It is therefore important for you, the customer and also the tax office that you ensure basic transparency in the final invoice . Therefore, list in this invoice all payments already received and also the respective sales tax that is included in each payment . If you do not do this and only make a list of all gross amounts, you may find that you have to pay the included sales tax again to the tax office. You certainly don’t want that. You can also save yourself some trouble with a possible tax audit. Therefore, pay close attention to these points when you create a final invoice.
Requirements & checklist for a final invoice
In Section 14 (5) of the UStG , the legislature stipulates that the same content is required for a final invoice as is the case with normal invoices. A final invoice must therefore contain the following mandatory information and meet the following requirements for an invoice:
- Name and address of the biller
- Name and address of the invoice recipient
- Your tax number or your sales tax ID
- An invoice number
- the date of issue of the invoice
- the date of the delivery or service
- A precise indication of the delivery or service (e.g. which goods are included in the delivery, which duration of your service, etc.)
- all invoice amounts itemized according to the applicable sales tax rates
- VAT amount included in the invoice amount
- possible sales tax exemptions ( e.g. small business regulation )
However, since this is a final invoice, you have to provide the following additional information in the invoice .
- All partial services and the fees as a net amount for the entire project
- all partial payments already made (for example , installment payments) as a net amount and the tax amounts that have accrued for this amount
- the remaining invoice amount that is still open
- Indication of the sales tax due for this open amount
You can also add a payment deadline.
Note cumulative advance invoices during the construction period in the final invoice
If you should submit a final invoice if you have a VOB contract, you still have to pay attention to a few special features . This is especially true if cumulative advance payment invoices have already been created during the construction period. With the final invoice, you enclose this with the completed and proven construction work according to the VOB contract.
- Deduction of the payments received must also be cumulatively updated up to the final invoice
- If, in addition to the final invoice, the client also requests cumulative evidence of this for invoice amounts in installments and a deduction of installments from deduction invoice to deduction invoice, this must be taken into account in the invoicing
A cumulative invoice has a significant advantage for both you and your customer . On the one hand, the cumulative status of the services and, on the other hand, the outstanding amount of payment for services is always visible.
VAT rate on the final invoice: 16% or 19%?
How high the sales tax is in your final invoice depends on the legally applicable sales tax rates under the Sales Tax Act . A calculation is therefore always made with reference to the assessment base. When preparing your billing, you have to pay attention to the following points:
- If you submit an invoice after July 1st, 2020 and until December 31st, 2020, you must take into account the reduction in sales tax from 19% to 16%
- The reduction no longer applies if the invoice is submitted from January 1st, 2021. From this day on, the original tax rate of 19% will apply again .
The reduction in sales tax can also be important in the case of possible advance payments. It is therefore quite conceivable that you still taxed an advance invoice at 19%, but the final invoice at 16% – or vice versa.
Format of the final invoice: paper, e-invoice, x-invoice?
First of all, as the biller, you have to observe the legal requirements for an invoice . As the biller , however, you are free to choose whether you want to write a paper-based invoice or send your customer an e-invoice . However, the recipient of the invoice should give his consent to an e-invoice beforehand. However, you have to pay attention to a change in the law when it comes to billing for public clients. The so-called “Ordinance on Electronic Invoicing in Federal Public Procurement (ErechV)” came into force on November 27, 2020.
The final invoice is a final invoice for fully rendered deliveries or services . However, the basis for a final invoice are always advance payment invoices or partial invoices. The term final invoice is not known in German tax law. Rather, the sales tax law speaks of the final invoice . The final invoice is mainly used for construction work, often in connection with VOB contracts. But long-term projects or very complex orders can also make a final invoice necessary.