You want to write an invoice and you have the terms “gross” and “net” in mind. But what exactly do these terms mean and how do they affect your bill? “Netto” comes from Italian and means something like “without added tax”. It is therefore the net price that does not include sales tax . “Gross” is the exact opposite of “Net”. This word also comes from Italy. This is the gross price that already includes sales tax. We take a closer look at the net price and thus also the net invoice compared to the gross invoice.
Difference between the gross and net invoice
The invoice amount is always identical for the net and gross invoice. The difference, however, lies in the presentation of the individual invoice items.
Net invoice
- the invoice items are listed with the net price
- from this, the invoice amount is determined without sales tax
- The sales tax is determined from the invoice amount, added to the invoice amount and thus the gross amount is determined
| product | crowd | unit | price | amount | |
| Laptop | 1 | piece | 380.00 | 380.00 | Net prices |
| Tablet | 2 | piece | 250.00 | 500.00 | Net prices |
| Subtotal | 880.00 | Total net amount | |||
| VAT 19% | 167.20 | + Sales tax | |||
| Total payment amount € | 1,047.20 | Total gross amount |
With an invoice template you can quickly and easily create a net invoice.
Gross invoice
- the invoice items are listed with the gross price
- this results in the invoice amount including sales tax
- VAT is deducted from the invoice amount and shown separately
| Product | Crowd | Unit | Price | Amount | |
| Laptop | 1 | piece | 380.00 | 452.20 | Gross prices |
| Tablet | 2 | piece | 250.00 | 595.00 | Gross prices |
| Payment amount | 1,047.20 | Total gross amount | |||
| includes VAT 19% | 167.20 | -Value added tax | |||
| Total net € | 880.00 | Total net amount |
The amount to be paid is the same in both invoices, only the type of presentation differs here.
Sales tax calculator
With a sales tax calculator you can simply enter your net amount and the respective sales tax rate that you have to state on your invoice. The calculator will then automatically show you the amount of VAT and the gross amount. With this simple calculation, you know immediately what amount to show on your invoice.
When do you have to write a gross or net invoice?
You’re an entrepreneur, but your customer is a private individual or a small business owner. In this case you have to use the gross invoice. The total gross amount is the payment amount. Your customer cannot get the sales tax back from the tax office.
You are an entrepreneur and your customer is an entrepreneur too. Then you use the net invoice. Your customer can get the sales tax back from the tax office. The invoice must therefore show the net price for each individual item, the sales tax shown separately and the total amount to be paid visible.
It is important to observe the price regulation!
This ordinance regulates when, how and which prices must be mentioned in advertising and in offers for products, goods and services. The purpose is to enable the consumer to research his price expectations on the basis of mutually comparable prices. With factually correct and complete consumer information, the price truth and price clarity are to be guaranteed and the position of consumers vis-à-vis trade and industry is to be strengthened by optimal price comparison options in order to promote competition.
Article 1 of the Price Indication Directive 98/6 regulates the indication of the sales price and the price per unit of measure for products that are offered to consumers by dealers, and that this is intended to provide consumers with better information and facilitate price comparisons.
In order to ensure uniformity and transparency of the price information, Article 3 (1) of Directive 98/6 stipulates that the sales price of all products offered to consumers by traders must be indicated, this sales price according to Article 2 (a) of the latter Directive is defined as the final price for a unit of product or a specific quantity of product, including VAT and all other taxes.
Write a net invoice
A net invoice is also subject to the requirements of the sales tax law in Germany. Therefore, a net invoice must contain the following mandatory information:
- your name and address (providing entrepreneur)
- the name and address of your customer (service recipient)
- your tax number or sales tax identification number
- the customer from the EU is his VAT ID number
- the date of the invoice
- the unique, consecutive invoice number
- the quantity and type of products or other services delivered
- the time of delivery or service
- the net amount, the applicable tax, the tax rate and the gross amount
Small business owner invoice
You can apply for the small business regulation if your total turnover in the past calendar year did not exceed 22,000 euros and you are unlikely to exceed 50,000 euros in the current calendar year. According to Section 19 of the Sales Tax Act, as a small business owner you do not have to state sales tax on your invoice. So it is neither a net nor a gross invoice, since you have to calculate the sales tax here.
In practice, many people refer to a small business invoice as a net invoice because no sales tax is charged. That is a bit misleading. In fact, your net amount is also the gross amount.
In addition, you specify the payment deadlines so that you can get your money quickly. Invoices without information are due immediately, but many just don’t know that. And of course the bank details or the necessary information on other cashless channels should not be missing.
If your customers have any questions about the invoice, it is helpful to note down your contact details.
The note “VAT exempt due to the small business regulation” is very important. If you forget this sentence on your invoice, sooner or later the tax office will “ask” you to pay the sales tax.
Another option would be to use a template for an invoice without sales tax . You can find them online for free download.
Invoice abroad
As an entrepreneur, you show sales tax on your invoices. You pass this sales tax on to the tax office and your customer, if he is an entrepreneur, can get the sales tax back from the tax office as input tax.
But there is an exception to this principle of sales tax – “ reverse charge ”. You have probably heard of it before or even used it. In this case, the recipient of the service owes the tax office the sales tax. This procedure is used for all cross-border deliveries within the EU. However, it is not a must, but an optional provision. In this case, your customer pays the sales tax to his tax office. The only prerequisite for using this procedure is that both you and your customer must have a VAT ID number (sales tax identification number).
As an entrepreneur, you are obliged to inform your customer of his or her tax liability with the note “tax liability of the service recipient”. This obligation arises in accordance with Section 14a (5) of the UStG . Similar notes with the same content are of course also allowed.
The reverse charge process offers you many advantages because it saves you administrative work.
Example
An entrepreneur based in Germany sells printers worth € 1,000 net to a tax office in Vienna. He will opt for the reverse charge procedure, so that the sales tax with the note “tax liability of the service recipient” does not have to be included in the invoice. The sales tax of 200 € (20% VAT rate in Austria) is paid by the tax office directly to the Austrian tax office. The tax office is entitled to deduct input tax and can therefore deduct the sales tax as input tax.
If you opt for the reverse charge procedure, please note the following when generating the invoice:
- Your VAT ID number and your customer’s VAT ID number must be provided
- do not specify a tax rate, just the net amount
- to add the note “Reverse Charge” to the invoice
Write a net invoice – with an invoice program
With an online invoice program you can generate a net or gross invoice with a simple click of the mouse. You simply select the button “gross” or “net” and the invoice will be created according to your specifications. Of course, you also have to add the necessary invoice details such as the product / service, the price, the customer address.
You can then easily send the invoice from your invoice program with a click of the mouse. Finished!
