Lukas Bartels
Published:
11/2021
5 mins
Back in the summer, we wrote extensively about the reduction in sales and value added tax. The blog post covers all the key aspects of change in tax rates, for example:
We could now talk about each of these points again because they are all important. Therefore, if you have basic questions on the topic, read the article carefully (here).
In particular, we want to work with you to address the issue that is likely to be most relevant to your business.
To illustrate, let's use the following example. You have quoted an order with a total net value of €10,000. You have already charged your customer a total of 2 advance invoices (after June 2020, i.e. with 16% VAT each).
So now it's time for the final bill. Here is a sample procedure for the final invoice:
The date on which the service/delivery is fully provided is decisive for the applicable tax rate.
The date of performance is part of the mandatory legal information on an invoice.
If you have already defined this on your quotes/ order confirmations, it makes billing easier, as you only need to do double-check: Did the job get done as agreed?
Determining the time of performance is generally not rocket science. Especially in the trades and construction, it is clearly defined by an acceptance. In Handwerksblatt you find a good article about further subtleties at the time of performance.
Example
Acceptance is in January 2021, which means 19% VAT is due on the final invoice and on the entire order.
Is the performance date still in December 2020? Then 16% sales tax will be due on the order.
Let's stick with our example and now focus on the final invoice. In step 1, we checked or determined the date of performance and now know which tax rate in the final invoice is to be applied to the entire order.
Therefore, we need to show the total amount of VAT due in the final invoice. On the other hand, we calculate which amounts of VAT have already been shown in the discounts. In this way, we ensure that the final invoice is properly prepared as a separate invoice and an overview of all deductions. It doesn't matter if the deductions were made at 16% or 19%, because we have to list and balance the amounts anyway.
Since the supposedly more complicated case is that deductions and final invoices list different tax rates, we will explain the facts using a small example.
Example:
tees
Final invoice
The final invoice is calculated accordingly. Here, the payments made by the customer must now be added together in order to determine the final payment amount due.
A clean invoices must then be created. We can see an example of this using a final invoice automatically generated by plancraft as a sample:
The associated payment statement, assuming the customer has paid both invoices:
By definition, advance invoices are issued before full delivery of a service.
If, on the other hand, clearly defined partial services are provided, partial invoices must be submitted accordingly. Partial invoices are therefore independent, “normal” invoices.
As a result, the sales tax rate shown in the partial invoice at the time of the partial payment is correct and is not caused by the (partial) final invoice correction.
Again, you should consult a tax advisor or the IRS if you are unsure.
With plancraft, you can automatically generate final invoices in accordance with VOB with just a few clicks. The invoice statement is generated for you along with a payment summary that includes all invoices, VAT rates and amounts, and payments. This way, you always create correct invoice documents.
This blog post is intended to help you understand the tax situation and is not intended to be legal advice. If in doubt, you should contact your tax advisor or tax office.
On this blog, we want to write about topics that interest you and really help you. Tell us what's bothering you: feedback@plancraft.de