New legislation, which is designed to reduce administrative burdens (second law to reduce burdens of bureaucracy), will implement simplifications in several areas of German tax rules. Concerning Value Added Tax the new legislation raises the threshold for simplified invoices from €150 to €250. The adjustment will be retroactive as of 1 January 2017.
Businesses can issue simplified invoices if the payment does not exceed a total amount of 250 EUR (gross, so VAT included - Art. 33 German VAT Act Implementing Provision). Typical examples of such simplified invoices for small amounts are sales slips in supermarkets. Simplified invoices must show only the following information:
* Name and address of the business supplying the goods or services,
* Invoicing date,
* Quantity and type of goods or services supplied
* Payment and tax amount in one sum (gross amount),
* Tax rate or a reference to a tax exemption.
Service providers or suppliers benefit from the simplification rule in the billing process since it is not required to specify invoice characteristics like the name and address of the customer, time of performance or tax number and billing number.
Also the customer gets relieved. For the deduction of input Value Added Tax he has to check only the simplified invoice, which contains less characteristics, for correctness. If, however, the service provider or supplier does not make use of the simplification rule and issues “standard” invoices, the customer should check the full invoice for correctness!
Please note: Simplified invoices may not be issued inn case of intra-Community distance selling (Art. 34 CD 2006/112/EC), for intra-Community supply of goods (Art. 138 CD 2006/112/EC) or for transactions which are subject to the reverse charge mechanism (Art. 194 et seq. CD 2006/112/EC)! As a consequence, businesses established outside Germany and having no fixed establishment in Germany should continue issuing “complete” reverse charge invoices for B2B services to German business customers irrespective of the invoiced amount.
Unfortunately, German legislature has not exhausted full scope of possibilities for simplified invoices. According to the EU provisions the threshold amount could have been raised up even to 400 EUR (Art. 238 CD 2006/112/EC ).