Secure input tax deduction and avoid sales tax errors in incoming invoices

Requirements for a valid invoice under § 14 of the German Value-Added Tax Act (UStG) and for an e-invoice under EN 16931

• Terms and Definitions:Invoice, e-invoice, other electronic invoices, paper invoice, and small-amount invoice; distinction from pure PDF/image formats.
• Required Information Pursuant to Section 14 of the German Value-Added Tax Act (UStG):General Requirements and Specific Provisions for Cross-Border Services and Deliveries.
• Formal e-invoice requirements according to EN 16931:Structured data fields, validation logic, and minimum content requirements for a compliant, machine-readable e-invoice.
• Disclosure and Retention:Time Limits, Audit-Proof Archiving, and Legal Retention Requirements.

Consequences of an incorrect invoice

• Risk to Input Tax Deduction:Errors in required information, form, or content that preclude the input tax deduction, delay it, or require a correction.
• Threats to Tax Exemptions:Deficiencies that jeopardize tax exemptions, particularly in cross-border situations.
• Additional Sales Tax Liability and Tax Reporting:When an incorrect tax report triggers an unintended tax liability, and how to distinguish between unjustified and incorrectly reported sales tax.

Invoice Adjustment and Invoice Correction

• Distinguishing Between the Terms“Invoice Adjustment” and “Invoice Correction.”
• Correction Methods:Cancellation and reissuance, or a correction document that can be clearly assigned to the original transaction.
• Conditions for Validity:Requirements that must be met in order for an unauthorized tax credit to be validly eliminated and for no outstanding tax liability to remain.
• Retroactive Effect:The conditions under which an invoice correction is retroactive to the original date of issuance.

Requirements for input tax deduction

• Basic Requirements:Distinguishing between business and non-business activities and allocating services to the business.
• Input Tax Deduction for Paper and Electronic Invoices:Audit and Documentation Requirements.
• Special Cases:Input Tax Deduction for Intra-Community Acquisitions and Reverse Charge, Including the Respective Documentation Requirements.
• Timing of the Input Tax Deduction

Exclusion and Allocation of Input Tax

• Exclusion:Input services that are used directly for transactions that are excluded from input tax deduction.
• Input Tax Allocation:Determining and Applying an Input Tax Ratio in Cases of Mixed Use and Its Effect on the Deductible Input Tax Amount.
• Process Optimization:Designing allocations to optimize the input tax ratio within the framework of sales tax regulations.

How to Handle Suppliers When Invoices Contain Errors.