We all know the problem. During an invoice audit we discover that essential invoice requirements are missing or incorrect. The input VAT deduction is therefore lost. A deliberate deduction of input tax despite the formal errors can be sanctioned by criminal law in many countries and violates company-wide compliance rules.
In Germany, however, three simple ways to remedy these errors are available. Pursuant to § 14 para. 6 no. 5 of the German VAT Act (UStG), § 31 para. 5 of the German Value Added Tax Implementation Regulation (UStDV), an invoice can be corrected if it does not contain all the information required by § 14 para. 4 UStG or § 14a UStG or if the information on the invoice is incorrect.
1. Rectification directly on the invoice
Each correction must be confirmed by the invoicing party with its company stamp, date and signature. If an invoice is corrected, the amended data must still be visible on the invoice. It is not permitted to use stickers to overlay data or to overwrite them.
2. Invoice supplement
Issue of a supplementary document with the date of issue, clearly and specifically related to the invoice to be amended. The invoice supplement shall contain the missing information or correct wrong data. It must have a reference to the original invoice by naming the original invoice number. Only the original invoice together with the invoice supplement allow the input tax deduction.
3. Credit note and reissue of a new invoice
Cancellation of the old invoice by means of a credit note and issue of a new invoice with a new invoice number and invoice date. The invoice must contain a clear reference to the original invoice. This is typically done by referring to the original invoice number. The credit note and the new invoice are normally generated in the current period and therefore do not require a company to re-open past accounting periods. It is the most common way to correct in particular when the financials of an invoice (e.g. net amount, VAT amount or gross amount) have been changed.
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