As already reported in Winterzeit (Issue 2, December 2012 to March 2013), credit notes (Gutschriften) must be designated as such since 01/01/2013 in order not to jeopardise the input VAT deduction. This applies to cases in which the recipient of the service (i.e. the customer) issues a credit note (instead of receiving an invoice from the supplier). Example: A commercial agent arranges contracts for your company. Instead of the agent issuing you an invoice, you issue a credit note to him (e.g. because you can directly and automatically allocate the arranged contracts on the PC, which makes accounting easier). In this case, it is a "genuine" Gutschrift in the VAT sense, which must also be designated as such. This also affects, for example, companies that have previously settled commission accounts in favour of commercially active agencies, intermediaries, etc. Since 01/01/2013, the word "Gutschrift" must be stated on the settlement. This also covers, for example:
• Commercial agent settlements • Intermediary settlements • Agency settlements • Vendor settlements • Commission settlements
If the wording "Gutschrift" in German is missing on the invoice, it no longer entitles the recipient to the input VAT deduction. There is a risk that this also applies if the term appears in another language (e.g. "self-billing"). If you therefore issue credit notes in other languages, you should, as a precaution, always add the word "Gutschrift" in brackets.
Important: Do not confuse the commercial credit note with the "genuine" Gutschrift in the VAT sense. Supposed "credit notes" issued, for instance, for complaints or returns of goods from customers are not "Gutschriften in the VAT sense" at all; rather, they are simply "invoice corrections" or "cancellation invoices". To avoid confusion, they should also be designated accordingly (so in these cases, no longer use the term Gutschrift, but rather Rechnungskorrektur / invoice correction)!
If, for example, as the recipient of a service you object to a delivery of goods, you, as the entrepreneur, will usually issue a so-called "Belastungsanzeige" (debit note). You will then generally receive a Rechnungskorrektur (invoice correction) from the supplier. Please ensure that this invoice correction has also been designated as such since 01/01/2013 (not as a Gutschrift)!
Gutschriften are therefore only "genuine" Gutschriften if the recipient of the service (instead of the supplier) issues the settlement.
SUMMARY:
1.) Gutschrift in the VAT sense: The term must not be confused with the so-called "commercial credit note". (VAT) Gutschriften must, since 01/01/2013, also be called Gutschriften in order for the input VAT deduction to be granted. This only concerns cases in which the recipient of the service (i.e. the customer) settles with the supplier by way of a Gutschrift. Such cases include, for example: A commercial agent (= supplier) arranges sales for the company/customer (= recipient of the service): The commercial agent does not issue an invoice; instead, the recipient of the service settles with him by way of a Gutschrift. These are the credit notes referred to here, which must be called "Gutschriften" from 01/01/2013 (not Rechnung)!!! In short: Gutschriften always apply when the recipient of the service settles INSTEAD of the supplier.
2.) Correction invoice or cancellation invoice (= so-called commercial credit note): These are cases in which the supplier (= the party who, for example, sells the goods) first issues an invoice to his customer for the delivered goods. The customer complains about part or all of the consignment and, for example, returns goods. The supplier then (again) issues a Rechnungskorrektur (invoice correction) or a Stornorechnung (cancellation invoice) to the customer. In your sales department, this process was previously referred to as a "Gutschrift"; in other words, a Gutschrift was sent to the customer. To avoid confusion (since this is not a Gutschrift in the VAT sense), these invoices should no longer be called Gutschrift, but rather Rechnungskorrektur or Stornorechnung (this case affects, for example, your sales department).
3.) Belastungsanzeige (debit note): Belastungsanzeigen remain Belastungsanzeigen, as they merely notify of complaints. Following this, a Rechnungskorrektur or a Stornorechnung should then be sent by the supplier (i.e. by the party who delivered the goods).
Frequently asked questions
Frequently asked questions
When does a true credit note exist for VAT purposes?
For VAT purposes, a credit note (Gutschrift) only exists when the recipient of the supply (customer) invoices the supplier for the service rendered, instead of the other way around. Typical examples include settlements with commercial agents, brokers, agencies or commission arrangements, where the principal issues the invoice. This does not apply to mere invoice corrections or cancellations.
Which mandatory wording has been required on VAT credit notes since 1 January 2013?
Since 1 January 2013, VAT credit notes must contain the German term "Gutschrift". Without this wording, the document does not entitle the recipient to deduct input VAT. For foreign-language settlements (e.g. "self-billing"), the term "Gutschrift" should be added in brackets as a precaution.
How do commercial credit notes and VAT credit notes differ?
A VAT credit note (umsatzsteuerliche Gutschrift) is issued by the recipient of the service instead of the supplier. A commercial credit note (kaufmännische Gutschrift), by contrast, is a correction or cancellation invoice issued by the supplier, for example after a complaint or return of goods. The latter should no longer be called a "Gutschrift," but rather a "Rechnungskorrektur" (invoice correction) or "Stornorechnung" (cancellation invoice), in order to avoid confusion and VAT-related risks.
How should corrections following complaints or returned goods be properly labeled?
If the supplier corrects the original invoice after a complaint or return of goods, the document should be expressly labeled as a "Rechnungskorrektur" (invoice correction) or "Stornorechnung" (cancellation invoice). The previously common term "Gutschrift" (credit note) is misleading here, as there is no credit note within the meaning of VAT law. This clear designation prevents confusion and input VAT risks.
What role does the debit note play in the complaint process?
The debit note (Belastungsanzeige) is issued by the recipient of the goods or services to flag a complaint, e.g. in the case of defective deliveries. Even after 01/01/2013, it remains a debit note and is not reclassified. The supplier should then issue a corrected invoice or cancellation invoice — but not a credit note (Gutschrift).