Contractors are required to issue an invoice to the customer. First and foremost, it is important for your business to keep a copy of this invoice on file. For your customers, an invoice is particularly important from a tax perspective. For customers who are business owners, the invoice allows them to claim a VAT deduction. If the service is a trade-related service provided to a private household, it may be possible for this customer to claim the invoice for a reduced income tax rate. To ensure these aspects are handled correctly, the invoice must contain all required information. As tax advisors based in Düsseldorf and Oberhausen, we increasingly serve trades businesses and, unfortunately, often encounter incorrect invoices. In this article, we have therefore summarized the most important aspects of a tradesman’s invoice.
What mandatory information must be included in a tradesman’s invoice?
Tradespeople should never forget to include the following ten mandatory details on their invoices. We have therefore briefly explained all these points below and illustrated them in a clear sample invoice. Please note that there are sometimes special regulations that we cannot explain in this context. In case of doubt, a consultation with a qualified tax advisor is therefore necessary!
- Information on Name or Company
If you operate a sole proprietorship, you must include your full name on the invoice as the tradesperson and the issuer of the invoice. However, if your trade business is a partnership or a limited liability company (GmbH), the company name must appear on the invoice.
- Address Information
In addition to the name, the full address must also be provided. This must be the business address. Of course, this may differ from your private address.
- Customer’s address and name
The invoice is addressed to the invoice recipient—that is, your customer. Therefore, it is important that the customer’s address and name are also included. This information is particularly essential from a tax perspective for future deductibility.
- Tax ID or VAT ID
The tax number or VAT identification number should never be omitted. It is essential that this be included on every invoice!
- Invoice date
The invoice date or date of issue should never be missing from any invoice. This is the date on which you created the invoice.
- Invoice number (sequential)
The tax office wants to ensure that each invoice is issued only once. Therefore, each invoice must be assigned a sequential invoice number.
- What services were provided?
On the invoice, tradespeople must describe exactly which services were provided. Simply stating “tradesman’s services” would not be sufficient! A specific description is required. If goods are listed on the invoice, the quantity and type of each item must also be specified. Additionally, the standard commercial designation of the goods must be used.
Tip: In the case of extensive trade work, the services may be too numerous to list on a single invoice. In such a case, it is possible to refer instead to the contract containing this information.
- Date of Service
The invoice must include the date of service. For trade services, the month is sufficient as a time specification. The date of service for trade services is the day of completion. It may happen that trade services are performed over several months or years. In this case, the period in month + year is sufficient.
- What is the amount due?
Of course, the invoice must also specify the applicable fee. This refers to the net amount excluding sales tax. If you wish to grant your customers a discount, it is sufficient to state the percentage. Alternative bonus or discount agreements must also be specified in writing. No exact figures need to be provided.
- Tax Rate and Tax Amount
Of course, it is also particularly important to state the 19% tax rate at the end. This is used to calculate the tax amount, or the sales tax that is charged. Both details are listed after the fee and are essential for a proper invoice!
In the following example, we have presented a classic invoice from a trades business. Check whether your invoice is structured correctly and contains the important mandatory information.
Tax Advisors for Tradespeople in Düsseldorf and Oberhausen
As a tradesperson, you want to focus on your core expertise rather than tax matters. That’s why, as tax advisors in Düsseldorf and Oberhausen, we are the perfect partners for tradespeople. We handle your tax matters and answer all your questions. With our industry specialization, you can rely on our team! Simply schedule a consultation. Contact us now.
