Modern tax myths often persist in day-to-day business, including those concerning formal requirements. In Part I, we examined common misconceptions about business entertainment receipts and the assumption that VAT is always merely a pass-through item.
This article addresses typical misunderstandings concerning invoice corrections and tax deadlines.
Myth 1: “Invoices can be corrected at any time”
Incorrect invoices are not uncommon. Errors can occur more quickly than many businesses realise: transposed figures, an incorrect VAT rate or missing mandatory information are all common in a busy working environment, particularly where invoices are not generated automatically.
But what happens then? Can a business simply issue a new invoice, correct the existing one or cancel it completely?
As a general rule, invoices can be corrected, and not every typographical error will cause a serious problem. However, the requirements for a valid correction depend on the type of error and when it is corrected.
The decisive question is whether the invoice meets the statutory requirements. The most important mandatory information includes:
- the correct name and address of the invoice issuer and the recipient;
- the tax number or VAT identification number;
- the invoice number and date of issue;
- the nature, extent and date of the supply or service; and
- the amount charged, the applicable VAT rate and the VAT amount.
Where mandatory information is missing or individual details are incorrect, such as the company name or legal form, the invoice must be corrected. This is necessary to ensure that it has full legal and tax effect for both parties, particularly for VAT purposes.
It is not always necessary to cancel the invoice completely and issue a new one. In many cases, a supplementary correction document is sufficient, provided that it clearly identifies the original invoice and replaces the incorrect information.
Why is a correct invoice so important?
A correctly issued invoice is particularly important for the recipient’s right to deduct input VAT.
For smaller businesses or low-value invoices, the financial consequences may initially appear limited. For larger companies and substantial invoice amounts, however, incorrect invoices can have a significant financial impact.
- Incorrect or incomplete information, such as the wrong legal form or address, can jeopardise the recipient’s entitlement to deduct input VAT.
- If essential minimum information is missing, such as the identity of the supplier or recipient, the supply or service, the amount charged or the VAT amount, input VAT may generally only be deducted once a proper invoice has been received.
- Incorrectly stated VAT can have immediate VAT consequences. In particular, where an invoice shows an excessive amount of VAT, that amount will generally initially be payable to the tax authorities.
Invoice errors should therefore be corrected promptly and in a transparent, traceable manner. This is important not only for the issuing business itself, but also to prevent accounting and tax problems for its customers.
Clearly defined digital processes can help avoid queries, additional tax payments and objections during tax audits.
Myth 2: “Deadlines can always be sorted out later”
Deadlines are a sensitive issue in tax law. Missing a deadline may result in late-filing penalties, late-payment surcharges, assessments based on estimates or the loss of legal remedies.
Does that mean that tax deadlines are always fixed and absolute?
As a general rule, tax deadlines are binding. In certain circumstances, however, an extension may be requested. Whether an extension is available depends primarily on whether the deadline is prescribed by law or has been set by the tax authorities in an individual case.
The following examples illustrate the distinction.
1. Deadlines for filing tax returns
Statutory deadlines apply to the filing of tax returns, including income tax and VAT returns. An extension is only possible in certain circumstances, for example where there is a valid reason, in accordance with section 109 of the German Fiscal Code (Abgabenordnung, or AO). Businesses may also apply for a permanent one-month extension for filing advance VAT returns, known as a Dauerfristverlängerung.
2. Deadlines set by the tax authorities
Where the tax authorities set a deadline for answering questions, submitting a statement or providing documents, an extension can often be granted. However, the request should be made in writing and in good time before the original deadline expires.
3. Deadline for objecting to a tax assessment
The deadline for lodging an objection against a tax assessment is fixed and cannot be extended. As a general rule, the objection must be submitted within one month. Where the deadline is missed through no fault of the taxpayer, it may exceptionally be possible to apply for reinstatement, meaning that the missed deadline is treated as if it had been observed. This is only available under strict conditions, and the relevant procedural steps must be taken promptly in accordance with section 110 AO.
4. Payment deadlines
The tax authorities may also exercise some flexibility in relation to payment deadlines. For example, where a business is experiencing acute liquidity difficulties, the authorities may agree to defer payment or permit the tax liability to be paid in instalments. Whether such an arrangement will be approved depends on the individual circumstances. Interest on the deferred amount may also be charged in addition to the original tax liability.
Conclusion: tax clarity creates commercial certainty
Tax myths also persist in relation to formal matters such as invoice corrections and deadlines.
It is therefore worth establishing precisely which rules apply. Businesses that understand the relevant requirements can save time and money and avoid unnecessary disputes with the tax authorities.
Clear processes for issuing and correcting invoices and monitoring deadlines also reduce the risk of errors, improve planning certainty and help preserve commercial flexibility.
With structured tax advice, we help businesses identify risks early, establish reliable processes and make the best use of tax planning opportunities.
Tax myths for SMEs – part I
Part I of this series covers topics including:
- Correctly claim business entertainment expenses for tax purposes
- Understand how VAT works
- Avoid common mistakes
- Practical tips for businesses
Your ACCONSIS contact
Melanie Hornauer
Tax consultant
Service phone
+49 89 547143
or via email
m.hornauer@acconsis.de
Your ACCONSIS contact
Stefan Strassl
Tax consultant
Service phone
+49 89 547143
or via email
s.strassl@acconsis.de
FAQ – answers to frequently asked questions about tax myths – part II
Can incorrect invoices be corrected at any time?
Invoices can generally be corrected. However, the appropriate procedure depends on the type of error and when the correction is made.
In many cases, a supplementary correction document will be sufficient, provided that it clearly refers to the original invoice and replaces the incorrect information.
What information must a proper invoice contain?
The essential mandatory information includes:
- the name and address of the invoice issuer and recipient,
- the tax number or VAT identification number,
- the invoice number,
- the date of issue,
- the nature and date of the supply or service,
- the amount charged,
- the applicable VAT rate and
- the VAT amount.
How can incorrect invoices affect the deduction of input VAT?
Missing or incorrect information may jeopardise or delay the recipient’s entitlement to deduct input VAT.
Where essential minimum information is missing, input VAT may generally only be deducted once a proper invoice has been received.
Can tax deadlines be extended?
This depends on the type of deadline.
Deadlines set individually by the tax authorities and certain filing deadlines may be extended under specific conditions. However, the one-month deadline for objecting to a tax assessment cannot be extended.
In exceptional cases, reinstatement following a missed deadline may be possible, but only where the strict statutory requirements are met.
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