Invoice date = tax date? A big misconception!

In online trade, there are unfortunately still some misconceptions about the date of delivery / service, invoice date and tax date, which can lead to incorrect Value Added Tax declarations and incorrect bookkeeping. Find out here on which date services actually have to be taxed.
Dr. Roger Gothmann
Dr. Roger Gothmann
  • 6 min. Lesezeit
Invoice date = tax date? A big misconception!

Unfortunately, there are still some misconceptions in online trade, which can lead to false Value Added Taxdeclarations and incorrect accounting.

Even serious media like to take up e.g. the striking alleged problem that baby food is not taxed at a reduced rate in contrast to dog food. However, this is wrong.

However, the following misconception has a much greater impact in online trading.

Misconception: Invoice date relevant for sales tax

There are usually two dates on invoices: The invoice date and the service date (or service period). While the invoice date is simply the day on which the invoice was issued, the service date is somewhat more complicated.

The date of performance to be shown on the invoices is the date on which a delivery is recorded for VAT purposes.

A misjudgment of the timing results in – Value Added Taxdeclarations and wrong invoices are. In addition. Delivery thresholds incorrectly monitored and determined.

Ultimately, the accounting is then also not correct.

But when is a delivery to be recorded for sales tax purposes?

When does the tax arise for a supply?

Pursuant to § 13 para. 1 no. 1 a) UStG, the VAT arises Value Added Tax at the end of the advance notification period (VA) in which a delivery is deemed to have been carried out. The RA for most online merchants is the calendar month.

In the following we therefore always refer to the month for better readability.

There are two exceptions to this rule in online trading.

  • Exception 1: If the previous year’s sales were less than 500,000 euros, the fee Value Added Tax for deliveries only arises at the end of the month in which the fee was received. However, this so-called actual taxation must be applied for at the tax office.
  • Exception 2: If the payment is received before the delivery has been carried out, the payment Value Added Tax already arises at the end of the month in which the money was received.

The central question for most traders is therefore: When is a delivery considered to have been executed? —reworded– What is the time of a delivery?

Central question: What is the time of delivery?

The time of delivery in online trade is the earlier of the shipping and payment date.

Let us take a look at the following example.

The date of a delivery which is ordered by the customer on 30 December 2017, sent to the customer on 2 January 2018 and arrives at the customer’s premises on 4 January 2018 is 2 January 2018 and the tax will therefore arise at the end of January 2018.

Modification of the example:

In addition to the above example, the customer pays for the goods in advance on 30 December 2017. The tax then already arises – regardless of whether the entrepreneur is the target or actual taxable person – at the end of December 2017.

Structural problems in online trade

Depending on the software used, we have identified two structural problems over the past few years.

1.) Invoicing tools are often based on the date of purchase

This is wrong.

In VAT law, pressing the Buy Now button is not relevant. It only refers to the time of the start of the delivery to determine the time of the delivery.

2.) Many to-DATEV converters are based on the invoice date

That is also wrong.

To put it bluntly, one could otherwise manage one’s own VAT burden.

Why?

On the one hand, according to § 14 UStG, an invoice does not have to be issued for B2C deliveries that do not cross borders.

In the logic of mistaken belief, this would mean that these deliveries would never Value Added Tax have to be paid for.

On the other hand, according to § 14 para. 2 no. 2 UStG, the invoice for a B2B delivery must be issued within six months after the delivery has been made.

Thus, § 14 para. 2 no. 2 UStG clearly states that the invoice date (= issue of the invoice) does not correspond or must not correspond to the delivery date.

What are the consequences of this misconception?

Incorrect mandatory invoice details

Pursuant to § 14 para. 4 no. 6 UStG, the turnover tax law requires that the Time of delivery in the invoice is listed.

The frequently used reference in many invoices: The time of delivery corresponds to the invoice date may only be used if this is actually the case.

In the case of cross-border deliveries, the following is added.

Incorrect delivery threshold monitoring

The delivery, with which the respective delivery threshold of an EU country is exceeded, must already be taxed in the country of destination.

If the timing of deliveries is systematically wrong, the respective Value Added Taxdeclarations in the country of origin and the country of destination are ultimately wrong.

Delivery thresholds: If the overrun of the delivery threshold is determined incorrectly, the Value Added Tax-declarations are incorrect in both states.

False Value Added Taxdeclarations

We see very often that deliveries are assessed for sales tax and accounting purposes on the basis of their invoice date.

Since the invoice date in online trade is often also supposed to be the supposed date of delivery, Value Added Taxdeclarations in this case are systematically wrong.

Any other consequences?

Wrong Value Added Taxdeclarations cause in the best case only unnecessary additional administrative work for your bookkeeping and tax office – in the worst case, however, fines can result.

If you have to find out that false declarations have been made at home and abroad due to an incorrectly determined date for the delivery threshold crossing, this effort is doubled again.

In addition, an auditor who finds such systematic errors can, in the worst case, also question the correctness of the accounting.

Taxdoo is the Compliance platform for the digital economy

… and provides the leading merchants in Europe with numerous other compliance services via a unique platform in addition to the handling of ongoing Value Added Taxcompliance and financial accounting.

If you want to know more about how you Value Added Tax -Compliance, financial accounting and much more can be mapped efficiently and securely via a platform, then book your individual and free initial interview with the compliance experts of Taxdoo via this link!

You are also welcome to register for our regular demo webinar in which we will introduce Taxdoo and our compliance services and answer your questions personally.

P.S.: Taxdoo has been an official partner of DATEV in online trading since the beginning of 2020.

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