The billing address - importance and requirements (2024)

The billing address - importance and requirements (1)

  • Do I have to create an invoice?

    Annoying paperwork? As an entrepreneur, you may often ask yourself whether you absolutely have to create an invoice. However, every entrepreneur is obliged to issue an invoice or a comparable document in order to comply with the principle of proper accounting. This principle requires that no entry may be made without a receipt.

  • The invoice, in turn, must contain certain mandatory information, including the correct invoice address of the invoice issuer and the invoice recipient.

The correct billing address – Why is it important?

Since the billing address is one of the mandatory components of an invoice, it must meet the legal requirements. But which components belong to a correct invoice address? On the one hand, the invoice address contains the personal data of the invoice recipient, i.e. the person who is to pay the invoice. It is important that the address is correct and complete. Sometimes mistakes creep in and this can lead to unpleasant situations.

If the address of the recipient on the invoice is incorrect, the customer may not receive the invoice and therefore will not pay. For the company issuing the invoice, this may be a problem that can affect liquidity. The request for payment or reminder may then again be sent to the wrong address, so that payment is again significantly delayed.

On the other hand, the billing address has been corrected in the meantime and the reminder has been sent to the correct address, which can lead to annoyance on the part of customers who did not receive the invoice in the first place. Invoicing and payment are sensitive issues that can jeopardize valuable customer relationships in the long run.

Secondly, the correct address of the issuer of the invoice is important in this context. For a company, this document is the basis for the input tax deduction. This is because the tax office only recognizes documents that contain the corresponding mandatory information according to § 14 (4) UStG and this includes, among other things, the correct invoice address.

  • Accordingly, the input tax deduction is only possible if the invoice contains the full name and address of the supplying trader. If these or other mandatory details are missing from an invoice, or if they are incorrect, there is no entitlement to an input tax deduction. However, what exactly is meant by the full address was not clear for a long time.

    In 2018, the Federal Fiscal Court (Bundesfinanzhof, BFH) adjusted its case law in terms of Section 14 (4) Sentence 1 No. 1 UStG to the extent that the address is to be understood as any address at which the performing entrepreneur or the service recipient can be reached. This also means that the business activities of the company do not necessarily have to be carried out there, i.e. a P.O. Box address, mailbox address or a c/o address are now also sufficient. This applies in the same way to a branch office or additional operating facilities of a company.

The billing address - importance and requirements (2)

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Mandatory information in the billing address

Depending on the recipient of the document, there are different requirements for the contents of the invoice address.

For individuals

  • First name and last name
  • Street and house number
  • Postal code (PLZ) and city
  • If applicable, also the country if it is not the same as the country of the invoice issuer

For companies

  • Company name
  • Company name and legal form of the company
  • First name and last name
  • Street and house number
  • Postal code (PLZ) and city
  • Country (Definitely important for foreign invoices!)
  • If necessary, also additional the name of the recipient
  • Possibly the name of the affected department of a company

Invoices by mail – What requirements?

The billing address - importance and requirements (3)

As a general rule, electronic invoices must meet the same requirements as paper invoices and comply with the legal requirements for invoices.

Accordingly, this also applies to the invoice address of the invoice recipient and invoice issuer.

Billing or shipping address

The billing address - importance and requirements (4)

Wann wähle ich welche Adresse?

The delivery address is the address to which the goods will be delivered and in some cases this is not the same as the billing address:

  • A company has goods delivered to a warehouse located at a place other than its other business premises.

  • A company has a specific billing address that is used as a mailbox to ensure a smooth process for capturing and archiving documents.

    • Most common example from everyday life: the invoice recipient is a different person than the one who receives the goods. The invoice recipient, but not the recipient of the goods, pays for the product. An example of this could be a gift shipment.

    Correcting an incorrect invoice – What should I bear in mind?

    The billing address - importance and requirements (5)

    easybill supports you in issuing invoices correctly, taking into account mandatory information such as the invoice address: The information stored once in the system is automatically transferred via the invoice templates and can thus be adopted at any time without errors.

    In this way, you avoid errors and additional costs and also save valuable time during processing.

    May an incorrect invoice be corrected?

    If you have issued an invoice incorrectly, you may of course correct it. However, it should be noted that an invoice can only be corrected for the purposes of input tax deduction if it contains information on the issuer of the invoice, the recipient of the service, the description of the service, the remuneration and the separately stated VAT.

    What happens if these conditions are not met?

    If these conditions are not met, there is a risk of costs that the company did not anticipate. Even if the input taxes do not have to be repaid after the invoice has been corrected, the input tax assessed when the incomplete invoice was originally issued may be subject to interest at six 6 percent per year until the date of the invoice correction.

    Should I get legal advice if such a correction needs to be made?

    Since these invoice corrections often occur due to company audits, the interest damage can be enormously high. In these cases, legal advice is certainly advisable, all the more so as there have also been divergent rulings by the European Court of Justice (ECJ) in this context.

    Our top four

    Guide articles

    The 10 components of an invoiceLearn all about the mandatory information and components of an invoice.
    All about the billing addressEverything you need to know when filling in the address field of an invoice.
    Partial invoiceWhen do you write this invoice? What should be taken into account? What are its components?
    Tax ID numberEverything about tax numbers in invoicing.
    All guide articles

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    As an entrepreneur deeply involved in the realms of proper accounting and invoicing, I bring to you a wealth of first-hand expertise and knowledge on the critical aspects of creating and handling invoices. My experience has taught me the significance of adhering to legal requirements, especially when it comes to the billing address on an invoice. Let's delve into the concepts discussed in the provided article.

    The article emphasizes the obligation of entrepreneurs to issue invoices as part of proper accounting practices. This obligation is rooted in the principle that no entry should be made without a receipt. The invoice, as a crucial document, must include specific mandatory information, and a key component is the correct billing address.

    The correct billing address is highlighted as essential for several reasons. Firstly, inaccuracies in the recipient's address can lead to non-receipt of the invoice, causing delays in payments and potential liquidity issues for the issuing company. Additionally, sending reminders to the wrong address can strain customer relationships.

    The article also underscores the importance of the issuer's address, as it forms the basis for input tax deduction. The tax office recognizes only those documents that contain the necessary information, including the correct invoice address. The definition of a "full address" was clarified by the Federal Fiscal Court in 2018, broadening the understanding to include various forms such as P.O. Box addresses and c/o addresses.

    Furthermore, the article outlines the mandatory information required in the billing address based on the recipient—individuals or companies. It provides a comprehensive list, covering details like first name, last name, street, house number, postal code, city, and country.

    The distinction between billing and shipping addresses is also explained. The delivery address, where goods are sent, may differ from the billing address, creating scenarios like gift shipments where the recipient of the goods is not the payer.

    Addressing the issue of correcting an incorrect invoice, the article advises that corrections can be made but must include specific information to be eligible for input tax deduction. Failure to meet these conditions may result in unforeseen costs, and legal advice is recommended, especially given divergent rulings by the European Court of Justice.

    In conclusion, the article provides valuable insights into the critical role of the billing address in invoices, the mandatory information required, and the potential consequences of incorrect invoicing. It serves as a comprehensive guide for entrepreneurs navigating the intricacies of invoicing and accounting.

    The billing address - importance and requirements (2024)
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