As an entrepreneur, you are almost inevitably confronted with the subject of cancellation invoices . Another accounting issue is directly linked to the cancellation invoice – the credit note . To put it more precisely, a cancellation invoice has the effect of a credit note. Creating a cancellation invoice is always necessary if you have to cancel the previous outgoing invoice. In this article you will find out what the term cancellation invoice is all about, what consequences it has and what you have to pay attention to.
What is a cancellation invoice?
The cancellation invoice is issued when an incorrect invoice needs to be corrected. It is therefore very often referred to as an invoice correction. From a commercial point of view, the cancellation invoice is simply a credit . The cancellation invoice is derived from the Italian word “cancellation”, which means something like delete, cancel, undo, dissolve . Like many other accounting terms, it has its origins in the Italian language.
Cancellation invoice – when do I need a cancellation invoice?
It is certainly not a mess of work or sloppiness. But it happens again and again: You have to make an invoice and you make a mistake. But that is not a problem at first. Before there is a complaint , you simply correct the error or errors in the invoice. This is done with a cancellation invoice. In practice, there are two main reasons for creating a cancellation invoice.
- You made the invoice incorrectly
- The performance, which was stated on the invoice and billed, is not, or only partially with substantial defects been provided
This means that in most cases a cancellation invoice is preceded by a complaint by the invoice recipient. They have no choice but to complain about the invoice to you as the invoice issuer. He himself is not allowed to manually correct an incorrect invoice . As a result, you have to create a cancellation invoice for the incorrect invoice.
It is important for you that you pay particular attention to the retention periods for invoices, especially for cancellation invoices. You should be able to explain the reasons for this cancellation invoice at any time based on your documentation of such an invoice .
A cancellation invoice is therefore necessary!
A cancellation invoice is necessary for several reasons. First of all, each of your customers has a right to an invoice correction. The following reasons also make a cancellation invoice necessary:
- If the invoice is not corrected, the customer’s right to deduct input tax is at risk
- an uncorrected calculation can have consequences
- Deliveries are missing or incomplete
- Information on the sales invoice contains spelling errors
- Not all mandatory information is included on the outgoing invoice
Mandatory information on a cancellation invoice
With the cancellation invoice, too, you have to pay close attention to the mandatory information required by law in order to be able to write your invoice correctly . Anyone who does not do this can run into serious problems in the event of a possible tax audit. In addition to the mandatory information , it is very important that you also pay attention to possible spelling errors . These are also the reason that an invoice correction is necessary. According to the Value Added Tax Act, the following information is required by law in the cancellation invoice :
- Name and address of the invoice issuer
- Name and address of the invoice recipient
- your tax number or your sales tax identification number
- the date of issue of the correction invoice
- a consecutive invoice number that is only issued once
- the date of issue of the original invoice
- the invoice number of the original invoice
- exact quantity and type of delivery or service
- Indication of the net amount
- the applicable tax rate
- the resulting tax amount
- a minus amount resulting from the cancellation invoice
- possibly an addition to a small business regulation
Only if all this information is also included is the cancellation invoice valid under the Value Added Tax Act.
With all the mandatory information, it can happen that my information is incorrectly processed or forgotten. Instead, you can simply use digital software so that you can quickly and easily write invoices that already contain all mandatory information !
Form, content and structure of a cancellation invoice
The above-mentioned mandatory information for a cancellation invoice is firmly regulated in § 14 Paragraph 4 UStG and is described in detail there. This means that they have to be included in every invoice. It is also important that you always make sure that a cancellation invoice can always be assigned to the incorrect original invoice. For this reason, it is particularly important that the new invoice always contains the actual invoice number . In addition to the date of the cancellation invoice, the date of the invoice, which had to be corrected, must also be visible. In addition to the points listed, your cancellation invoice must contain other components :
- The cancellation invoice must be clearly marked as such . You can do this with terms such as cancellation invoice, invoice correction or correction invoice.
- The cancellation invoice needs a separate invoice number , but should also have a reference to the invoice number of the original invoice.
- With a comment such as “This will cancel the invoice (+ invoice number) from (invoice date), you are making a clear reference to the original invoice.
- All items on the original invoice must be identical to those on the original invoice