E-invoices: Specific considerations regarding advance and final invoices
Anyone who pays in instalments will come across a particular issue with e-invoicing: the final invoice, with the instalments deducted, cannot easily be presented in a structured format.
Introduction
In projects with a longer duration – such as in the skilled trades, the construction industry or the project business – payment is often settled in stages: via advance payments, instalment or partial invoices, and finally a final invoice. Since 2025, these invoices have also been e-invoices in business-to-business transactions. We’ll guide you through the correct process.
A few clarifications first, as there are often misunderstandings in this area:
Interim invoices are not simplified documents. They are fully-fledged invoices in accordance with Section 14 of the German Value Added Tax Act (UStG) and must contain all mandatory details.
Similarly, the final invoice, in which the instalments are settled, cannot simply be presented in the structured format. There is a special procedure for this, which we will explain.
This article clarifies the terminology, outlines the requirements for instalment invoices and explains the two approaches for the final invoice.
Deposit, instalment, final invoice – the terms
These terms are often confused, but they are distinct. A deposit is paid before the service is provided, whilst an instalment invoice settles partial services already rendered during an ongoing contract.
The final invoice – also known as the ‘end invoice’ for VAT purposes – summarises the entire service at the end and offsets all advance payments and instalments received previously. What remains is the outstanding balance.
For e-invoicing, the interim invoices issued during the project and the final invoice at the end are particularly relevant. Both follow the general rules for invoicing.
Progress invoices are also e-invoices
An instalment invoice is a fully valid invoice under Section 14 of the German Value Added Tax Act (UStG). It must contain all mandatory details and, in business-to-business transactions, must be issued as an e-invoice from 2025 onwards, as soon as the requirement comes into force.
As with any invoice, VAT must be shown. For tradesmen’s services, the labour component must also be shown separately so that your customers can claim it for tax purposes – this also applies to instalment invoices.
It is advisable to state that this is an instalment invoice and that the instalments paid will be offset against the final invoice. This ensures that the connection between the different stages remains clear.
Your invoicing software must support ZUGFeRD or XRechnung for instalment invoices. Many programmes treat advance payment, instalment and final invoices as separate transactions and automatically offset the instalments.
The problem with the final invoice
The difficulty lies in the final invoice. In this, the partial payments that have already been settled are deducted – and it is precisely this deduction that cannot currently be fully represented in the structured format without further ado.
In the simple case of a single service, this is not a problem. However, as soon as several advance payments and instalments need to be offset, the structured format reaches its limits.
In such cases, there are two viable options to choose from.
Two approaches to the final statement
Instead of a final invoice that lists and deducts all instalments, you issue a balance invoice for the outstanding amount. You only invoice for the remaining service, thereby avoiding the deduction of partial payments in the structured section.
This approach is often the simpler one in day-to-day practice, as it avoids the problematic offsetting process in the structured file.
You still issue a final invoice and show the deduction of the partial payments received in an attached, unstructured appendix. This requires that the structured part of the e-invoice explicitly refers to this attachment.
This provision, laid down by the Federal Ministry of Finance, may also be applied beyond the year 2027.
Both approaches are permitted. Which one suits you depends on your billing model and your software.
Please ensure that the mandatory details of the final invoice are included in the structured part itself. Only the breakdown of the instalments may be included in the referenced appendix – not the mandatory details of the invoice.
What this means in practice
For most businesses that issue instalment invoices, the route via the final invoice is the simplest. You avoid offsetting in the structured section and simply invoice the outstanding balance at the end.
Those who, for the sake of clarity, prefer a traditional final invoice listing all instalments should use the attachment solution. In both cases, it is important that the instalment invoices have been drawn up correctly beforehand, as they form the basis of the final settlement.
We deal separately with sector-specific particularities – such as in the construction industry with contracts based on VOB or where the service recipient is liable for tax. We will work with you to determine which approach makes sense for your projects.
Common sources of error
- Treating an instalment invoice as a simplified document: An instalment invoice is issued without all the mandatory details. However, it is a fully-fledged invoice under Section 14 of the German Value Added Tax Act (UStG) and must be complete.
- Labour costs not shown: For tradesmen’s services, the separate labour component is missing. Your customers are then unable to claim this for tax purposes.
- Deduction forced into the structured section: An attempt is made to offset all instalment invoices within the structured section, even though the format does not accurately reflect this. A final invoice or an annex solution are the intended methods.
- Attachment not referenced: The final invoice includes the deduction in an attachment, without the structured section referring to it. Without an explicit reference, this approach is not permitted.
- Discounts not offset: The final invoice does not take into account any discounts already applied. This results in an incorrect balance and leads to queries.
Frequently asked questions
Does an instalment invoice have to be an e-invoice?
In business-to-business transactions, yes, as soon as the obligation comes into force. An instalment invoice is a fully valid invoice under Section 14 of the German Value Added Tax Act (UStG) and follows the same rules as other invoices.
Why is the final invoice a special case?
Because the deduction of instalments already settled cannot easily be fully reflected in the structured format. This is why there is the balance invoice or the final invoice with a referenced attachment.
Which is the simpler option?
In many cases, the balance invoice covering the outstanding balance. This avoids offsetting in the structured section. The final invoice with an attachment is the alternative if you wish to list all instalments.
Can the instalments be listed in an attachment?
Yes, in an attached unstructured appendix, provided the structured section explicitly refers to it. However, the mandatory details of the invoice itself must appear in the structured section.
Does this also apply beyond 2027?
Yes. According to the guidelines of the Federal Ministry of Finance, the rule regarding the appendix to the final invoice may also be applied beyond the year 2027.
Is there anything in particular I need to bear in mind for tradespeople’s invoices?
Yes. The labour component must be shown separately so that your customers can claim it for tax purposes – even on instalment invoices. We deal with sector-specific points separately. \[Link zu einem Hilfsartikel]
How many instalment invoices can I issue?
There is no statutory upper limit. The number depends on the scope and duration of the project and is usually agreed in the contract.
Legal notice
This article provides an overview and is not a substitute for individual advice. The legal situation and its interpretation may change; the current status at any given time is decisive. The appropriate invoicing method depends on your project and your invoicing model.
If you have any questions about interim and final invoices, please contact us directly.
As at: June 2026