E-invoicing: Specific features relating to credit notes (invoicing by the recipient)
In the case of a credit note for VAT purposes, the roles are reversed: it is not the supplier but the recipient of the service who issues the invoice.
Introduction
The credit note procedure is common in business, for example in relation to commissions or in the field of commercial agency. With e-invoicing, the question arises as to who is responsible for the format in this reversed procedure. We sort this out for you and handle the tax processing.
A clarification first, as two things are often confused here:
A credit note, as used in this article, is not the correction of a previous invoice. It refers to the credit note as a method of settlement in which the recipient of the service issues the invoice. The correction of a previous invoice is instead referred to as a ‘corrective invoice’ or ‘cancellation invoice’.
The key point for e-invoicing is this: whoever issues the invoice is responsible for the format. In the case of a credit note, this is the recipient of the service – in other words, the person who receives the service and issues the invoice for it.
This article explains what a credit note is, who is responsible for providing the e-invoice format, and which typical scenarios are affected.
What a credit note is
A credit note for VAT purposes is an invoice issued by the recipient of the service, provided this has been agreed in advance. The roles are therefore reversed: it is not the supplier who issues the invoice, but their customer who settles the account for the service received.
This requires an agreement prior to invoicing; this may be set out in contracts and is not subject to any specific formal requirements. The credit note must bear the heading ‘Credit Note’ and otherwise contain the same mandatory details as an invoice. The service provider must provide the issuer with their tax number or VAT registration number for this purpose.
Do not confuse this credit note with the colloquial term ‘credit note’ in the sense of a reversal or correction entry. Correcting a previous invoice is a different matter; we deal with how corrections and reversals work separately. \[Link zu einem Hilfsartikel]
Who is required to use the e-invoice format
This is the point that makes the credit note procedure unique. The credit note procedure applies to all VAT-related matters that also apply to invoices – and therefore also to e-invoices.
It follows that if there is an e-invoice obligation for the invoiced transaction, the credit note must also be issued as an e-invoice. And because the recipient of the service issues the credit note, they are responsible for the format. It is not the supplier, but their customer who must generate the e-invoice.
This is the reverse of the logic applied to a standard invoice: normally, the supplier creates the e-invoice. In the credit note procedure, however, it is the recipient who creates it – and they bear the technical responsibility for ensuring the correct format.
Typical scenarios
The credit note procedure is primarily found in situations where the client handles the settlement. Two scenarios are particularly common.
In the commission sector, the company often settles its agent’s commission itself by means of a credit note. The situation is similar with commercial agents: the manufacturer or group represented issues the commercial agent with a credit note for their intermediary services. In both cases, the party carrying out the settlement – the company or group – is the service recipient and is therefore responsible for the e-invoice.
So, if your company settles commissions via credit notes, it is you who must generate the e-invoice as soon as the obligation comes into force.
What applies in the event of a dispute
A distinctive feature of credit notes is the right to object. If the recipient of the credit note – that is, the business providing the service – objects to the document, the credit note ceases to be valid as an invoice.
This is rare in day-to-day business, but should be borne in mind: a disputed credit note can no longer serve as an invoice, with consequences for input tax deduction. If the details are correct, this is not an issue; in the event of discrepancies, the parties involved should resolve these before raising an objection.
Common sources of error
- Confusing a credit note with an invoice correction: The VAT credit note is equated with a reversal or correction entry. The two are different.
- Incorrect format assigned: It is assumed that the supplier is responsible for issuing the e-invoice. In the case of a credit note, however, it is the recipient who issued it who is responsible.
- Missing ‘credit note’ designation: The document does not bear the mandatory designation ‘credit note’. Without this, the settlement is not valid.
- No prior agreement: Settlement is carried out via a credit note without this having been agreed in advance. The agreement must be in place before settlement takes place.
- Tax number not provided: The service provider has not provided their tax number or VAT registration number. This means a mandatory detail is missing from the credit note.
How we work together
In the credit note process, we clarify together who is responsible for invoicing – and therefore for providing the format – and we handle the processing.
Your tasks:
- If you settle the invoice yourself via credit note, generate the e-invoice where required
- Ensure the prior agreement is in place and that the term ‘credit note’ is specified
- Send us the credit notes in their original format via the agreed channel
Our tasks:
- Determine the circumstances in which the credit note procedure applies
- Post the credit notes and check them for tax compliance
- Provide support with questions regarding format and mandatory details
We will agree the exact breakdown with you.
Frequently asked questions
What is a credit note for VAT purposes?
An invoice issued by the recipient of the service, provided this has been agreed in advance. It must include the word ‘credit note’. This has nothing to do with a reversal or adjustment entry.
Who is responsible for issuing the e-invoice?
The recipient of the service, as they issue the credit note. In the credit note procedure, therefore, it is the customer who is responsible for providing the e-invoice format, not the supplier.
Does the e-invoicing obligation also apply under the credit note procedure?
Yes. The procedure applies to the same circumstances as for invoices, including e-invoices. If the obligation applies, the credit note must also be an e-invoice.
Is a credit note the same as an invoice correction?
No. A VAT credit note is a method of settlement. Correcting a previous invoice is a different matter and is dealt with separately. \[Link zu einem Hilfsartikel]
What happens if there is a dispute?
If the recipient objects to the credit note, it ceases to have effect as an invoice – with possible consequences for input tax deduction. If the details are correct, this is not an issue.
How do I submit credit notes to you?
In the original format via the agreed method, usually DATEV Unternehmen online or an upload address. Please let us know where you settle accounts via credit notes. \[Link zu einem Hilfsartikel]
Legal notice
This article provides an overview and is not a substitute for individual advice. The treatment of credit notes depends on the individual case; the current legal position is decisive.
If you have any questions about your credit notes, please contact us directly.
As at: June 2026