EU: How can you handle VAT deductions on incorrectly issued invoices?

October 14, 2021

Purchase invoices allow you to get your VAT back. But what to do if an invoice is incorrectly issued?

Your employees might often need to ask for invoices on purchases they make in the name of your business. To claim back VAT on your suppliers’ invoices, however, you need to make sure they have been issued correctly, and that all details identifying your company and that of your supplier are correct. Otherwise, you’ll miss opportunities to deduct VAT on time (if at all). 

In this article, we’ll look into one of the most common errors that happen in B2B invoicing, how to prevent it, and also what to do to fix the issue: incorrect business information. 

Requirements for B2B invoices & VAT deductions

In different countries, invoices must meet different requirements, according to local rules and regulations. One of them is common across all countries, though: correctly identify both the seller and the buyer. In the EU, this is done by completing the following information:

  • The correct name and address of both businesses (as registered with the local chamber of commerce and tax authorities).
  • The VAT numbers of both businesses.

Sometimes, this is completed by a business identification number, which might be different from the above. 

To claim back VAT, you must make sure your suppliers’ invoices feature this information (unless they haven’t reached the VAT threshold of the country where they’re operating, in which case they aren’t charging VAT). 

Common mistakes in B2B invoicing that affect VAT claims

One of the most common mistakes that happen in B2B invoicing is that the business identification information (name, address, VAT number) is missing, incomplete, or incorrect. This often happens when your employees need to ask for an invoice, for example on business trips, but forget to mention that the invoice should be issued to your business. If they’re booking a hotel room or are renting a car, for example, they might get an invoice in their name, on which you cannot claim back VAT. Suppliers might occasionally make mistakes, too, or forget to request your VAT number.

What should you do if an invoice was issued incorrectly?

If you receive an invoice that was issued incorrectly, don’t instantly ask for a credit note and a new invoice: it might simply not be necessary. Instead, contact your supplier and ask for a corrected invoice: many countries allow for the simple correction of business identification information, especially for low amounts. For example, in the Netherlands, simplified invoices under €100 can be easily reissued with the correct information. 

This simplifies tax compliance, as it doesn’t change the date of the invoice, and VAT can be claimed back as originally planned. Of course, in some instances, it might be necessary to have an invoice reissued, but it’s always a good idea to first ask for a simple correction. 

Prevention is key

The best thing you can do to prevent the incorrect issuance of invoices is to: 

  • Sensitize your employees to how important it is to ask for B2B invoices whenever they’re purchasing supplies for your business or incurring business expenses
  • Ask them to always double-check the information on the invoice to be able to correct errors on the spot
  • Always provide them with the correct information, such as exact business name, address, and VAT number, in an easily accessible form. 

For business trips, for example, they might not always have an internet connection or a mobile device at hand; have your business information printed out beforehand. 

This way, you can make sure you can claim back all VAT. 

Fonoa Invoicing

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