Gutschrift vs credit note: a German false friend
Short answer: In German VAT law, a Gutschrift is a self-billed invoice: your customer issues the invoice for what you supplied. It needs a prior agreement, the word „Gutschrift“ or „Self-billing“ and all standard invoice details, including your tax number. A credit note correcting your own invoice is legally something else, even though Germans often call it Gutschrift too.
Few German business words cause as much confusion for English speakers as „Gutschrift“. A dictionary will tell you it means credit note. Your German client may use it for exactly that, a refund or a correction. And then a publisher sends you a document called Gutschrift that pays your royalties and shows VAT on top. Same word. Two legally different things.
What a Gutschrift is under German VAT law
Under § 14(2) UStG, the customer may issue the invoice for a supply they received, if both sides agreed to this beforehand. German law calls that document a Gutschrift. In English, the EU term is self-billing. The Gutschrift replaces your invoice entirely. Your customer deducts input VAT from it, and for you it counts as your outgoing invoice. You do not send a second invoice. Ever.
Self-billing is common where the customer knows the numbers better than the supplier:
- publishers settle royalties with authors, because only they know the sales figures
- companies settle commissions with sales agents
- grid operators settle feed-in payments for solar panels
- manufacturers settle with suppliers on receipt of goods instead of waiting for invoices
- online platforms settle payouts to sellers or creators
All these cases share one condition. The supplier must agree to the procedure and must be able to check the settlement. Trusting a Gutschrift blindly means importing the issuer’s mistakes into your own VAT return. Creators who get paid by platforms in Germany often see these statements every month without realising they are, legally, their own invoices.
The false friend in one table
| Criterion | Gutschrift (self-billing) | „Gutschrift“ as credit note |
|---|---|---|
| Who issues it? | The customer | The supplier |
| What does it settle? | A supply the customer received | A reduction or cancellation of the supplier's own invoice |
| Prior agreement needed | ||
| Word „Gutschrift“ required | yes, § 14(4) no. 10 UStG | no, better „Stornorechnung“ |
| Whose tax number? | The supplier's | The issuer's |
| Type code in an e-invoice | 389 (self-billed invoice) | 381 (credit note) or 384 (corrected invoice) |
The credit-note kind is a correction, and how corrections work is in the article on how to cancel or correct an invoice. The tax administration has said that mislabelling such a correction as Gutschrift is harmless. Across borders it still causes trouble. Your UK client reads „credit note“, your German bookkeeper reads „self-billing“, and both are sure they are right.
What a self-billed invoice must contain
Everything a normal invoice needs. The ten details from § 14(4) UStG apply unchanged, see German invoice requirements. Two points are often wrong.
First, the tax number. The Gutschrift must show the tax number or VAT ID of the supplier, meaning you, not the customer who issues it. Anyone setting up self-billing must collect and maintain these numbers from their suppliers or authors.
Second, the word. „Gutschrift“ must appear on the document. The tax authorities also accept the equivalent in other official EU languages, such as „Self-billing“ or the French „Autofacturation“.
The invoice number comes from the issuer’s own number range. You then record a number in your books that you did not assign yourself. That is correct, and the article on the invoice number explains why.
Sample: royalty statement from a publisher
Invented example: a non-fiction publisher settles twice a year with an author who is a regular VAT payer.
- Copies sold: 1,840, royalty 8 % of net retail price €22.43
- €3,301.70
- Less advance already paid
- −€1,500.00
- Royalty, net
- €1,801.70
- VAT 7 %
- €126.12
- Label on the document
- Gutschrift
- Amount paid out
- €1,927.82
Fictional example. Header: publisher as issuer, author as supplier with the author's tax number. Copyright licences from authors are taxed at the reduced rate of 7 %. VAT on the advance was already settled when it was paid, so this statement covers only the remainder.
The author only has to check it. They book it as an outgoing invoice and pay the €126.12 with their VAT return. If they used the small business exemption, no VAT line should appear at all.
Objecting, and the small business trap
The recipient of a Gutschrift can object to it. It then loses its effect as an invoice under § 14(2) UStG. Your customer has no basis for deducting input VAT, and you have to write your own invoice.
When should you object? For example, when you use the Kleinunternehmer exemption and receive a Gutschrift showing 19 % VAT. If a Gutschrift shows VAT you do not owe and you do not object without delay, you owe that amount under § 14c UStG. Freelance writers and photographers who are small businesses should read statements from publishers and agencies carefully. Background on the exemption is in the article on the Kleinunternehmer invoice.
How to check a Gutschrift you receive
Four questions usually do it. Is your correct tax number or VAT ID on it? Is the VAT rate right, or did the issuer apply 19 % across the board although your work qualifies for 7 %? Does the basis, such as copies sold or commission rate, match your own records? And does the document carry the word „Gutschrift“?
If any answer is no, contact the issuer in writing. For wrong VAT, a formal objection is the safe route. For a typo in the address, asking for a correction is enough. Either way, keep the Gutschrift for eight years like your own invoices.
A sample agreement clause
The agreement must exist before the first settlement. One paragraph in the contract is enough, for example:
The parties agree that the client will settle all services of the contractor under this agreement by self-billing (Gutschriftverfahren) under § 14(2) UStG. The contractor will inform the client without delay of their tax number or VAT ID and of any change in their VAT status, in particular the use of the small business exemption.
The sentence on VAT status is not decoration, because an author who crosses the small business threshold during the year, or drops back below it, changes the correct VAT line on every future statement, and the publisher would otherwise only find out at the next audit. It prevents the most common error in self-billing.
Gutschrift and e-invoicing
Since a Gutschrift is an invoice under VAT law, the e-invoicing mandate applies to it as well. From 2027 or 2028, depending on the issuer’s turnover, it must arrive as structured data between German businesses. The formats have a separate document type for it, the self-billed invoice with code 389, while corrections use 381 or 384. Mixing up the codes means the recipient’s software files the document in the wrong place. The timeline is in the article on e-invoicing in Germany.
For platforms that pay out to many sellers or creators, self-billing is often the only workable model. Building it needs clean master data on each payee’s VAT status and solid logic for corrections. OnlineBuilders develops billing features of this kind.
If a Gutschrift just arrived in your inbox, check your tax number and VAT status on it first. For the rest, tick it off in the invoice checker as if it were a normal invoice.
Check an invoice for mandatory details: Tick what your invoice contains.
Questions people ask
My German client sent me a „Gutschrift“ for a refund. Is that wrong?
For VAT purposes it is harmless. The German tax administration has stated that calling a correction a Gutschrift does not by itself trigger any tax consequences. Clearer terms are „Stornorechnung“ or „Rechnungskorrektur“.
Does the self-billing agreement have to be in writing?
The law requires a prior agreement but no particular form. For evidence, put it in writing, either in the contract or in a separate note with a date and scope.
What happens if I object to a Gutschrift?
It loses its effect as an invoice, and your customer can no longer deduct input VAT from it. You then have to issue your own invoice. Objecting makes sense if the Gutschrift shows wrong amounts or VAT you do not owe.
Do self-billed invoices have to be e-invoices from 2027?
Yes, where the e-invoicing mandate applies, because a Gutschrift is an invoice under VAT law. XRechnung and ZUGFeRD have a separate document type for it, the self-billed invoice with type code 389.
