Understanding Liability for Incorrect Tax Statements in Germany
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May 8, 2025Background:
On December 5, 2024, the Federal Tax Court (BFH) held in Case V R 16/22 that a taxpayer may only be held liable for an incorrect tax statement in a VAT invoice if they issued or contributed to its creation. Critically, any tax errors made by a previous owner—for example, in a property sale—cannot be passed on to the purchaser
Legal Background
| Provision | Summary |
|---|---|
| § 14b UStG (Invoice Requirements) | Sets out mandatory elements of a VAT invoice (e.g., tax rate, net/gross amounts). |
| § 14c (1) UStG (Liability for Inaccuracies) | Allows tax authorities to deny input VAT or impose penalties for incorrect invoices. |
| § 566 (1) BGB (Property Purchases) | Governs transfer of rights and obligations on property sale—but doesn’t extend invoice errors. |
Key Takeaways
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Strict Liability Limitation: Only the invoice issuer or anyone who actively contributed to drafting it can be held liable under § 14c UStG.
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Protection for Purchasers: A buyer—whether of goods, services, or real estate—is not responsible for prior mistakes in the seller’s invoices.
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Input VAT Deduction Safe: Purchasers can claim input VAT on valid invoices even if earlier documents were flawed.
Why This Matters for Your Business
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M&A Transactions & Property Deals
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Avoid inheriting hidden VAT liabilities when acquiring assets.
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Due diligence should verify that past invoices comply with § 14b UStG.
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Supply-Chain Relationships
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Ensure your vendors and subcontractors issue accurate invoices—errors cannot be passed on.
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Incorporate invoice-accuracy clauses in your contracts.
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Internal Compliance Controls
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Automate invoice-validation workflows to flag missing or incorrect VAT details.
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Train accounting teams on § 14b and § 14c UStG requirements
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Practical Steps to Mitigate Risk
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Review Historical Invoices
Conduct a spot audit of past invoices, especially for high-value transactions. -
Obtain Corrective Invoices
If you find a mistake you issued, request a retrospective correction from your vendor. -
Contractual Protections
Include indemnity clauses ensuring vendors cover any penalties for their invoice errors. -
Documentation & Audit Trail
Keep clear records of who drafted, approved, and sent each invoice to demonstrate lack of involvement if disputes arise.
Conclusion
The BFH’s Case V R 16/22 brings welcome clarity: only those who create or contribute to an incorrect tax statement bear liability. Purchasers and downstream recipients can rest assured they will not inherit VAT mistakes made by prior parties.
Ready to safeguard your business?
Our team at Safe Accountants specializes in VAT compliance audits, invoice-accuracy workflows, and tax-risk management.
Contact us at info@safe.accountants or visit www.safe.accountants.
