The Importance of Issuing Invoices in due time and former
Patrick2023-12-14T03:46:36+00:00What does it mean to issue invoices in a due time and form?
Issuing invoices in due time and form is a fundamental aspect of compliance with the tax obligations of a company, freelancer or professional. Issuing an invoice involves providing legal proof that supports a commercial transaction, detailing the products or services purchased, as well as the corresponding amounts.
Timely invoicing ensures that both the seller and the buyer comply with their legal and fiscal responsibilities. For the seller, issuing proper and timely invoices allows him to meet his tax obligations and avoid possible penalties for non-compliance. On the other hand, for the buyer, receiving a valid invoice allows him to deduct expenses and claim VAT refunds.
Invoicing represents one of the fundamental obligations for both businesses and the self-employed. By law, it is imperative to issue invoices in accordance with specific deadlines.
The invoice, a document certifying the provision of services or delivery of goods, is crucial for self-employed and SMEs to be able to collect payment for their operations. Recording invoices issued provides vital information on income, which is essential for tax filing.
In addition to tax compliance, issuing invoices in a timely manner also contributes to maintaining a good business relationship between the parties involved. A clear and accurate invoice facilitates the accounting and financial management of both parties, avoiding misunderstandings or disputes related to payments.
When is it mandatory to issue and send an invoice to the addressee?
The answer varies depending on whether the recipient or customer is a self-employed person or a private individual:
- For private customers, the invoice must be issued at the time of the transaction, i.e. on the accrual of VAT. Similarly, the invoice must be sent at the time of issue.
- In the case of transactions with professionals or entrepreneurs, the invoice must be issued and sent before the 16th day of the month following the accrual of the tax or the transaction.
Deadlines for issuing Recapitulative, Rectifying and Intra-Community Transaction Invoices
Recapitulative and rectifying invoices, together with certain intra-Community transactions, also have specific deadlines:
- For recapitulative invoices intended for professionals or entrepreneurs, issuing and sending must be done before the 16th day of the month following the period of the operations.
- If the recapitulative invoice is for a private customer, it must be issued and sent on the last day of the month in which the transactions were carried out.
- In the case of corrective invoices, they must be issued when the circumstances requiring them are known and sent before the 16th day of the month following the original issue.
- In the case of intra-Community deliveries, the invoice must be issued and sent before the 16th day of the month following the start of the transport of the goods to the customer.
Reasons why it is crucial to issue invoices in due time and form
1. Legal Compliance and Avoiding Tax Penalties
Legal compliance and avoiding tax penalties are critical issues for any business. Tax compliance is especially important, as non-compliance can result in penalties for late or incorrect invoicing, as well as possible charges of tax evasion.
It is crucial that businesses understand and comply with all tax laws and regulations applicable to their industry and geographic location. This involves keeping accurate records of income, expenses and financial transactions, as well as filing timely tax returns.
2. Financial Transparency and Customer Credibility
Financial transparency is fundamental to establishing customer confidence and maintaining a professional image in the business. Accurate and transparent accounting records allow customers to have a clear view of the company’s finances, which gives them confidence when transacting business.
Accurate bookkeeping means keeping detailed control of income and expenses, as well as keeping financial statements up to date. This not only helps to comply with tax obligations, but also demonstrates reliability and commitment to customers.
3. Controlling Income and Expenses for Efficient Management
Controlling income and expenses is essential for efficient management in any business. To achieve this, it is necessary to keep an orderly record of business transactions, both income and expenses.
Proper record keeping will provide a clear and accurate picture of the company’s financial situation. This involves recording in detail all sales, purchases, payments and receipts made.
Negative consequences of not issuing invoices on time and how to avoid them
Failure to issue invoices on time can have negative consequences for businesses, even if it is unintentional tax evasion. One of the main consequences is the loss of business credibility. If a company does not comply with its tax obligations, it can generate mistrust among its customers and suppliers, which in turn can negatively affect its reputation and business relations.
Penalties for Failure to Meet Deadlines
Failure to comply with the established deadlines entails proportional financial penalties:
- Late issuance and dispatch results in a proportional fine of 1% of the amount of the transactions involved.
- If the failure is to issue an invoice, the fine amounts to 2% of the amount of the transactions without an invoice or, if this cannot be determined, EUR 300 for each transaction not invoiced.
What happens if a false invoice is issued? This offence is considered serious and is punishable by a fine of 75% of the total amount of the related transactions.
In addition, failure to issue invoices on time can make it difficult to access credit or bank financing. Financial institutions often require complete and up-to-date documentation to assess a company’s creditworthiness. Failure to issue invoices correctly and on time can raise doubts about the company’s real financial situation and make it difficult to obtain loans or credit lines.