A classic case from everyday business: your customer cancels an order at short notice, but the invoice has already been created and sent. To ensure the amount isn’t mistakenly posted, you need a legally compliant solution: a cancellation invoice.
What is a cancellation invoice?
A cancellation invoice is a document you use to completely reverse an already issued invoice. It is used whenever the original invoice was incorrect—for example due to transposed digits, an incorrect tax rate, or because the service was not provided as planned.
People also often refer to a corrective invoice or invoice correction. This generally means a revised version of the original invoice. However, such a correction is only permitted if the original invoice has neither been posted nor processed or paid by the customer. Otherwise, you must issue a cancellation invoice and, if necessary, subsequently create a new invoice.
It does not replace a new invoice; rather, it renders the old invoice ineffective in your accounting. If the service is still to be billed, you then issue a new, correct invoice.
When do you need a cancellation invoice?
Typical cases include:
- The customer withdraws from the purchase
- A service was not provided at all
- Incorrect amounts, tax rates, or line items on the invoice
- The invoice was accidentally issued twice
Important: A cancellation invoice is always required if the original invoice has already been posted or further processed and must be reversed retroactively. A simple correction is no longer sufficient in that case.
Cancellation invoice or credit note? The difference
The terms cancellation invoice and credit note are often used interchangeably, but they are not identical:
Cancellation invoice:
- Completely reverses an incorrect invoice
- Must clearly refer to the original invoice
- Mainly used for formal errors or cancelled orders
Credit note:
- Is an independent refund
- Used for discounts, returns, or goodwill payments
- Has no direct reference to a specific invoice
So if you want to cancel an incorrect invoice, use a cancellation invoice. If, on the other hand, you want to credit a customer money, for example for a complaint, a credit note is the tool of choice.
Mandatory information on a cancellation invoice
The general requirements for invoices in accordance with Section 14 of the German VAT Act (UStG) also apply to cancellation invoices. Your cancellation invoice must include:
- VAT separated by tax rates
- The designation “cancellation invoice”
- Your and your customer’s address
- Your tax number or VAT ID
- A new, unique invoice number
- The issue date
- A clear reference to the cancelled invoice (incl. number and date)
- Description of the cancelled services or goods
- The original amounts with a negative sign
Optional but recommended is also the reason for the cancellation. This keeps the process traceable.
Create cancellation invoices with easybill
Would you like to create cancellation invoices easily and in a legally compliant way? With easybill, you can create cancellation invoices very easily directly from an existing invoice or e-invoice. You simply select the relevant function, and the system generates a correct cancellation document that meets all legal requirements. The link to the original invoice is stored automatically, so you’re also on the safe side in terms of accounting.
If you have stored your own texts or templates for your cancellation invoices, you can also adopt them. Changes to customer data are also possible – all steps remain audit-proof documented.
GoBD and retention obligations for cancellation invoices
Cancellation invoices must be archived just like regular invoices – for ten years. The GoBD requirements apply. This means:
- The cancellation invoice must be stored in an unalterable manner
- Any change or re-issuance must be documented
- The link to the original invoice must be clearly traceable
