Tax and bookkeeping terms
Short explanations of the terms Folnaro uses. They describe the general rules, not your individual case. Your tax advisor decides what applies to you.
In the app: Help > Tax and Bookkeeping Terms. You also find every term in Search and Capture (⌘K).
Writing invoices
Finalize
Assigns the next invoice number and locks the content. After that, an invoice can only be corrected by a cancellation invoice or an invoice correction, as the GoBD require. Drafts have no number yet. More
Cancellation invoice
Fully cancels a finalized invoice with its own date and number. The original invoice stays unchanged. More
Invoice correction
Corrects part of a finalized invoice, such as a discount agreed afterwards. It names the original invoice and shows the difference, with negative amounts when it lowers the total. An invoice correction is not a self-billing statement; in German that word (Gutschrift) is reserved for statements your customer issues. More
E-invoice (XRechnung, ZUGFeRD)
An invoice as structured data that software can read. Since 2025, businesses in Germany must be able to receive e-invoices. From 2027, businesses with more than €800,000 turnover in the previous year must also issue them to other businesses in Germany, from 2028 basically everyone except small businesses. Public authorities have required them for longer. A plain PDF is not an e-invoice. More
Leitweg-ID
The address of a public authority for e-invoices. You get it from the client and enter it in the customer’s details. Folnaro checks its check digits. More
Self-billing
A statement your customer issues for you, such as a platform or a publisher. It counts like an invoice from you and appears under Self-Billing. In German it must carry the word “Gutschrift”. More
Payments and reminders
Cash discount
A discount for quick payment, such as 2% when paid within 10 days. If your customer pays in time with the deduction, Folnaro books the rest as cash discount and corrects the VAT accordingly. A cash discount is not income. More
GiroCode
A QR code on the invoice with payee, IBAN, amount and invoice number. Your customer scans it with their banking app and types nothing. You turn it on under Bank Account in the settings. More
Installment plan
An agreement under which your customer pays an invoice in several installments on fixed dates. The invoice itself stays unchanged. Folnaro shows which installment is due or overdue. More
Refund
Money you pay back to your customer, for example after an overpayment, a cancellation or an invoice correction of an invoice that was already paid. Until you record it, the invoice shows “Refund due”. More
Write-off
If the money for an invoice can no longer be collected, for example after an insolvency, you write off the receivable. The invoice stays as it is. With accrual accounting you then correct the VAT you already paid (§ 17(2) UStG). If money arrives after all, you take back the write-off. More
Reminder
A letter to a customer who has not paid after the due date. The first level is a friendly payment reminder, followed by the first reminder and the final reminder, each with a new deadline. More
Default
From default on you may charge reminder fees and default interest. Your customer is in default after a reminder sent after the due date, when a fixed payment date has passed, or at the latest 30 days after the due date and receipt of the invoice; for consumers only if the invoice says so (§ 286 BGB). From businesses you can also claim a one-time flat fee of €40 (§ 288(5) BGB). More
Time-barred claim
A claim usually becomes time-barred after three years, counted from the end of the year in which it arose (§§ 195 and 199 (1) BGB). After that your customer can refuse to pay. Before you send a reminder, Folnaro warns with “Possibly time-barred”. More
VAT
Small business rule (§ 19 UStG)
If your turnover was at most €25,000 last year and stays at or below €100,000 this year, you can invoice without VAT. If your turnover exceeds €100,000 this year, the rule ends immediately. The invoice then carries a note instead of the tax. You cannot deduct input tax. More
Reverse charge
For certain services to businesses in other EU countries, the customer owes the VAT. You invoice the net amount and state both VAT IDs as well as the note “reverse charge” (§ 14a Abs. 1 UStG). When you buy such a service yourself, you owe the VAT (§ 13b UStG). More
VIES
The European Commission’s service that confirms a VAT ID from another EU country is valid. Folnaro asks it when you check the VAT ID in the customer’s details. Without a confirmed VAT ID, reverse charge is risky. More
Input tax
The VAT on your expenses. In the VAT return you deduct it from the tax you charged your customers. You need a proper invoice for that. More
VAT return (UStVA)
Reports to the tax office, monthly or quarterly, how much VAT you owe and how much input tax you deduct. It is due on the 10th day after the end of the return period (§ 18 (1) UStG). More
Permanent extension
Moves the deadline of every VAT return by one month. Monthly filers pay a special advance payment once a year for it (§§ 46 to 48 UStDV). More
EC sales list (ZM)
Lists your reverse charge services and intra-Community supplies to businesses in other EU countries with their VAT IDs. It goes to the Federal Central Tax Office and is due on the 25th day after the end of the reporting period (§ 18a UStG). More
Bookkeeping
Profit statement (EÜR)
How freelancers and small businesses determine their profit: income minus expenses, usually counted on the day of payment (§ 4 (3) and § 11 EStG). It is part of the tax return. More
Cash and accrual VAT
With accrual accounting the VAT arises at the end of the return period in which you performed the service, even if the customer has not paid yet (§ 13 Abs. 1 Nr. 1 Buchst. a UStG). With cash accounting it arises when the money arrives. Cash accounting applies only when the tax office permits it on application (§ 20 UStG). More
DATEV
The bookkeeping format most German tax advisors work with. Folnaro exports your transactions so your tax advisor can import them directly. More
GoBD
The German tax administration’s rules for digital bookkeeping: keep records complete, unalterable and traceable. That is why a finalized invoice is locked and every change is logged. More
Retention
How long you must keep records: receipts such as invoices since 2025 for eight years, books and annual accounts for ten years and business letters for six years (§ 147 (3) AO, § 14b UStG). The eight years also apply to older receipts whose period was still running at the start of 2025 (Art. 97 § 19a EGAO). The period starts at the end of the year in which the record was created and runs longer while the assessment period is still open (§ 147 (3) sentence 5 AO). That is why reading, searching and exporting in Folnaro always keep working, even without a subscription. More
Procedure documentation
Describes how you capture, process and keep records, so a tax audit can follow it. The GoBD require it. Folnaro creates a PDF describing how the app is set up for you and names the questions only you can answer. More