Invoice Terms for Freelancers: All Key Terms Simply Explained

E-invoicing, GoBD, input tax deduction, small business regulation – anyone who becomes self-employed will sooner or later encounter terms that sound like someone invented them to discourage people from starting a business. But many of these terms aren’t optional. If you don’t know them, you risk incorrect invoices and trouble with the tax office.

This guide explains the most important terms – without legalese, with concrete examples. You’ll learn what each term means, when it becomes relevant for you, and how a good invoicing tool takes most of the work off your hands.

Terms Related to Invoices

Mandatory Invoice Information

In Germany, §14 UStG (VAT Act) specifies what must appear on an invoice; in Austria, §11 UStG 1994 governs mandatory information – the content requirements are largely identical. This includes: name and address of both parties, tax number or VAT ID number, invoice date, sequential numbering, description of services, net and gross amounts, tax rate, and date of service. Sounds like a lot – a good invoicing tool fills in most of it automatically once you’ve entered your master data.

Sequential Invoice Number

Every invoice needs a unique, sequential number – no gaps, no duplicates. The number doesn’t have to start at 1: “2026-001” is just as valid as “R001.” The key thing is: unique and traceable. Errors almost only happen with manual numbering – an invoicing tool prevents this automatically.

Invoicing Obligation

In B2B transactions, there is always an obligation to issue an invoice – your client needs the invoice for input tax deduction. In B2C transactions, the obligation applies in Germany only from €250, in Austria from €400. Below those thresholds, simplified requirements apply – more on that under “Small-amount invoice.”

Small-Amount Invoice (§33 UStDV)

For invoices up to €250 gross (in Austria: €400), simplified mandatory information applies. Instead of the full details per §14 UStG, the following suffices: full name and address of the invoice issuer, date of issue, quantity and type of service, gross amount (net + tax in one sum), tax rate (or reference to tax exemption, e.g., under the small business regulation). Details such as invoice number, tax number, or the recipient’s name are not required for small-amount invoices. Whether an automatically generated payment receipt – for example from Stripe or PayPal – meets these requirements depends on the specific content. When in doubt, you’re on the safe side with a Jimdo invoice.

Small Business Regulation (§19 UStG)

If your revenue was less than €22,000 in the previous year and you stay below €50,000 in the current year, you can use the small business regulation: no VAT shown on your invoices. But be careful: every invoice must include a note indicating that the regulation applies. If it’s missing, the tax office can still demand the tax.

Example wording:

• “As a small business owner within the meaning of §19(1) UStG, no VAT is charged.”
• “Pursuant to §19 UStG, the invoice amount does not include VAT.”
• “No VAT shown, as small business owner per §19 UStG.”
• “Tax-exempt small business owner”

Taxes and Compliance

VAT (Umsatzsteuer / USt)

VAT is added on top of the net amount and remitted to the tax office. Standard rate in Germany: 19%, reduced: 7%. Austria: 20% or 10% (reduced) and 13% (e.g., for accommodation). Small business owners do not show VAT but must include a note on the invoice. In Germany, VAT is colloquially also called “Mehrwertsteuer” (value-added tax) – they refer to the same thing. The correct term, however, is Umsatzsteuer (turnover tax).

Input Tax Deduction (Vorsteuerabzug)

B2B clients can reclaim the VAT on purchases from the tax office – but only with a correct invoice. If mandatory information is missing, the deduction is denied. As a freelancer, you’re also responsible for ensuring that your clients can submit their invoices properly.

GoBD (Germany) / BAO + UGB (Austria)

GoBD stands for “Principles for the Proper Management and Storage of Books, Records, and Documents in Electronic Form” and applies to all self-employed individuals in Germany – including small business owners. It prescribes how digital accounting data and receipts in Germany must be recorded, processed, and stored in an audit-proof manner. In essence: invoices must be traceable, unalterable, and completely archived. An invoice in Word that you can retroactively edit is not GoBD-compliant. An invoicing tool that logs changes, however, is.

In Austria, there is no direct GoBD equivalent. Here, the Federal Fiscal Code (BAO) and the Commercial Code (UGB) serve as the basis for proper bookkeeping – with comparable requirements for traceability and retention.

E-Invoice (E-Rechnung)

Not just a simple PDF sent by email, but a structured electronic format (ZUGFeRD or XRechnung) embedded in the PDF’s metadata that machines can read. Mandatory for B2B invoices in Germany from 2027. ZUGFeRD combines a human-readable PDF with machine-readable XML – for most solo freelancers, the more relevant format. XRechnung is pure XML and is already mandatory for invoices to public sector clients.

Good to know: From 2027, the e-invoicing obligation applies to B2B transactions in Germany. Austria currently has no comparable obligation but accepts both ZUGFeRD and XRechnung. Anyone who already uses invoicing software that supports e-invoicing will be spared the transition later.

Terms Related to Payments

Payment Link

A link with a pre-set amount that you can share via WhatsApp, email, messenger, or SMS. Your client clicks and pays directly online. Important: a payment link does not replace an invoice. In B2B transactions and for amounts over €250 (DE) or €400 (AT), you also need a proper invoice. Otherwise, the simplified requirements for a small-amount invoice apply.

Stripe and PayPal

Stripe enables online payments via credit card, SEPA direct debit, Klarna, and more. PayPal has the advantage that many end customers already use the service. Ideally, you offer multiple options – platforms like Jimdo integrate both.

Transaction Fee

With every online payment, a fee is charged by the payment provider. The amount varies depending on the provider and payment method. When calculating your prices, you should factor in the fee.

Legal Text Guarantee and Legal Text Manager

If you offer online payments, you must name the payment provider in your privacy policy and disclose the data processing. Jimdo handles this automatically via the Legal Text Guarantee with the Trusted Shops Legal Text Manager – your privacy policy is updated when you activate new features like payment links.

Tip: When in doubt, a formal standard invoice is always the safe choice – and with Jimdo, it’s created in under two minutes. With Jimdo invoices, you can meet all legal mandatory requirements, are GoBD-compliant in Germany and BAO-compliant in Austria – and you get paid faster when you use an integrated payment link.

Quick Check: What Applies to You?

Not every term is equally relevant for everyone. Here’s a quick orientation:

You only sell to private customers, not to businesses?

• General rule: When selling to private individuals, there is generally no legal obligation to issue an invoice.
• Exceptions (invoicing obligation even for private customers): Services related to real estate (e.g., construction work, trades invoices, cleaning services, broker fees). If an invoice is requested, it must be issued. The e-invoicing obligation does not apply here.
• Tip: Even when there’s no obligation, a receipt or till receipt for cash payments is recommended.

You sell B2B, but under €250 (DE) / €400 (AT)?

Even under €250/€400, you always need an invoice (or receipt) containing the following minimum information: (1) Full name and address of your business. (2) Date of issue. (3) Quantity and type of goods delivered or the scope/type of service. (4) Total amount including tax (gross amount). (5) The applicable tax rate (e.g., 19%) or a note on tax exemption (e.g., small business regulation).

Tip: A standard cash receipt or a proper online receipt almost always meets these requirements.

• B2C < €250/€400: Simplified information is sufficient. E-invoice not required.
• B2B / > €250/€400: E-invoice (DE) from 2027 or full invoice details (AT) required.
• Payment link: Only usable as an invoice if it contains the mandatory information listed above.

You have B2B clients?

Mandatory information, invoice numbers, and input tax deduction are your daily bread. From 2027, e-invoicing too (in Germany).

You’re a small business owner?

The small business regulation is your most important lever. Don’t forget the §19 UStG reference on every invoice.

How Does AI Help with Invoicing?

AI-powered tools can take work off freelancers’ hands when it comes to invoicing: creating mandatory information, calculating tax rates, applying discounts. Jimdo Companion analyzes your business and provides concrete recommendations – including how to make your payments and invoicing processes more efficient.

Try It Now

Invoices and payment links are included in all paid Jimdo plans – at no additional cost.*

Want to see what Jimdo Companion specifically recommends for your business?

Disclaimer:

Jimdo Invoices is designed for invoice creation. It is not a complete accounting system. Users are responsible for ensuring that their invoicing and record-keeping comply with applicable tax and GoBD/UStG+BAO requirements. This article is for general orientation purposes and does not constitute tax or legal advice. For questions about invoicing obligations in your specific case, please consult your tax advisor.

*An online payment requires a Stripe account. Standard Stripe transaction fees apply.