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Restriction on the invoice issued by a trader in Germany

12.12.2023
Restriction on the invoice issued by a trader in Germany

In this article, we look at the complexities of the limitation period for invoices issued by tradesmen in Germany. We analyse the main legal provisions providing for a limitation period of three years under Article 195 of the German Civil Code (BGB) and examine specific cases where various circumstances affect this period. We also examine the key role played by the acceptance of the trader’s work and the differences between suspension and renewal of the limitation period. The article is aimed at both traders and customers to help them better understand the legal framework that plays an important role in the handling of traders’ invoices.

Introduction to limitation periods

The limitation period for traders’ invoices is an important aspect of contract and claims management that is often underestimated. A limitation period means that after a statutory period – usually three years according to Article 195 of the German Civil Code (BGB) – one can no longer go to court to claim payment of an invoice. This mechanism is intended to protect the debtor from old, possibly forgotten or irreparable claims. For traders, it means that they have to send invoices quickly and within the statutory time limits in order to avoid losing their claims. On the other hand, customers need to be aware of the importance of paying traders’ invoices on time in order to avoid additional costs or legal complications. The limitation period is therefore an important aspect of commercial transactions, relevant for both customers and service providers.

Grounds for the application of the limitation period

According to Article 195 of the German Civil Code (BGB), the limitation period for commercial invoices is three years. This period does not start immediately after receipt of the invoice but only after the end of the calendar year in which the invoice was issued. This means that if the invoice is issued, for example, in November 2023, the limitation period does not start until 31 December 2023 and therefore runs until 31 December 2026. It is therefore very important that traders issue their invoices on time and record the date of issue accurately in order to correctly determine the start of the limitation period. In turn, customers need to know the date of the invoice in order to be able to make a payment within the limitation period and to avoid late payment penalties or legal disputes.

Importance of acceptance

Acceptance of the trader’s work is a key moment in the contractual relationship between the trader and the customer and is a prerequisite for the start of the limitation period for the trader’s invoices. The customer is obliged by law to accept the work if it is in conformity with the contract and free from material defects. However, if the customer refuses to accept the work without justifiable reason, tacit acceptance takes effect after a reasonable time. Such tacit acceptance of the work triggers the start of the limitation period. It is therefore important that traders accurately document the process of acceptance in order to accurately determine the start of the limitation period. On the other hand, customers should not delay or refuse to accept works without good reason, as this may lead to legal complications. In practice, clear communication and documentation of the acceptance process by both parties is essential to avoid misunderstandings and subsequent disputes.

Special cases and exceptions

In certain cases, the limitation period for commercial invoices may be postponed, in particular if there are serious defects which prevent the customer from accepting the work in the normal way. In such cases, the limitation period does not start to run from the performance of the work itself, but only from the subsequent performance of the work by the craftsman and the subsequent acceptance of the work by the customer. This means that the craftsmen must ensure that the defects are rectified before they can claim payment. This protects the client by ensuring that he does not have to pay for poor quality work. Once the defects have been rectified and the work has been accepted, the three-year limitation period starts, which sets a new deadline for legal claims and payment for both parties.

Suspension and renewal of the limitation period

It is important to distinguish between suspension and renewal of the limitation period. Suspension occurs when events occur during the limitation period that prevent the full three-year period from being used. Conversely, the resumption of the limitation period causes the three-year period to start anew, for example, when the debtor acknowledges his obligation to pay.

Important issues for traders

Traders must ensure that invoices are issued correctly and on time. Delays in invoicing can have legal consequences and affect the running of the limitation period. Interestingly, the actual invoicing is not subject to a limitation period, so invoices can be issued retrospectively. However, it should be noted that if the invoice is issued too late, the limitation period for the service rendered may already have started to run.

Limitation period in the international context

In Austria, commercial invoices are subject to similar limitation periods as in Germany. Here, too, the period is generally three years from the time the customer accepted the service.

Understanding limitation periods is very important for both tradesmen and customers. This helps to avoid legal problems and ensures transparency in commercial transactions.