Down Payment and Final Invoice in Germany 2026: How to Bill Milestones as a Freelancer or GmbH

On long projects, customers usually pay in stages: a deposit upfront, the balance later. To handle VAT correctly and reconcile the final invoice cleanly, you need both a down payment invoice (Anzahlungsrechnung) and a final invoice (Schlussrechnung) — two tightly coupled documents tax auditors love to scrutinise. Here is how to issue both correctly in 2026, whether you operate as a freelancer or a GmbH managing director.

What is an Anzahlungsrechnung?

An Anzahlungsrechnung — a down payment invoice — is issued before you have fully delivered the service, for an agreed advance payment. Typical cases: construction, software development, wedding photography, event production, milestone-based consulting. The moment the customer pays, the embedded VAT becomes due to the tax office — even if the final delivery is months away. Don't confuse this with a full prepayment invoice for the entire amount, which is treated like a normal final invoice.

Mandatory fields on a down payment invoice in 2026

A down payment invoice carries the same mandatory fields as any regular invoice under § 14 UStG, plus three specifics — without them you forfeit input VAT. See the full list of required invoice fields in Germany for the basics.

• Labelled "Anzahlungsrechnung" or "Abschlagsrechnung"
• Reference to the underlying transaction, e.g. "Down payment 1 of 3" or "30% advance on project XY"
• Down payment amount and the VAT it contains shown separately

VAT becomes due immediately — the cashflow trap

Down payments fall under § 13(1)(1)(a) UStG: VAT is due in the period the money lands in your account — not when the final invoice goes out. If a customer transfers €30,000 in February, you owe €4,789.92 of VAT in the February VAT return at the 19% rate. Plan that outflow in your liquidity planning.

Writing the Schlussrechnung correctly

You issue the final invoice or Schlussrechnung once the service is fully delivered. The biggest pitfall: you must deduct every prior down payment, including the VAT it contained, otherwise the customer effectively pays VAT twice and the tax office will demand it back.

• Total net value of the service
• Full VAT on the total
• Itemised list of every down payment with date, net and VAT
• The remaining balance — net plus residual VAT

Example: total €100,000 net, €19,000 VAT, €119,000 gross. Two prior down payments of €30,000 net plus €5,700 VAT each. Remainder: €40,000 net plus €7,600 VAT = €47,600 gross.

E-invoicing rules apply to down payments too

Since 1 January 2025 every domestic B2B invoice must be issued as a structured e-invoice — XRechnung or ZUGFeRD 2.0.1 and above — and that includes both down payment and final invoices. From 2027, companies above €800,000 turnover must also send e-invoices themselves; from 2028 everyone must. Tools like Norman generate XRechnung-compliant files for partial and final invoices automatically.

Bookkeeping: posting down payments correctly

In SKR03 use accounts 1718 for down payments received, gross, and 1719 for the VAT portion; in SKR04 use 3275 and 3276. When the final invoice is issued, the down payment is reversed against the revenue account such as SKR03 8400. Posting to the wrong account inflates revenue and distorts your management accounts. See SKR03 or SKR04 for GmbH and UG for the chart-of-accounts decision.

Common mistakes — and how to avoid them

• Down payments not reconciled in the final invoice — the customer pays VAT twice and you have to issue a correction
• Treating a full prepayment as a down payment — billing the full amount upfront makes it a normal invoice, not an Anzahlungsrechnung
• Forgetting to remit VAT — once the down payment is received, the VAT goes into that month's UStVA

If you need to fix an invoice, see our guide to cancelling and correcting invoices in Germany. Norman creates down payment invoices and reconciles them automatically in the final invoice — invoicing is free.

Conclusion

Down payment and final invoices are not a footnote — they shape your cashflow and your VAT exposure. Get the timing of the VAT right, reconcile cleanly in the final invoice and you avoid double-payments and correction filings. With a tool that nets prior down payments automatically, you skip the spreadsheet acrobatics entirely.