Skonto: what it is, how to calculate it and how to word it on an invoice

As of September 2026. All amounts in this guide are gross amounts including 19 % VAT unless stated otherwise.

What is Skonto?

Skonto is a percentage price reduction that the issuer of an invoice grants the customer for paying within a short, pre-agreed deadline. Typical terms are 2 % to 3 % for payment within 7 to 14 days.

Skonto is not required by law. It is a voluntary agreement between the issuer and the customer and only applies if it is stated explicitly in the quote, the contract or on the invoice. Without that agreement the customer may not deduct anything.

Both sides benefit: the issuer is paid earlier and reduces the risk of default, the customer saves real money. The cost to the issuer is a genuine loss of revenue, which is why the effective annual interest rate below is worth checking first.

How do you calculate Skonto?

The calculation has two steps:

• Discount amount = invoice amount × discount rate ÷ 100
• Amount to pay = invoice amount − discount amount

In practice Skonto is deducted from the gross invoice amount, that is, including VAT. No statutory rule prescribes this; the agreement governs. Absent any other arrangement, the gross amount is the customary reference value.

Worked examples at the usual rates:

Step by step for the first example: the invoice is 1.190,00 € gross and 2 % Skonto was agreed.

1. Discount: 1.190,00 € × 2 ÷ 100 = 23,80 €
2. Amount to pay: 1.190,00 € − 23,80 € = 1.166,20 €

The customer therefore transfers 1.166,20 € if they pay within the discount period. If they pay later, the full 1.190,00 € is due.

Skonto and VAT: what happens to the tax?

When Skonto is taken, the consideration for the supply is reduced, and the VAT falls proportionally with it. The legal basis is § 17 (1) UStG (change of the taxable amount): if the taxable amount changes, the supplier must correct the tax owed and the recipient must correct the input VAT deducted.

Skonto is therefore not merely a payment discount but a genuine reduction of the taxable amount that has to be reflected in the VAT.

The example in detail: an invoice for 1.000,00 € net plus 190,00 € VAT, 1.190,00 € gross. The customer takes 2 % Skonto.

Cross-check: 1.166,20 € ÷ 1,19 = 980,00 € net. The issuer therefore remits only 186,20 € of VAT and the customer deducts only 186,20 € as input VAT. Both corrections belong in the VAT return period in which the payment is received, not retroactively in the month the invoice was issued.

Skonto is ultimately just percentage arithmetic. You can check the discount, the reduced net value and the VAT share in seconds with the percentage calculator from Mein MwSt-Rechner and the VAT calculator.

How do I word Skonto on an invoice?

For the customer to be entitled to the discount, the agreement has to be unambiguous on the invoice: the rate, the deadline and the date the deadline runs from. Two proven formulations:

"Payable within 30 days without deduction. For payment within 10 days of the invoice date we grant 2 % early payment discount (23,80 €), amount to pay 1.166,20 €."

"Payment terms: 14 days net. For payment by 19.09.2026: 3 % early payment discount."

For VAT purposes, § 14 (4) no. 7 UStG requires an invoice to state any reduction of the consideration agreed in advance, unless it is already reflected in the consideration. A Skonto agreement is exactly such a reduction, so the note on the invoice is not just good commercial practice but part of the mandatory invoice content.

Stating the actual discount amount, by contrast, is not required. The German tax administration expressly confirms that a note such as "2 % Skonto bei Zahlung bis …" satisfies § 14 (4) sentence 1 no. 7 UStG and that the discount need not be quantified, neither as a gross nor as a net figure (Umsatzsteuer-Anwendungserlass, section 14.5 (19)). Stating it is still advisable, because it prevents queries and incorrect deductions. All the other mandatory fields are covered under writing an invoice.

Is Skonto worth it? The effective annual interest rate

Skonto is expensive for the issuer and usually an excellent deal for the paying customer. The effective annual interest rate makes this visible:

Effective rate in % p. a. = discount rate × 360 ÷ (payment term in days − discount period in days)

This is the commercial approximation using a 360-day year, not a statutory rule. It slightly understates the true compounding effect but is entirely sufficient for a day-to-day decision.

Example: 2 % for payment within 10 days, otherwise 30 days net. 2 × 360 ÷ (30 − 10) = 36 % p. a. The customer earns an annualised 36 % for paying 20 days earlier. Almost any overdraft facility is cheaper, so taking the discount is nearly always worthwhile for the customer.

For the issuer the reverse applies: Skonto is one of the most expensive forms of financing there is. It pays off mainly where it noticeably shortens long payment terms or avoids dunning effort and bad debt.

Skonto or a discount (Rabatt): the difference

Both reduce the price, but they attach to different conditions:

Both are reductions of the taxable amount within the meaning of § 17 (1) UStG. The difference is the timing: a Rabatt is normally already included in the net amount shown, whereas Skonto only arises on payment.

Skonto in the books

Skonto is not booked as a separate price change but as a subsequent correction of revenue and VAT.

• For the issuer it is a Skonto expense: revenue and the VAT payable are reduced in the month of payment.
• For the customer it is Skonto income: the expense and the input VAT claimed are reduced in the month of payment.

In both cases the date of payment governs, not the invoice date. You do not need to issue a corrected invoice as long as the Skonto agreement was already stated on the original one.

Sources

• § 14 UStG – issuing invoices (subs. 4 no. 7: reductions of consideration agreed in advance)
• § 17 UStG – change of the taxable amount
• § 15 UStG – input VAT deduction