In short:
- Skonto amount = invoice amount × Skonto rate.
- The effective annual rate shows how expensive it actually is to not take the discount — often a double-digit percentage.
- Under § 17 UStG, Skonto also reduces the VAT assessment base.
- The Skonto rate and deadline have to be stated on the invoice, otherwise they don't apply.
What is Skonto?
Skonto is a price discount a seller grants when the buyer pays significantly earlier than the standard payment term. A typical wording is something like "2% Skonto for payment within 7 days, net within 30 days." For the seller, this improves cash flow; for the buyer, paying earlier is financially worthwhile if they have the money available anyway.
The Skonto formula
Skonto amount
Skonto amount = invoice amount × Skonto rate
For a gross amount of €1,190.00 and a 2% Skonto rate:
€1,190.00 × 0.02 = €23.80 discount
The amount payable therefore drops to €1,190.00 − €23.80 = €1,166.20.
Effective annual rate
More interesting than the raw Skonto amount is the question of how expensive it actually is to not take the discount and instead wait until the standard payment deadline. To find out, you annualize the benefit:
Effective annual rate ≈ [Skonto rate / (100 − Skonto rate)] × [360 / (payment term − Skonto deadline)] × 100
With a 2% Skonto rate, a 7-day Skonto deadline, and a 30-day payment term:
(2 / 98) × (360 / 23) × 100 ≈ 31.9% p.a.
In other words: whoever lets the extra 23 days pass until the payment deadline, in order to hold on to their money longer, effectively "pays" an annual rate of nearly 32% for the privilege — far more than most short-term financing costs. That's exactly why taking Skonto makes financial sense for solvent businesses in the vast majority of cases, as long as there isn't a more urgent liquidity constraint working against it.
Worked example including VAT
| Item | Amount |
|---|---|
| Net amount | €1,000.00 |
| VAT (19%) | €190.00 |
| Gross amount | €1,190.00 |
| 2% Skonto on net | −€20.00 |
| 2% Skonto on VAT | −€3.80 |
| 2% Skonto on gross (total) | −€23.80 |
| Amount due if Skonto is taken | €1,166.20 |
Important: the Skonto deduction doesn't just affect the net amount — it also proportionally affects the VAT. More on that in the next section.
Don't want to work through this calculation by hand? Our Skonto calculator calculates the Skonto amount, the amount due, the VAT correction, and the effective annual rate directly online, and gives you ready-to-use wording for your invoice.
Skonto and VAT: what § 17 UStG requires
For VAT purposes, Skonto is a reduction in consideration under § 17 UStG. If the Skonto is actually taken, the VAT assessment base changes retroactively: you (or your customer, for input VAT deduction purposes) have to correct the VAT proportionally, not just the net amount. In practice, accounting software handles this automatically as soon as the payment with the Skonto deduction is recorded — the important thing is not to overlook it if you're booking manually.
Skonto vs. payment term: when does which one make sense?
- As a seller: Skonto speeds up your incoming payments and reduces your default risk, but costs you the discount amount. It's worthwhile above all when liquidity matters more to you than the full invoice amount.
- As a buyer: taking the Skonto is, in financial terms, almost always cheaper than using the full payment term, provided you have the necessary liquidity — the calculated effective annual rate is usually higher than the cost of an overdraft facility.
There's no blanket answer for cases where liquidity itself is tight: then the longer payment term can be the right decision, despite the calculated "loss."
Stating Skonto correctly on the invoice
For a Skonto agreement to be valid at all, it has to appear on the invoice itself — a common wording is:
"Payable within 7 days less 2% Skonto (€23.80 deduction = €1,166.20). Payable net without deduction within 30 days."
A Skonto deadline agreed verbally or offered afterwards by email, but not stated on the invoice, is not legally binding and can't be enforced in a dispute. You'll find an overview of all mandatory invoice details — Skonto included — in our article "Writing a Proper Invoice".
Common mistakes when calculating Skonto
- Forgetting the VAT correction: only the net amount is reduced by the Skonto, while the VAT is left unchanged — this contradicts § 17 UStG.
- Skonto deadline not on the invoice: the terms are only mentioned verbally or in the order confirmation, but not on the invoice itself.
- Confusing Skonto with default: Skonto is a voluntary incentive for faster payment, not a substitute for the rules on payment default and default interest for overdue invoices — more on that in our article "Writing Payment Reminders".
Frequently Asked Questions (FAQ)
How do you calculate the Skonto amount? Skonto amount = invoice amount × Skonto rate. For €1,190 gross and 2% Skonto, that's a €23.80 deduction, reducing the amount due to €1,166.20.
How do you calculate the effective annual rate of Skonto? Effective annual rate ≈ [Skonto rate / (100 − Skonto rate)] × [360 / (payment term − Skonto deadline)] × 100. With 2% Skonto, a 7-day Skonto deadline, and a 30-day payment term, that comes to around 31.9% p.a.
Do I have to correct the VAT if a customer takes Skonto? Yes. Under § 17 UStG, Skonto reduces the assessment base. If the Skonto is actually taken, the stated VAT also has to be corrected proportionally.
Does Skonto have to be stated on the invoice for it to apply? Yes. The Skonto rate and deadline have to be noted as a payment term on the invoice itself — a Skonto deduction agreed afterwards, without being in writing, is not legally binding.
Is Skonto worthwhile for my business as the payer? Purely in financial terms, often yes, if the effective annual rate exceeds your other financing costs — but whether that makes sense for your specific liquidity situation depends on the individual case.
Conclusion
The Skonto formula itself is simple — invoice amount times Skonto rate. The real insight lies in the effective annual rate: it makes visible how expensive it actually is to pass up a small discount. Anyone offering or taking Skonto should also keep the VAT correction under § 17 UStG in mind, and document the terms cleanly on the invoice.
