Update: 25 June 2024 by Dilara İnal
Ministry Publishes Draft Guideline on B2B E-Invoicing
The German Ministry of Finance (MoF) released a draft guideline on 13 June 2024, detailing the upcoming B2B e-invoicing mandate which will roll out on 1 January 2025.
Although the current law only obliges taxpayers to issue and receive e-invoices for domestic B2B transactions, the MoF plans to introduce an e-reporting system for invoice details at a later stage, with no set date.
The highlights from the guidelines are:
- E-invoicing exemptions include tax-free services, invoices under EUR 250, and travel tickets.
- E-invoices must comply with EN 16931 syntaxes or a mutually agreed format that meets the requirements. XRechnung, ZUGFeRD (from version 2.0.1), Italy’s FatturaPA and France’s Factur-X are mentioned as compliant formats.
- E-invoices can be structured or hybrid with a human-readable part. If discrepancies occur, the electronic data takes precedence.
- E-invoices can be sent via email, electronic interfaces or portals, but not on USB sticks.
- Corrections must be in electronic form.
- Issuers can rely on recipient-provided domestic entrepreneur status unless there’s contrary information.
- Recipients who cannot accept e-invoices cannot demand alternatives, and issuers fulfil their VAT obligations if they make documented efforts to send e-invoices. Recipients must ensure e-invoicing compliance. Non-compliant invoices, such as PDFs or paper, are not valid for tax deductions.
The final version of the guideline is expected by Q4 2024.
Update: 26 March 2024 by Dilara İnal
German Parliament Passes the B2B e-Invoicing Mandate
The German parliament passed the Growth Opportunities Act (Wachstumschancengesetz – the Act) concerning various tax matters on 22 March 2024, including a nationwide B2B electronic invoicing mandate.
The Act was originally scheduled for a vote at the end of 2023, with enforcement planned for January 2024. However, the lack of consensus between the Bundestag and Bundesrat – lower and upper houses of the parliament, respectively – in various provisions of the Act delayed its finalisation.
The Mediation Committee of the Bundestag and Bundesrat concluded its negotiations about the Act on 21 February 2024, and the Bundestag approved the amended text on 23 February. The Bundesrat’s vote on 22 March completed the parliamentary process.
The implementation timeline for this mandate has been confirmed as follows:
- 1 Jan 2025: Mandatory receipt and voluntary issuance of e-invoices
Mandatory receipt of e-invoices for domestic B2B transactions will be required for all businesses. Additionally, businesses will have the option to issue e-invoices that are compliant with the approved syntaxes based on CEN 16931 voluntarily, without the Buyer’s consent.
- 1 Jan 2027: Mandatory issuance of e-invoices will be implemented for businesses (large taxpayers) with an annual turnover of at least EUR 800,000.
- 1 Jan 2028: Mandatory issuance of e-invoices will be extended to include all remaining businesses (small taxpayers)
Following this parliamentary approval, the Act will be signed by the President and subsequently published in the official gazette.
Acceptable invoice formats to issue in following years:
| Domestic B2B Invoices | 2024 | 2025 | 2026 | 2027 | 2028 |
| Paper Invoices |
Allowed |
Prohibited for large taxpayers |
Prohibited for all |
||
| E-invoices in EN 16931 format |
Allowed with Buyer’s consent |
Allowed |
Mandatory for large taxpayers |
Mandatory for all |
|
| EDI invoice not EN 16931 format |
Allowed with Buyer’s consent |
Allowed if are interoperable with the CEN, if the required information can be extracted into CEN | |||
| Other invoices in e-form (e.g. PDF, JPEG) |
Allowed with Buyer’s consent |
Allowed if are interoperable with the CEN, if the required information can be extracted into CEN** Please note that exchange on EDI is permitted if the e-invoice aligns with European standards. |
|||
Is your organization unprepared for the upcoming mandate? Our expert team can help.
Update: 6 November 2023 by Dilara İnal
Additional Information Released for Germany’s B2B E-Invoicing Plans
In October 2023, The Federal Ministry of Finance (MoF) released additional information regarding electronic invoicing, one of the proposed tax measures included in the Growth Opportunities Act.
If the MoF’s proposal, with the details provided in the preceding updates, becomes law, the following will be applicable:
- Invoices following the well-established XRechnung and ZUGFeRD formats from version 2.0.1 onwards must comply with the EN-based format requirements.
- Efforts are underway to ensure the continued use of EDI (Electronic Data Interchange) procedures within the forthcoming legal framework, albeit with some necessary technical adjustments.
- It is important to highlight that the government draft outlines a phased transition, though all taxpayers will be obliged to be able to receive electronic invoices as of 1 January 2025.
Besides MoF clarifications, the upper house of the German Federal Parliament, Bundesrat, addressed the Act during its session on 20 October. While the Bundesrat supports the introduction of mandatory e-invoicing, it has proposed a two-year delay so the mandatory receipt of electronic invoices commences on 1 January 2027.
In the next steps of the process, the lower house of the Parliament, Bundestag, is expected to vote on the Growth Opportunities Act in mid-November. The upper house’s vote should take place in mid-December.
Looking for more information on the global adoption of e-invoicing? Read our definitive E-invoicing guide.
Update: 20 September 2023 by Dilara İnal:
Federal Government Approves Mandatory B2B E-Invoicing and Extends Voluntary Phase
On 30 August, the German Federal Government approved the draft act known as the “Growth Opportunities Act,”. The act consists of several provisions on different tax matters, including the introduction of a nationwide B2B e-invoicing mandate.
Key dates for implementation of the mandate include:
- From 1 January 2025: Issuing e-invoices will be allowed without the buyer’s consent if the e-invoice is fully compliant with the e-invoicing standard set forth by the European Committee for Standardization (CEN), EN 16931. Paper invoices will still be permitted throughout 2025.
- From 1 January 2026: Scheduled commencement of mandatory implementation of B2B e-invoicing.
The draft bill approved by the government does not change the previously communicated framework, however it extends the voluntary phase by one year. The voluntary phase will last until January 2027 for small companies with annual turnover of 800,000 EUR or less in 2025.
Next steps for the e-invoicing mandate
The Federal Parliament and the Federal Council are expected to give their approval to this reform by the end of 2023.
Looking for additional guidance on invoicing in Germany? Speak with our team of experts.
Update: 4 August 2023 by Dilara İnal
German Regulatory Changes For Mandatory E-invoicing
The German Federal Ministry of Finance (the Ministry) shared the draft “Growth Opportunities Act” with significant German business associations on 14 July 2023. This act introduces amendments to VAT law to implement mandatory e-invoicing, along with other national and international tax-related proposals.
Currently, issuing an electronic invoice requires the buyer’s consent. Proposed amendments will change this, with invoices for transactions between German resident taxpayers – known as domestic B2B transactions – required to be electronic.
The act also introduces a new definition for e-invoices. An electronic invoice is defined as an invoice issued, transmitted and received in a structured electronic format that enables electronic processing. An e-invoice must also comply with the eInvoicing standard of the European Committee for Standardization (CEN), EN 16931.
The Ministry previously shared its plan to roll out mandatory e-invoicing as of January 2025. This date remains the same in the amendment proposals, with transitional measures giving taxpayers some time and flexibility to comply with the new requirements:
- Paper invoices will be accepted until the end of 2025. Also, electronic invoices that do not comply with the CEN standard can be issued if the buyer’s consent is obtained. However, electronic invoices based on the CEN standard can be issued without the buyer’s consent.
- E-invoices do not have to meet the CEN standard until the end of 2027, if transaction parties agree and exchange invoices via electronic data interchange (EDI).
Even though this act does not include any provisions for a transaction-based reporting system, it notes that such a reporting system for B2B sales will be introduced later.
European Council issues derogation decision
The European Council authorised Germany to introduce special measures regarding mandatory electronic invoicing with its decision dated 25 July 2023.
Germany received the derogation from the VAT Directive from 1 January 2025 to 31 December 2027 or, if an EU directive is adopted earlier than planned, until the national transposition of the VAT in the Digital Age (ViDA) directive into German law.
Looking for additional guidance on invoicing in Germany? Speak with our team of experts.
Update: 21 April 2023 by Anna Norden
Germany Takes Another Step Towards CTC by Proposing an E-Invoicing Mandate
The German Federal Ministry of Finance sent a discussion proposal for the introduction of mandatory B2B e-invoicing in Germany on 17 April to significant German business associations.
The business associations are requested to provide their opinion on matters such as the following by 8 May:
- The timeline: The Ministry suggests a phased introduction of mandatory e-invoices for domestic B2B supplies starting from 1 January 2025. The associations are asked to consider this timeline as well as organisation size, exemptions and more
- A new e-invoice definition: Based on VAT in the Digital Age (ViDA) using structured data and the European Norm
- A definition of “other invoices”: For those that do not fall under the new e-invoice definition, which includes paper or PDF invoices
The proposed e-invoicing mandate is a step toward implementing a real-time transaction-based reporting system for creating, verifying and forwarding e-invoices. This system is not part of the current proposal, but – as this is directly related to an e-invoice mandate – the ideas for such a system are laid out at a high level by the Ministry of Finance.
The final aims to provide a uniform electronic transaction-based reporting system for national and cross-border B2B transactions. The invoice exchange would be done via a central or private platform.
No verification of the full invoice content would be performed or interruption of forwarding of the invoice – however, the issuer’s platform would check (“Plausibilitätsprüfungen”) that all mandatory fields are present, whether structure and syntax are EN-compliant and so on.
The reporting of the invoice would be in real-time at the same time as the invoice is sent so that the supplier would not have to initiate two transactions.
The Ministry of Finance states the aim is for the new system to be aligned with ViDA but that Germany counts on having to use a derogation from the provisions of the VAT Directive to introduce the e-invoice mandate, should ViDA not be adopted in time.
While many have speculated around Germany going down the path of the Italian e-invoicing system, the message from the Ministry of Finance seems rather to be that the cues are taken from the French system, with the use of a centralised platform complemented with private service providers who serve to channel the invoices.
Need to discuss how Germany’s proposal to introduce continuous transaction controls could affect your business? Speak to our tax experts.
Update: 3 November 2021 by Joanna Hysi
Germany Steps Closer to Introducing Continuous Transaction Controls
There’s been increased discussion among different institutions about the introduction of continuous transaction controls (CTCs) in Germany to combat tax fraud and boost the competitiveness of the German market in Europe.
Supporters of a CTC reform
Proponents of the introduction of CTCs in Germany include, among others: the parliamentary group of the business-friendly Free Democratic Party (FDP), the German Association for Electronic Invoicing (VeR) and an independent judiciary body, the German Bundesrechnungshof (Federal Audit Office).
Recently, we’ve seen this topic included in tax policy negotiations of the coalition partners that emerged from the recent German government elections (the Social Democratic Party (SPD), FDP, and the Green Party).
While the discussions remain at a conceptual level, the new potential coalition parties display political will for reform in this area.
Proposals on CTC reform
Specifically, the German Bundesrechnungshof proposed to the Ministry of Finance a real-time reporting system leveraging blockchain technology as an efficient system to combat VAT fraud. However, their proposal wasn’t accepted on the grounds that a cost-benefit analysis is required before such measures are proposed and implemented.
As part of a parliamentary process the FDP called for “an electronic reporting system comparable to the Italian SDI to be introduced nationwide as quickly as possible, for the creation and testing and forwarding of invoices”. The leading German industry association, the VeR, welcomed this proposal recognising its numerous advantages to companies and the German economy.
A VeR study on whether the Italian model can be used as a blueprint for Europe explains that although it doesn’t seem to have contributed significantly to reducing Italy’s VAT gap, the advantages of e-invoicing to companies and the Italian economy are convincing. It concludes that the Italian clearance system can serve as a model for the digitization of VAT in Germany, if not in Europe. In addition, the VeR experts offer their knowledge to develop such a CTC system in Germany.
Conclusion: Will Germany be the next EU country to introduce CTCs?
It seems that the idea of introducing a CTC system in Germany – following in the footsteps of fellow Member States like Italy, France and Poland – is gaining traction and might not be far from becoming reality if the coalition partners indeed manage to reach a coalition agreement to succeed the currently ruling party.
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