The German Federal Ministry of Finance has made draft amendments to Value Added Tax Law (Umsatzsteuergesetz, “UStG”) in order to implement mandatory e-invoicing.
In April 2023, The German Federal Ministry of Finance sent a discussion proposal for the introduction of mandatory B2B e-invoicing to significant German business associations, asking for input. In June 2023, the European Commission (EC) shared its positive proposal to authorize Germany to derogate from the VAT directive by its plans to mandate e-invoicing. EC commented that Germany’s plans are aligned with the VAT in Digital Age proposal.
With the UStG amendments, an electronic invoice is defined as an invoice issued, transmitted and received in a structured electronic format that enables electronic processing, and which is also compliant with the eInvoicing standard of the European Committee for Standardization (CEN), EN 16931.
Currently, for issuing an electronic invoice, the buyer’s consent is required. With the implementation of aforementioned amendments, electronic invoicing will become mandatory for transactions between Germany resident taxable persons.
The German Federal Ministry of Finance initially planned to roll out mandatory e-invoicing as of January 2025. This date remains the same in the amendment proposals, be it that certain transitional measures will give taxpayers some time and flexibility to comply with the new requirements.
- Until the end of 2025, paper invoices will be accepted. Also, electronic invoices which do not comply with 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.
- Furthermore, until the end of 2027, e-invoices do not have to meet CEN standard, if they are exchanged via electronic data interchange (EDI) and transaction parties agree.
