Germany: Mandatory B2B E-Invoicing from 1 January 2025
Germany is introducing mandatory e-invoicing for B2B transactions from 1 January 2025.
There will be a transitional period in order to give businesses sufficient time to adapt their invoicing and reporting systems:
- From 1 January 2025 – all businesses should ensure they have capacity to receive electronic invoices;
- Businesses can issue paper invoices or PDF until 31 December 2026;
- From 1 January 2027 – businesses with annual turnover above € 800,000 in the previous calendar year must issue e-invoices;
- Paper invoices are permitted until 31 December 2027 for small and medium sized businesses with annual turnover not exceeding € 800,000; and
- From 1 January 2028 – this requirement applies also to businesses with annual turnover below €800,000.
In BMF Draft Letter dated 14 June 2024, BMF detailed the practical implementation aspects. This included the stages of implementation, the acceptable formats, documents and businesses that are in scope, record keeping requirements, input VAT deduction, corrections.
Below are some of the key points mentioned:
- E-invoices can be transmitted by email and data can be made available via an electronic interface or the option of downloading via a (customer) portal;
- The right of input VAT deduction may be exercised upon having an e-invoice where invoice correction may be made or if no invoice correction is made by subsequently issuing an e-invoice, input tax deduction may also be possible from another invoice by applying a strict standard, provided that the tax authorities have all the information to check the material requirements for the input tax deduction;
- The limit of € 800,000 applies regardless of whether the invoice issuer calculates its turnover according to the provisions for estimated taxation (Section 16 UStG) or actual taxation (Section 20 UStG);
- In cases of a VAT group, the turnover of the entire group of companies is to be taken into account;
- If the invoice is issued in the form of a credit note, the total turnover of the credit note issuer is to be taken into account;
- If the invoice is issued by a third party not involved in the exchange of services, the total turnover of the client is decisive.
The Federal Government representative in a response dated 29 August 2024 to a parliamentary group CDU/CSU question, provided further clarifications on the implementation.
- Federal Government planned measures in support of companies in implementing the newly introduced requirements;
- Draft of the corresponding BMF letter has been posted on the BMF website for general information. The final version is expected to be published this year, and thus before the regulations on e-invoicing come into force. In addition, the publication of an accompanying list of questions and answers (FAQs) on the introduction of e-invoicing is planned.
- To the question whether the recipient only needs to provide an email account to receive an e-invoice or are additional systems required to ensure that the invoice is also stored, and if so, which systems are required;
- The Federal Government confirmed that “To receive an e-invoice, it is sufficient to provide an e-mail mailbox, unless another electronic transmission method has been agreed between the companies involved in the transaction.
- To the question on the requirements applicable to an e-invoice issue and transmission particularly in the case of everyday personal transactions (e.g. an entrepreneur receives a delivery for his company in a restaurant, supermarket, hardware store, etc);
- The Federal Government responded that “If a structured e-invoice cannot be triggered and transmitted by a cash register system, it is possible that the e-invoice will later be transmitted electronically to the business service recipient or made available for download. It would also be permissible to first issue “another invoice” (i.e. not an e-invoice) and then correct it by electronically transmitting an e-invoice;
- invoices whose total amount does not exceed € 250.00 (invoices for small amounts) can always be issued and transmitted as “other invoices”.
- To the question on a free tool that had been expected to be made available by 31 December 2024;
- “The federal government has come to the decision that no free service for the creation and visualization of e-invoices tool can be made available. Such offers are already available from private providers – some of them free of charge.
Stay Up to Date with Our VAT Newsletter
To ensure you remain informed about the latest VAT news, trends, and topics from around the globe, subscribe to our VAT Newsletter. Each month, we deliver insightful updates straight to your inbox, helping you stay ahead of the curve.
Partner with Real VAT Experts
With decades of experience in VAT compliance and consultancy, our team at Taxback International stands ready to assist you. We offer comprehensive expertise across all countries and languages where VAT obligations exist.
Taxback International
Taxback International’s innovative tax technology and experienced tax professionals to provide VAT Compliance and VAT Reclaim services to global businesses. Find out more about our range of technologies:
Comply: End-to-end VAT Compliance Platform
VATConnect: VAT Reclaim Platform
TBI Pay: Global Payments Solution