E-invoicing in Germany – Preparations are required
In a previous article we already had a report on the EU’s VAT in the Digital Age (ViDA) initiative and plans by the EU Commission to introduce e-invoicing throughout Europe along with the related digital reporting requirements. The implementation will be carried out between 2024 and 2028. Notwithstanding this, Germany plans to introduce e-invoicing beforehand to a limited extent.
German implementation proposal
The roll-out of e-invoicing in Germany will entail considerable effort not only on the part of businesses but also at the official level. In order to respond to these components in the best possible way Germany has already introduced the initial action steps. The recently published draft Act to Strengthen Growth Opportunities, Investment and Innovation and to Simplify the Tax System and Create Tax Fairness [Gesetz zur Stärkung von Wachstumschancen, Investitionen und Innovation sowie Steuervereinfachung und Steuerfairness (Wachstumschancengesetz)] proposes the introduction of e-invoicing as of 1.1.2026 (for now, exclusively) for German domestic B2B transactions between businesses that are resident in Germany for tax purposes.
The EU Council’s implementing decision of 25.7.2023 paved the way for Germany to focus on the accelerated roll-out of e-invoicing independently of the ViDA implementation date and the relevant regulations contained therein.
Definition
As of 2025, invoices that can be issued, transmitted and received in a structured electronic format will be considered to be e-invoices. In addition, the definition requires the possibility of electronic processing. E-invoices have to be drawn up according to Directive 2014/55/EU, i.e. in accordance with the European Norm (EN) 16931 [developed and published by the European Committee for Standardization (CEN)]. During a transitional period that lasts until 31.12.2027, the above-mentioned CEN EN does not have to be complied with as long as the e-invoice is transmitted via an EDI channel.
PDF invoices, which are currently commonplace, are not considered to be e-invoices and they along with the classic paper invoices will then be regarded as so-called ‘other invoices’. According to the current draft legislation, such formats would still be permissible for the respective business transactions until the end of 2025. However, these formats will remain valid for all other business transactions that are not affected by the e-invoicing regulations.
Also as previously, businesses that are obliged to issue invoices will still have six months time to issue e-invoices.
Scope of application
The new regulations will affect businesses that are resident in Germany for tax purposes (the main office of the management board is located there or they have permanent establishments there that generate sales) and that execute transactions that are taxable and liable to taxation with business customers that are likewise resident in Germany for tax purposes. For example, if a French business customer is registered for VAT in Germany and receives goods from a business that is tax resident in Germany then the invoice for the French business would not have to be issued in the form of an e-invoice because the status of this business would not fulfil the ‘tax residency requirement’.
Please note: Travel tickets and invoices for small amounts will be exempt from the e-invoicing requirements.
Other e-invoicing requirements
The draft legislation does not provide for any new rules for the mode of transmission. The classic requirements of authenticity of origin and integrity of content will remain unchanged. Consequently, it will still be possible to send e-invoices as e-mails, too. This will apply, at least, until reporting has to be done via a separate reporting system – as envisaged by the ViDA proposal.
Recommendation: Businesses that are affected should now already address the roll-out of e-invoicing and, in particular, the IT aspects – also in view of the digital reporting system (via private or state providers), which is likewise on the ViDA implementation agenda. Moreover, a look at our neighbouring countries – notably Italy – could be helpful in the course of implementation considerations.