e-Invoicing in Germany: What's New?
Along with some transitional provisions included, it will be mandatory to use e-invoices for sales between domestic companies from 1 January 2025. The Federal Ministry of Finance (BMF) will publish a letter with the highest financial authorities of the federal states, however, this has been sent to associations for the opportunity to comment in the meantime. The changes occurring have a large implication on entrepreneurs in the economy, for this reason, the draft has been published for informational purposes. The final letter is expected to be published by the BMF in the beginning of Q4 of 2024.
The new regulations state that an e-invoice should comply with the EN-16931 standard, or another format as agreed mutually between the invoice issuer and the invoice recipient. An e-invoice will only be considered as existing if issued, transmitted, and received in a structured electronic format which enables electronic processing. The authenticity of the origin, integrity of the content, and the legibility of the invoice must be guaranteed. Legibility means that the structured data file must be machine-readable. From 1 January 2025, all invoices in paper or electronic formats that do not comply with the aforementioned requirements, will be considered other invoices. This includes JPEG or simple PDF files.
The obligation to issue an e-invoice applies to transactions between domestic entrepreneurs where both the seller and recipient are resident in Germany. This means that if one of the parties to the transaction is not resident in Germany, there is no obligation to issue an e-invoice. From 1 January 2025, issuing of an e-invoice no longer requires the consent of the recipient. It is obligatory for the recipient to create the technical conditions for receiving such an e-invoice. Invoices considered as "other invoices" may be issued for B2C (Business-to-Consumer) sales. Additionally, this allowance extends to small-value invoices, whose total amount does not exceed EUR 250, as well as passenger transportation tickets.
With regards to the permissible formats of an e-invoice, this includes a purely structured format or a hybrid format. A hybrid format will consist of structured data (such as XML) as well as a human-readable data file - both data parts should be combined in one file. Where a hybrid format exists, the structured data file will take precedence over any human-readable data file.
So, what does this mean when it comes to the transmission of these invoices? Invoices must be transmitted in electronic form. For this purpose, it will be sufficient for an invoice recipient to provide an email address, from 1 January 2025. If transmitted via email, the data can be made available via an electronic interface or downloaded from a customer portal. An entrepreneur is free to use an external service provider, such as eezi-Powered by VAT IT, to create or transmit e-invoices. An invoice issuer is able to correct an issued e-invoice by making use of a credit note.
When considering the effect of the above on input VAT recovery, it has been stated that where an obligation exists to issue an e-invoice, only this invoice will meet the requirements for input VAT recovery. Any other invoice will not be considered a proper, legal invoice. If there was an obligation to issue an e-invoice and another invoice was issued instead, this invoice will not entitle the buyer to deduct input tax. However, an alternative invoice can be corrected by issuing an e-invoice, indicating that it is a corrected invoice. If you need assistance with input VAT recovery and the complexity that it entails, reach out to our sister company VAT IT Reclaim.
To summarise the arrangements; the receipt of an e-invoice must be guaranteed by invoice recipients by 1 January 2025. Until the end of 2026, issuing and transmission of paper invoices is permissible for VAT purposes. This is extended until the end of 2027 if the entrepreneur's total turnover did not exceed EUR 800 000 in the previous calendar year.
With mandates changing rapidly, we're here to help keep you up-to-date. Reach out to our team of experts to get compliant ahead of time! Follow our blog to stay informed with news as it occurs. Roll on 2025!
