Whilst on EU level plans to implement obligatory e-invoicing are stuck due to a lack of willingness to reach agreement on the EU VIDA package, the German parliament has approved respective law for Germany in March 2024. Action is required for companies being established in Germany.
1. What is an “e-invoice”?
An electronic invoice is an invoice that is issued, transmitted and received in a structured electronic format and allows for electronic processing. The structured electronic format:
- Must either comply with the European standard for electronic invoicing. The basis for this is CEN standard 16931. This is a data model that defines the core elements of an invoice. In addition to the mandatory information known from sec. 14 of the German VAT Act, more than 150 so-called business terms specify numerous (potential) other invoice elements (e.g. discount conditions and due date).
- Or can be agreed bilaterally between the issuer of the invoice and the recipient of the invoice. The pre-requisite is that such an agreed format enables the correct and complete extraction of the information required under sec. 14 of the German VAT Act into a format that is interoperable with CEN standard 16931.
Among other formats the “X-Rechnung” (which has been established for invoicing in the public sector) as well as the the “ZUGFeRD-Rechnung” (acronym for “Central User Guide of the Forum Electronic Invoice Ger-many”) meet the requirements of that standard. According to the Ministry of Finance the EDI format will also continue to be applicable with appropriate adjustments.
2. When is an e-invoice obligatory?
An invoice has to be issued as an e-invoice if there is:
- A sale between two companies being established in Germany
- On a transaction which is taxable in Germany and which is not exempt under sec. 4 nos. 8-29 of the German VAT Act (the latter applies i.e. to finance, insurance, health, education and welfare business).
“Traditional” invoices (i.e. email, Word, PDF) can still be used if:
- The supplier and/or the recipient is not established in Germany (note: many companies are registered for VAT in Germany within being established here, they are not covered by the rule),
- Or: the recipient is not in business (B2C);
- Or: It is a small amount invoice (maximum 250 €);
- Or: It is a passenger transport ticket (aircraft, train, bus, taxi, …).
There is also no exception for transactions which are zero-rated (no VAT with a right to deduct), such as
- Intra-Community supply of goods,
- Exports,
- Transactions for maritime shipping,
- Services in the field of import and export logistics).
3. Timing
Companies must be “ready to receive” e-invoices as from 1 January 2025, i.e. accept e-invoices from their contractual counterparts if the latter make use of e-invoicing. “Ready to receive” means that a company provides an email address to which the issuer can send the e-invoice. There is no obligation for the recipient to automatically process the e-invoices in book-keeping. There is no right to refuse incoming e-invoices and no obligation for the issuer to replace it by a traditional invoice. For the purpose of input VAT deduction, the recipient has to archive e-invoices properly so that it can be presented to the tax office upon request, i.e. in an audit.
With regard to the obligation to issue e-invoices, a general transitional period until the end of 2026 (date of supply!) applies. That means that for 2025 and 2026 it is possible to apply todays’ rules. For companies whose total turnover in 2026 does not exceed € 800,000 the transition period is extended until end of 2027.
4. Need for action in 2024
Appropriate software solutions are required for the creation, transmission, reception, validation, visualization and automated processing of e-invoices. This is not a tax but a technical issue to be solved.
With regard to the issuing of invoices (and self-bill invoices) there is no immediate need for action since traditional invoicing can be applied at least for the next two years (until end 2026).
With regard to the receipt of invoices (and self-bill invoices) there is a need to be “ready to receive” from 1 January 2025, just in case the contractual party intents to replace traditional invoices by e-invoices. The recipient needs to make sure that the e-invoices are archived properly and that they can be made readable to make sure they are properly handled in the book keeping of the company.
5. Outlook
The e-invoice is only a preparatory measure for real-time reporting planned at a later date. This means that e-invoices will be transferred to a platform in a timely manner (within a few days), so that the tax authorities can check whether declared input VAT amounts have been properly declared and paid.
With the introduction of e-invoicing and the planned reporting system, Germany is in line with corresponding plans at EU level. The EU plans are focussed on e-invoicing for intra-Community supply of goods and services. However, the new rules are unlikely to come into effect in the current decade.
The above information was kindly provided by Nesemann & Grambeck (Germany). If you need further information, please contact Hans-Martin Grambeck at:
