Electronic invoicing

Electronic invoices of various formats have been in widespread use for many years now. However, no specific format has so far been prescribed for VAT purposes in Germany – alongside obtaining the recipient’s consent to an electronic invoice, it was only necessary to ensure the authenticity of the invoice’s origin, the integrity of its content, and that it was legible.

In future, electronic invoices in a particular structured format allowing electronic processing (referred to as “e-invoices”) will be mandatory for supplies carried out by a taxable person established in Germany to another taxable person established in Germany (i.e. domestic B2B). For a taxable person established in Germany by means of a VAT fixed establishment, it should be noted that this rule only affects supplies in which the fixed establishment is involved. There are a number of exceptions – e.g. for low-value invoices, and for travel tickets that are considered as invoices. The obligation to issue invoices will also not be extended as such: for example, there will continue to be no requirement to issue an invoice for VAT-exempt supplies where input VAT is not deductible.

Other invoices (paper invoices and electronic invoices in other formats) will still be admissible in all other cases. Where use of e-invoices is not mandatory, electronic invoices of any format (including the format mentioned above) may only be used with consent of the recipient.

E-invoices will be based on the European standard for electronic invoicing and the corresponding list of syntaxes under Directive 2014/55/EU of 16 April 2014. These standards are already compulsory – albeit not for VAT purposes – for invoicing to certain public bodies in Germany (business to government, or B2G). However, invoice issuers and recipients may also agree on a structured electronic format of their own, provided that the format enables the information required under the VAT Act (Umsatzsteuergesetz, or UStG) to be correctly and completely extracted from the invoice in a format that meets the aforementioned standard or is interoperable with it. In any case, parties must ensure the authenticity of the invoice’s origin, the integrity of its content, and that it is legible.

The use of e-invoices will become mandatory for B2B supplies of domestic companies regardless of their size or turnover. The amendment to VAT law brought about by the Growth Opportunities Act will come into force from 1 January 2025, although several transitional rules will apply. It will generally remain permissible to issue invoices in other formats for transactions carried out up to and including 2026, so that the regulation will de facto only apply from 2027 onwards. The grace period for invoice-issuing taxable persons whose total turnover in the previous calendar year does not exceed €800,000 will be extended by a further year, expiring on 31 December 2027. Another transitional provision provides that electronic data interchange (EDI) invoices may be used instead of e-invoices (for VAT purposes, not under other regulations) for transactions carried out up to the end of 2027. However, it should be noted that the transitional provisions only mention exceptions for sending e-invoices, not for receiving them. All domestic German businesses should therefore ensure that they are in a position to receive and process e-invoices by 1 January 2025.

The requirement to use e-invoices is intended as step towards a future obligation to report B2B transactions to a nationwide electronic system to be implemented by the tax authorities, which is initially set to cover domestic transactions. It will also serve as preparation for an EU-wide reporting obligation for intra-Community transactions, as drafted in the EU’s proposed “VAT in the Digital Age” (ViDA) Directive. However, the timetable – both for the adoption of this directive and the introduction of the measures it contains – is currently unclear.