E-Invoicing Regulations in Germany: An Update

tax compliant invoicing

March 25, 2024

Germany’s E-Invoicing Revolution: Transforming B2B Transactions

In Germany, the implementation of e-invoicing is set to become mandatory for all businesses engaged in B2B transactions, with the initial deadline set for January 1, 2025. This legislative move was approved by the Federal Council on March 23, 2024, marking the official adoption of the regulation.

Key points outlined in the current law include:

  • Mandatory adoption of electronic invoicing in the B2B sector.
  • Amendments integrated into the “Sales Tax Act” and the “Growth Opportunities Act”.

Whether you are currently conducting business in Germany or you are looking to expand your operations into this dynamic market, it’s essential to stay informed about the latest developments in e-invoicing regulations and practices.

Consequently, businesses must consider the following aspects regarding B2B invoicing:

  • The preference for paper invoices is no longer valid.
  • E-invoicing in Germany will adhere to EN16931 formats.
  • Existing EDI data exchange can persist for three more years, contingent upon recipient approval.

Currently, only domestic invoices are impacted, affecting:

  • All businesses headquartered in Germany for purely domestic B2B transactions.
  • Cross-border and intra-EU transactions remain unaffected at this stage.

Regarding invoice transmission, no specific regulations have been established, allowing business partners to agree on suitable methods, including email transmission.

Notably, the current legislation lacks provisions for a digital reporting system. It is anticipated that by 2028, Germany will align with the ViDA reporting system, addressing EU-wide cross-border B2B invoicing requirements. ViDA, standing for VAT in the Digital Age, governs cross-border accounting within the European Union.

The Clock is Ticking for E-Invoicing

Mandatory E-Invoicing in B2B Transactions with amendments anchored in the Value Added Tax Act “Umsatzsteuergesetz” and the Growth Opportunities Act “Wachstumschancengesetz”. Companies must adhere to crucial changes in the realm of B2B invoicing.

Noteworthy Changes:

  • Elimination of the priority of paper invoices.
  • E-invoicing in Germany will conform to EN16931 formats.
  • Existing EDI data exchange permitted for three years, subject to recipient approval.
  • Initially, only domestic invoices are impacted.
  • All companies headquartered in Germany, for complete domestic B2B invoices.
  • Cross-border and intra-EU invoices likely unaffected.

Transmission of Invoices:

  • Not regulated in the draft; business partners can mutually agree, including email transmission.

Digital Reporting System:

  • The current draft does not envision it. Anticipated alignment with the ViDA reporting system for EU-wide cross-border B2B invoices by 2028.

Transitional Regulations:

  • Important: Every company must be capable of receiving E-invoices from January 1, 2025.
  • Decoding EN16931 Format:
  • EN16931, a CEN-defined format for EU invoices, initially designed for B2G e-invoicing mandates, is now the standard in Germany. Allowed formats include “German CIUS” country-specific extensions.

What to Consider from January 1, 2025:

  • Every German company must be able to receive B2B E-invoices.
  • Every company can send B2B E-invoices; buyers cannot reject them.
  • PDF invoices permitted only with buyer’s consent.
  • EDIFACT invoices permissible until January 1, 2028, with buyer’s approval.
  • Paper invoices still viable.

Business Recommendations:

  • Invest in a managed solution to enable E-invoicing and save costs
  • Cease paper invoices now and initiate electronic invoicing to prepare for incoming E-invoices.

Future Regulations: From January 1, 2027:

  • Larger Companies (Annual revenue > €800,000):
  • Must send B2B invoices electronically.
  • No PDF or paper invoices allowed.
  • EDIFACT invoices permissible until January 1, 2028, with buyer’s consent.
  • Smaller Companies (Annual revenue < €800,000):
  • Can issue B2B E-invoices; no option for buyer to decline.
  • PDF invoices permissible only with buyer’s consent.
  • EDIFACT invoices allowable until January 1, 2028, with buyer’s approval.

From January 1, 2028, the following applies to all companies:

  • Obligatory sending and receiving of B2B invoices electronically in EN16931 formats.
  • PDF and paper invoices no longer permissible.

If you’re considering an investment into e-invoicing, our expert team are here to guide you. We can ensure that your solution aligns with future European developments. Book an obligation-free consultation today!

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