Why is eInvoicing mandatory?
The German government has set itself the goal of simplifying and digitalising the VAT process and curbing VAT fraud. With this in mind, mandatory eInvoicing was introduced for domestic taxable transactions between domestic entrepreneurs (B2B).
In this context domestic entrepreneurs are defined as businesses who have their registered office, their management, a permanent establishment involved in the transaction or their domicile or habitual residence in Germany.
The eInvoice is implemented in anticipation of the subsequent introduction of a nationwide electronic reporting system for domestic transactions by the German tax authorities. This transactional reporting system is to be used to issue invoices, check them for plausibility and forward them, as well as to transmit the relevant reporting data to government agencies.
An eInvoicing obligation is also being addressed in the EU Commission's initiative "VAT in the Digital Age" (ViDA). On basis of the eInvoicing regulations being pursued at EU level, a mandatory digital reporting for transactions among different EU member states is to be introduced.
Note: The national eInvoicing obligation in Germany is limited to domestic transactions between entrepreneurs, whereas the eInvoicing obligation proposed by the EU Commission would apply to cross-border transactions within the EU.
How the eInvoice works
When will eInvoicing be mandatory?
In principle, eInvoicing will be mandatory for affected national transactions in Germany from 1 January 2025, although there are various transitional arrangements:
- For reasons of simplification, other invoice formats, including paper invoices, will continue to be permitted alongside the new eInvoice until the end of 2026. As before, other electronic invoices may only be used with the consent of the invoice recipient. For entrepreneurs in Germany whose total sales in the previous calendar year did not exceed 800.000 Euro, this transitional regulation applies until the end of 2027.
- Until the end of 2027, invoices transmitted via the Electronic-Date-Exchance- procedure may continue to be used in the previous format with the consent of the invoice recipient.
Note: Irrespective of the transitional regulations, every domestic entrepreneur in Germany must be able to receive and process eInvoices from 1 January 2025.
What are the technical requirements for an eInvoice?
According to the new requirements, an eInvoice is an invoice that is issued, transmitted and received in a structured electronic format and enables electronic processing. In accordance with the EU Commission's ViDA proposals, an eInvoice must fulfil the requirements of CEN standard EN 16931.
Under certain conditions, individual agreements between the invoice issuer and invoice recipient on the format used for electronic invoicing are also permitted. If such an individual agreement is made, the selected format must allow the mandatory invoice information to be extracted into a format that complies with CEN standard EN 16931 or is interoperable with this format.
Note: Invoices that are issued in electronic form but do not comply with the specified data format, e.g. invoices as PDF files, will therefore no longer be permitted in future.
How we can assist:
- We advise you in all phases of the changeover to the use and processing of eInvoices in accordance with German regulations.
- Our VAT experts support you in the initial assessment of the need for action in your company in order to estimate the scope of the necessary technical and personnel resources.
- To this end, our experts will work closely with your company's accounting and tax department to analyse the current accounting and incoming invoice processes.
- We will also be happy to advise you on the technical implementation of eInvoicing and the selection of a suitable software provider.
