Starting January 1, 2025, Germany will introduce mandatory electronic invoicing (e-invoicing) for B2B transactions. This change is part of the Growth Opportunities Act, aimed at enhancing tax compliance and reducing VAT fraud. Below is an overview of the new requirements, transitional provisions, and practical tips for preparation.
Legal Framework and Key Dates
- Effective Date: January 1, 2025
- Legislation: Growth Opportunities Act (Wachstumschancengesetz), approved by the Bundesrat on March 22, 2024.
- Key Sections: Amendments to Section 14 and Section 14a of the German VAT Act (UStG).
E-Invoice Requirements
- Format and Standards:
- E-invoices must comply with the European standard EN 16931.
- Accepted formats include XRechnung and ZUGFeRD 2.0.1 or later. Hybrid formats combining structured data (XML) with human-readable data (PDF) are also acceptable.
- Transmission of e-invoices must be electronic (e.g., via email, electronic interfaces, or customer portals). Physical media like USB sticks are not permitted.
- Content Requirements:
- E-invoices must include all standard invoice details such as invoice number, date, supplier and recipient details, description of goods or services, net amount, VAT amount, and total amount payable.
- Storage and Accessibility:
- Businesses must store the structured part of the e-invoice in its original form and ensure it remains immutable and accessible for electronic evaluation by tax authorities.
Transitional Provisions
- From January 1, 2025: Businesses must be able to receive e-invoices. Issuing e-invoices remains optional but recommended.
- Until December 31, 2026: Businesses can issue paper invoices or non-structured electronic invoices (e.g., PDFs) with the recipient’s consent.
- From January 1, 2027: Businesses with annual revenues exceeding €800,000 must issue e-invoices.
- From January 1, 2028: All businesses must issue e-invoices.
Implications for International Companies
International companies with a fixed establishment in Germany will be required to comply with the e-invoicing mandate for their German operations. VAT registration alone does not trigger the e-invoicing obligation, but transactions involving the German establishment will.
Preparation Tips for Businesses
- System Upgrades:
- Ensure your ERP and accounting systems can generate and process e-invoices in the required formats. Systems like SAP, Oracle, and Microsoft Dynamics (Navision) are developing updates to comply with these requirements. For example, SAP is enhancing its integration with the XRechnung standard, and Oracle is updating its ERP solutions to support e-invoicing compliance.
- Training and Procedures:
- Train finance and accounting teams on the new e-invoicing requirements.
- Update invoicing procedures to ensure compliance with the new regulations, including the issuance, transmission, and storage of e-invoices.
- Engage with Service Providers:
- Consider engaging external service providers who can assist with the generation, transmission, and archiving of e-invoices.
- Leverage DATEV Platform:
- DATEV is developing its own e-invoicing platform to help businesses comply with the new mandate. Participating in information sessions and integrating your systems with DATEV’s platform can facilitate a smooth transition.
- Early Adoption:
- Start adapting your processes early to ensure compliance by January 1, 2025. This involves assessing current systems, identifying necessary changes, and implementing updates well in advance.
For detailed guidance and assistance with e-invoicing compliance, you can reach out to WW+KN, a Baker Tilly Company. Contact us at info@vat-germany.com for professional consulting services.
