Executive Summary:
Germany is implementing mandatory B2B e-invoicing, with key milestones commencing in January 2025. This initiative aims to modernise VAT reporting, combat fraud, and promote automation. The transition will be phased, with an initial focus on businesses being able to receive EN 16931-compliant e-invoices. Issuance requirements will follow in subsequent years, culminating in a complete transition to EN 16931 compliance expected by 2028. The German Ministry of Finance (BMF) is providing regulatory guidance, and solutions like Peppol are gaining traction. Small businesses have some exemptions regarding issuance but must still be able to receive e-invoices.
Key Themes and Ideas:
- Mandatory E-Invoicing Timeline:
- January 1, 2025: Businesses must be able to receive EN 16931-compliant e-invoices. This is a critical starting point. As the Pagero source notes, “EN-compliant e-invoice becomes the default in Germany. Businesses must be prepared to receive structured electronic invoices compliant with EN 16931 standards.”
- January 1, 2027: Businesses with turnover exceeding €800,000 in the previous year can no longer issue paper or unstructured electronic invoices (e.g., PDFs), even with buyer consent.
- January 1, 2028: All remaining businesses can no longer issue paper or unstructured electronic invoices, even with buyer consent. Non-EN 16931 compliant EDI e-invoices are also disallowed. This marks the complete transition.
- EN 16931 Standard:
- This is the core European standard for e-invoicing. Compliance ensures interoperability across different systems. “EN 16931 is the European standard for electronic invoicing. Compliance with this standard ensures interoperability between different e-invoicing systems across Europe.” (German E-Invoicing Regulations: A Comprehensive Guide).
- Formats like XRechnung and Peppol BIS are compliant.
- Exemptions for Small Businesses:
- Small businesses under the Kleinunternehmerregelung (Small Business Scheme) are exempt from issuing EN-compliant e-invoices. The turnover threshold has been increased: “The new threshold to be eligible as a VAT-exempt small business is increased from a total annual turnover of no more than 22,000 EUR to 25,000 EUR for the previous fiscal year and from 50,000 EUR to 100,000 EUR for the current fiscal year.” (Pagero)
- However, these small businesses must still be able to receive EN-compliant e-invoices.
- E-Invoice Formats:
- EN 16931-compliant formats are the long-term objective. XRechnung and Peppol BIS are examples of compliant formats.
- ZUGFeRD is a hybrid format (PDF with embedded XML data). Users of the EXTENDED profile should upgrade to version 2.3. The Pagero source highlights: “With the release of version 2.3, users of the EXTENDED profile are highly advised to update to the new version.”
- Enforcement and Customer Refusal:
- The specifics of enforcement haven’t been fully defined.
- If a customer refuses to accept an e-invoice, the supplier’s VAT obligations are considered fulfilled; the customer has no right to an alternative invoice. This might incentivise adoption, but its long-term effectiveness remains to be seen.
- Invoice Retention Times:
- Starting January 1, 2025, the required archiving retention time for invoices will decrease from ten to eight years. Other documents (commercial books, etc.) remain at ten years.
- Bavaria’s Approach:
- Bavaria is centralising e-invoice exchange through a single point of contact using the OZG-RE platform. This platform supports web capture, upload, email, and Peppol. The roll out is expected in the first half of 2025.
- “On January 7, 2025, the state authorities of Bavaria announced adopting a single point of contact for invoice exchange, which aims to simplify invoicing, reduce throughput times, and speed up processing.” (Pagero)
- Role of Email and Peppol:
- Initially, providing an email address is sufficient for receiving e-invoices. “The previous draft mentioned that providing an e-mail address was sufficient to comply with the requirement to receive e-invoices from 1 January 2025. The final version clarifies that it is not mandatory to have a separate electronic mailbox for receiving e-invoices;” (Pagero)
- However, secure and automated solutions like the Peppol network are strongly recommended for efficiency and reliability. Pagero explicitly suggests: “our recommendation to businesses would be to consider Peppol Network as the e-invoice issuance, exchange and reception framework for their operations in Germany.”
- Registration of electronic cash register systems:
- Beginning July 2025, businesses in Germany must report cash register systems, including their TSEs, to the tax authorities. “Electronic cash register systems acquired before 1 July 2025 must be reported to the tax authorities by 31 July 2025, and Systems purchased after 1 July 2025 must be reported within one month of purchase.” (Pagero)
- Key Players:
- German Ministry of Finance (BMF): Issuing regulations and guidance.
- Bundestag (German Parliament) & Bundesrat (Federal States Legislative Body): Legislative bodies involved in passing and approving the Growth Opportunities Act.
- European Commission & Council of the European Union: Granted Germany the derogation to implement e-invoicing.
- FeRD (German Electronic Invoice Forum) & FNFE-MPE (French Electronic Invoice Forum): Developed the ZUGFeRD format.
Implications for Businesses:
- Preparation is Key: Businesses operating in Germany must prepare to receive EN 16931-compliant e-invoices by January 1, 2025.
- Format Selection: Choose compliant e-invoicing formats (e.g., XRechnung, Peppol BIS, or updated ZUGFeRD).
- Process Automation: Explore solutions like Peppol to streamline e-invoice exchange.
- Small Business Considerations: Even if exempt from issuing, ensure you can receive e-invoices.
- Stay Informed: Continuously monitor regulatory updates from the BMF and other sources.
Open Questions and Areas for Further Research:
- Specific enforcement mechanisms for non-compliance with the e-invoicing mandate.
- The long-term impact of the mandate on tax revenue and overall economic efficiency.
- The exact single point of contact and the specific date for Bavaria’s implementation using the OZG-RE platform.
- How German companies will adapt to a reduced invoice retention period.
- The long term role of email as a valid channel for invoice reception.
