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E-Invoices for B2B Transactions – New Requirement in Germany Starting 2025
English image not yet available...In the EU, and thus in Germany, electronic invoices in the B2B sector will soon become mandatory. Germany will first require the receipt of e-invoices starting in 2025. Here, we provide an overview of the plan and status for Germany (as of April 5, 2024).
EU Initiative
The EU Commission has taken initial steps to curb VAT fraud with the VAT in the Digital Age Initiative (ViDA). The introduction is planned for the entire EU on January 1, 2028.
For example, in Italy, e-invoicing has been mandatory for some time and has been very successful in reducing tax fraud.
Germany also plans to gradually introduce mandatory e-invoicing for national B2B transactions starting January 1, 2025, as part of the Growth Opportunities Act.
For example, in Italy, e-invoicing has been mandatory for some time and has been very successful in reducing tax fraud.
Germany also plans to gradually introduce mandatory e-invoicing for national B2B transactions starting January 1, 2025, as part of the Growth Opportunities Act.
"VAT in the Digital Age (ViDA)" at a Glance
- Measure: The introduction of e-invoicing for intra-community transactions – e-invoicing is to become the standard.
- Implementation Timeline: From January 1, 2025, specific requirements for e-invoices will apply: a structured electronic format in XML that allows for automatic and electronic processing. From 2025, transmission without the recipient's consent will be allowed.
- Transitional Arrangements until 2028: Paper invoices and other electronic formats (e.g., PDF) will temporarily continue to be accepted.
- Mandatory from January 1, 2028: E-invoicing will be mandatory for intra-community transactions from January 1, 2028.
- Mandatory Information: IBAN of the service provider and the payment due date.
- Challenges: Collective invoices will no longer be allowed, and invoicing must occur no later than 2 business days after service delivery.
There is political resistance. The Economic and Monetary Affairs Committee (ECON) proposes at least a one-year delay, and the EU Parliament advocates for a relaxed timeline. Therefore, the final timeline is currently uncertain.
Implementation in Germany: The Growth Opportunities Act
- Measure in Germany: EU member states are now striving for national implementation. Germany aims to comprehensively revise § 14 of the Value Added Tax Act (UStG) with the Growth Opportunities Act to establish e-invoicing as the standard procedure for national B2B transactions in Germany. The Federal Council approved this on March 22, 2024.
- Affected Parties: Domestic B2B transactions: services according to § 1 para. 1 no. 1 UStG, provided both parties (entrepreneurs) have their headquarters, management, a VAT-relevant establishment, or their residence or habitual abode in Germany. This is required under § 14 para. 2 sentence 6 UStG-E.
- Exceptions: According to the draft, small invoices up to 250 euros and travel tickets are exempt.
Timeline
Timeline for Germany
The introduction will be gradual starting January 1, 2025:
- Step 1 from 01.01.2025 – Incoming Invoices: Every entrepreneur receiving services from other domestic entrepreneurs must be able to receive and process e-invoices (the previously required consent to receive an e-invoice is no longer necessary).
- Step 2 later – Outgoing Invoices: Various transition periods are planned for creating e-invoices (§ 27 para. 39 UStG-E): Until the end of December 2025, paper and PDF invoices are still allowed. For turnover under 800,000 euros in 2025, the deadline extends to the end of 2026. By January 1, 2027, paper and PDF invoices in the B2B sector should be a thing of the past.
This means for you: Your company must be able to receive e-invoices after the turn of the year. An email address is ultimately sufficient for this.
Definition of E-Invoice
The draft law defines an e-invoice as an invoice issued, transmitted, and received in a structured electronic format that allows for electronic processing.
OLD: Paper and PDF invoice
NEW: Structured format that allows for electronic processing
NEW: Structured format that allows for electronic processing
In principle, the well-known hybrid formats XRechnung and ZUGFeRD (from version 2.2) meet the planned legal requirements.
- XRechnung: This is a data format that has already been established in public procurement (B2G).
- ZUGFeRD: This format generates a human-readable PDF file in addition to an XML file as a so-called hybrid format.
Transmission Method Still Unclear
The draft law currently leaves open which transmission methods are intended for e-invoices between companies. Therefore, it remains to be seen how the Federal Ministry of Finance will position itself on this.
The draft law currently leaves open which transmission methods are intended for e-invoices between companies. Therefore, it remains to be seen how the Federal Ministry of Finance will position itself on this.
MOCO + E-Invoice
Receiving E-Invoices with MOCO
The electronic invoice is coming. In MOCO, this affects incoming invoices and outgoing invoices. Important preparations are already underway to ensure timely implementation.
In the first step, MOCO ensures that you can meet the obligation to receive e-invoices by 01.01.2025. This requires that you record all incoming invoices via MOCO.
In the first step, MOCO ensures that you can meet the obligation to receive e-invoices by 01.01.2025. This requires that you record all incoming invoices via MOCO.
2024 is the Year of Preparation
If you do not yet have a central digital invoice receipt – set this up in MOCO: My central digital invoice receipt
More and more companies expect their business partners to be able to receive and send electronic invoices. Therefore, the pressure to switch is growing regardless of national or EU legislative timelines.
More and more companies expect their business partners to be able to receive and send electronic invoices. Therefore, the pressure to switch is growing regardless of national or EU legislative timelines.
Creating E-Invoices with MOCO
This option will also follow soon and thus significantly earlier than officially mandatory (see timeline above).
