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E-Invoices for B2B Transactions – New Requirement in Germany Starting 2025.
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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 – and how it's considered in MOCO (updated 11/25/24).
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.
In Italy, for example, e-invoicing has been mandatory for some time and has been very successful in reducing tax fraud.
Germany now also plans to gradually introduce mandatory e-invoicing for national B2B transactions starting January 1, 2025, as part of the Growth Opportunities Act.
In Italy, for example, e-invoicing has been mandatory for some time and has been very successful in reducing tax fraud.
Germany now 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: It involves introducing e-invoicing for intra-community transactions – e-invoicing is to become the standard.
- Implementation Timeline: From January 1, 2025, specific requirements for an e-invoice apply: a structured electronic format in XML that allows automatic and electronic processing. From 2025, transmission will occur without the recipient's consent.
- Transitional Provisions 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 permitted, and invoicing must occur no later than two business days after service delivery.
There is political resistance. The Economic Policy Committee (ECON) proposes at least a one-year delay, and the EU Parliament advocates for a relaxation of the timeline. Therefore, the final schedule is currently uncertain.
Implementation in Germany: The Growth Opportunities Act
- Measure in Germany: EU member states are now striving for national-level implementation. Germany wants the Bundestag to comprehensively revise § 14 of the Value Added Tax Act (UStG) with the Growth Opportunities Act and establish e-invoicing for national B2B services in Germany as the standard procedure. Approval from the Bundesrat was granted on March 22, 2024.
- Affected Parties: Domestic B2B transactions: Services according to § 1 Abs. 1 Nr. 1 UStG, provided both parties involved (entrepreneurs) have their headquarters, management, a VAT-relevant permanent establishment, or their residence or habitual abode in Germany. This is required according to § 14 Abs. 2 Satz 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 occur gradually from 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 existing consent requirement for receiving an e-invoice is eliminated).
- Step 2 from 01/01/2027 – Outgoing Invoices: Various transitional periods are planned for creating e-invoices (§ 27 Abs. 39 UStG-E): Until the end of December 2025, paper and PDF invoices are still allowed. For a turnover of less than 800,000 EUR 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.
What this means for you: Your company must be able to receive an e-invoice after the turn of the year.
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 electronic processing.
OLD: Paper and PDF invoice
NEW: Structured format that enables electronic processing
NEW: Structured format that enables electronic processing
In principle, the well-known hybrid formats XRechnung and ZUGFeRD (from version 2.2) meet the planned legal requirements.
- XRechnung: It is a data format that has already been established in public procurement invoicing (B2G).
- ZUGFeRD: The format generates, as a so-called hybrid format, both an XML file and a human-readable PDF file.
MOCO + E-Invoice
More and more companies expect their business partners to be able to receive and send electronic invoices. Therefore, the pressure to switch is growing, independent of national or EU legislative timelines.