Compulsory Digital Invoicing in Germany Set for 2025 Implementation
Starting January 1, 2025, companies operating in Germany will be required to implement mandatory electronic invoicing (e-invoicing) for domestic B2B transactions. This move is part of an ambitious plan to promote business digitalization and reduce tax evasion.
1. **Adopting the European Standard**: E-invoices must comply with the European standard EN 16931, which defines a semantic data model for e-invoices. This standard supports automated electronic processing and includes all required VAT information.
2. **Ensuring Receipt Capability**: Companies must be capable of receiving e-invoices from their suppliers. The minimum requirement is providing an email inbox for e-invoice delivery, although parties may agree on alternative electronic data exchange methods.
3. **Structured E-Invoices for Domestic Sales**: German-based companies must issue structured e-invoices compliant with EN 16931 for all domestic transactions, as well as for cross-border EU supplies and exports.
4. **Validation and Compliance**: E-invoices must be validated to comply with EN 16931. Non-compliant invoices will not be eligible for VAT deduction unless specifically approved by the tax authorities.
5. **Phased Rollout and Transitional Provisions**: The mandate has transitional provisions to allow gradual adaptation, with full mandatory use for all domestic B2B transactions expected by 2028.
6. **Storage Requirements**: E-invoices must be stored securely and retained for 8 years (10 years in some accounting cases).
7. **Exceptions and Special Cases**: Exceptions include foreign suppliers without a German establishment and simplified invoices under 250 euros.
In the outgoing process, the invoice is converted into the format required by German regulations and transmitted via the PEPPOL communication channel. Intesa, a service provider, already manages the archiving of fiscal documents in Germany and offers a solution designed to accommodate future electronic invoicing obligations in other European countries.
From January 1, 2027, companies with a turnover of over 800,000 euros will no longer be able to issue paper invoices or structured electronic invoices, even with the buyer's consent. By 2028, all B2B transactions in Germany will require structured electronic invoicing for both outgoing and incoming invoices.
The transmission of electronic invoices via email to German partners is possible, but it is not recommended due to the difficulty of reading structured formats sent via email and the high likelihood of losing the documents. The requirement applies to all B2B and B2G transactions in Germany, and buyers' consent will be required for non-structured electronic invoices or EDI invoices not compliant with EN standards.
Sources: [1] German Ministry of Finance [2] European Commission [3] PEPPOL [4] Intesa [5] German Tax Authority (Finanzamt)
- Embracing Advanced Technologies: As companies transition to e-invoicing, they may need to invest in technology that supports EN 16931 compliance and automated electronic processing, ensuring smooth business operations in the digital era.
- Boosting Financial Efficiency: By adopting mandatory e-invoicing, businesses can potentially increase financial efficiency, as digital transactions reduce the chances of errors, speed up processing times, and offer improved visibility into accounts receivable and payable.
