German B2B e-invoicing extended to Jan 2027

Bundestag extends phased B2B e-invoicing rollout to Jan 2027

Germany’s lower house, the Bundestag, has approved an extension of the phased rollout of mandatory e-invoicing to 1 January 2027. This is a new 1-year addition to the plan first proposed in the government’s “Growth Opportunity Act”. It reflects concerns (see below) from the Bundesrat upper house around the preparedness of businesses and tax authorities for digital reporting. The phased rollout will still start 1 January 2025 with adoption of mandatory structured e-invoicing acceptance.

The bill now goes to the Bundesrat and is expected to pass.

Oct 2023 Bundesrat proposes moving mandatory 2025 e-invoice acceptance to 2027

Germany’s Bundesrat has called for a 2 year delay to January 2027 for the introduction of the obligation for businesses to accept e-invoices. The current proposed schedule, see below, is to require businesses to accept e-invoices from January 2025 (although paper may still be used for 1 year), and then move to e-invoices-only for most business from January 2026.

The Bundesrat is the legislative body representing the 16 federal states at the federal level. It is scheduled to review and approve the proposed e-invoicing law in December. This would follow the current Bundestag review, expected to conclude in November.

Whilst the Bundesrat backs the introduction of mandatory e-invoicing, its concerns include:

  • timing for companies to prepare for the proposed launch, and feasibility of the phased switch. This includes details on how current formats (ZUGFeRD and XRechnung) may conform during the transition and if EDI procedures may continue in some form;
  • the extent of the costs for businesses to adapt and whether proportionate to the tax benefits, especially the adoption of the standard EN 16931 format;
  • plus the challenges for all 16  Länder (federated states) of Germany.

10 Oct Phased mandatory B2B domestic e-invoices

Germany’s Federal Ministry of Finance (BMF) has provided new timelines for proposed changes to paper and e-invoicing rules. This includes the obligation for taxpayers to be able to receive structured e-invoices (e.g. XML; XRechnung) from 2025. However, this exceptionally tight deadline and the form of the regime, e.g. pre-clearance, remain in question with the Bill not yet debated and EU ViDA e-invoice doubts. The mandate covers domestic transactions between German resident businesses.

The draft Bill (Growth Opportunities Act) is now in the Bundestag for debate, modifications and approval:

  • 10 November Bundestag approval
  • 15 December Bundesrat approval
  • 1 January 2025 enters into law

27 July Council of EU approves mandatory German e-invoicing; delayed launch proposal January 2026

The request by the European Commission on behalf of Germany to introduce mandatory B2B domestic VAT e-invoicing was approved by the Council of the European Union on 25 July. This allows Germany to impose real time e-invoicing which it is now proposing for 1 January 2026.

The request was backed by the EU Commission in June (see below) to authorise Germany to derogate from the EU VAT Directive and its requirement for paper-based invoices. Germany will be permitted to impose e-invoices until the end of 2027 when there will be a further review.

17 July 2023: Mandatory domestic live e-invoicing proposals delayed to 1 Jan 2026

Germany’s BMF has revised proposed mandatory domestic e-invoicing imposition to 1 January 2026.  During a phased implementation from January 2025, e-invoices would become redefined and legalised, but paper or PDF invoices may still be issued until 31 December 2025 – and one year later for businesses with a turnover not exceeding €800,000 per annum.

Full structured e-invoicing only had originally been proposed from  January 2025. But, following a public consultation on a BMF discussion document, this has been postponed to 2026. This reflects recent calls for delays in the EU VAT in the Digital Age 2028 e-invoicing obligations, which covers intra-community B2B transactions only.

The new timeline is contained within outline BMF proposal – “Growth Opportunities Act‘. Other revised points following the consultation include:

  • January 2025, e-invoices will be redefined as structured e-invoices;
  • During the voluntary 2025 period, the same German invoice rules, disclosures and timelines would apply to e-invoices;
  • By 2028, they must comply with EN 16931, EU’s e-invoicing Directive. Further clarifications and legal definitions are required since this requirement at present would not become effective until 1 January 2028. This means any electronic format could be acceptable until 31 December 2027.
  • All mandatory e-invoicing rules would only apply to German resident taxpayers for domestic transactions – which would include foreign entities with a Fixed Establishment in Germany;
  • No reference is made to the reporting model – whether pre-clearance or not – but it will likely follow the ViDA lead and therefore no government pre-approval stage required. Also there will likely be a role for e-invoicing agents.

Germany’s application to the EC lasts until December 2027. However, the EU is proposing to remove this requirement to seek its approval to deviate from the EU VAT Directive on e-invoicing from 1 January 2024. This is part of the ViDA reforms.

April 2023 – discussion document from Ministry of Finance

The BMF issued a discussion document in April 2023 around its proposed mandatory e-invoicing live reporting regime.  The consultation ended 8th May 2023.

This proposal follows a 2022 commitment from the new coalition government to introduce a digital reporting regime to help tackle the VAT Gap.

Germany is to follow Italy, France, Poland and others by introducing mandatory electronic invoices. It has commenced plans by seeking permission from the European Commission to do so – under the EU Directive rules, businesses must first seek their suppliers’ permission to adopt e-invoicing.

Update: since this announcement, the EC has proposed removing e-invoice derogation approval from January 2024. Once the feedback has been considered, a Bill will be submitted to Parliament.

November 2021: Coalition new leaders confirm electronic invoice reporting system as soon as possible to fight VAT fraud; backing for EU definitive VAT system; import VAT reforms

The new German government coalition of the SPD, Free Democratic Party (FDP) and Green Party have now confirmed on 24 November 2021 plans to implement a country-wide live e-invoicing regime. It is envisaged that this will validate in real-time the creation of sales invoices by taxpayers, and then act as the forwarding channel for invoices to customers. This follows the Italian SdI model, with Continuous Transaction Controls (CTC)which in turn follows similar models adopted across South America and Asia Pacific.

The new government has also restated its support for the proposed EU definitive VAT system, which aim to shift the EU VAT regime to a destination principle.

The coalition has also committed to reform the import VAT rules to provide similar reverse charge relief as is common across the rest of the European Union.

Germany B2G e-invoices

As per the requirements of the EU VAT Directive on e-invoicing, in April 2020, Germany mandated the acceptance of electronic invoices for Federal governmental transactions with the commercial sector, B2G.The format varies by state (Bundesland) as they adopt the legislation in their local laws. The states have the option of their own format (which should be PEPPOL compliant) or the recommended by Core Invoice User Specification (CIUS).