The global trend towards implementing mandatory e-invoicing is gaining momentum as governments worldwide recognize the benefits of digitalization in modernizing tax administration processes. Germany is actively embracing this trend, with the government passing the Growth Opportunities Act aimed at fostering business growth, simplifying taxes, and ensuring tax fairness. The Act mandates the implementation of e-invoicing for domestic business-to-business sales, aligning with the EU proposal VAT in the Digital Age. The new law requires electronic invoices to be issued starting in 2027 for companies with turnovers exceeding €800,000 and in 2028 for companies below that threshold.
Current invoicing rules in Germany require businesses to issue invoices when supplying goods or services to other businesses. Invoices can be issued electronically, provided that their authenticity and content integrity are ensured. The German VAT law outlines detailed content requirements for invoices, including seller and buyer information, VAT rates, and total VAT amounts payable. While it’s not mandatory to include payment due dates or bank account details on invoices, it’s a common practice. Invoices must be issued within specific timelines based on the transaction type, and there are different requirements for simplified invoices.
The new e-invoicing mandate in Germany focuses on the format of the invoice, with compliance with the EU standard EN 16931 being a key requirement. Electronic invoices will become the default invoicing method in Germany from January 2025. The obligation applies to domestic B2B supplies, and businesses must issue electronic invoices for supplies taxable in Germany if the recipient is based in Germany. The implementation timeline for the e-invoicing obligation will roll out gradually from 2025 to 2028, with businesses required to be equipped to receive structured electronic invoices starting in 2025 and to issue electronic invoices from 2027 onwards.
The move to make e-invoicing mandatory in Germany is part of a global trend towards digitalizing tax processes. Unlike some other European countries, Germany’s regulations focus on the formats allowed for electronic invoices and the conditions for issuing and receiving them, rather than specifying how invoices should be exchanged and reported. The phased approach aims to make the transition smoother for businesses and ensure compliance with the new rules. While the obligation to transmit invoice data to tax authorities will be introduced later, after mandatory e-invoicing is in place, businesses in Germany are urged to start preparing for the upcoming changes to ensure a smooth transition.
Overall, the implementation of mandatory e-invoicing in Germany reflects a broader global trend towards digital transformation in tax administration processes. The new regulations aim to standardize invoicing practices, combat tax evasion, and promote transparency and compliance in business transactions. As businesses in Germany prepare to comply with the new e-invoicing mandate, it’s crucial for them to understand the requirements, timelines, and implications of the new regulations to ensure a seamless transition and avoid any potential pitfalls.
