Germany: Draft Administrative Guidelines on E-Invoicing made available by the Germany Tax Authorities

The Federal Ministry of Finance (BMF) coordinates with the tax authorities of the federal states on E-invoicing matters. On June 13, 2024, the BMF sent draft Administrative Guidelines to various associations for their review and comments. Given the significance of e-invoicing, the authorities made the draft public. Stakeholders can submit their feedback through the relevant associations. Comments on the draft are accepted until 11 July 2024.

The final version of the BMF letter is scheduled for publication at the beginning of the fourth quarter of 2024.

HERE IS THE SUMMARY OF THE GUIDELINES:

The Growth Opportunities Act (Federal Law Gazette I 2024 No. 108) introduces significant changes to the issuance of invoices under Section 14 of the German VAT Act, effective from January 1, 2025. This legislation mandates the use of electronic invoices for domestic business-to-business (B2B) transactions, aiming to enhance digitalization in business operations.

KEY PROVISIONS AND EXEMPTIONS

Under the new regulation, electronic invoices become mandatory for all transactions between domestic entrepreneurs, except for tax-exempt services specified in sec. 4 nos. 8 to 29 of the German VAT Act, invoices for amounts up to 250 euros, and driving tickets. Additionally, there is a legal obligation to report certain invoice details promptly to the administration through a notification system.

DIGITALIZATION OF BUSINESS TRANSACTIONS

From January 1, 2025, electronic invoicing will be redefined to include only those invoices issued, transmitted, and received in a structured electronic format that supports electronic processing. This excludes simple PDF documents or emails with invoice information. The structured format must comply with the European standard for e-invoicing (EN 16931) or be mutually agreed upon by the invoice issuer and recipient.

AUTHENTICITY AND READABILITY REQUIREMENTS

Electronic invoices must guarantee the authenticity of origin, integrity of content, and machine readability. While additional human-readable documents are optional, the primary requirement is the machine-readable XML file.

ISSUANCE OF OTHER INVOICES

In cases where electronic formats do not meet the specified standards, such as unstructured formats like JPEG or basic PDFs, these will be classified as "other invoices."

OBLIGATIONS AND COMPLIANCE

Entrepreneurs are required to issue invoices for taxable transactions to other entrepreneurs or legal entities, including services connected with immovable property. The new regulations distinguish between mandatory e-invoices and permissible other invoices, maintaining a six-month issuance deadline post-service performance.

SPECIAL CASES AND FORMATS

For transactions not involving domestic entrepreneurs or specific low-value transactions (under EUR 250), paper invoices or non-standard electronic formats remain permissible. Acceptable e-invoice formats include those adhering to the EN 16931 standard, such as XRechnung and ZUGFeRD (version 2.0.1 onwards).

TECHNICAL AND CONTRACTUAL CONSIDERATIONS

The legislation allows for the use of external service providers to create and transmit e-invoices. While email is a sufficient method for receiving e-invoices, other transmission methods can be agreed upon. Contracts that include necessary VAT information can also serve as invoices if they meet e-invoicing requirements.

IMPLEMENTATION AND CORRECTION

Entrepreneurs must ensure their systems can receive e-invoices by January 1, 2025. To receive an e-invoice, it is sufficient for the invoice recipient to provide an e-mail inbox.

Corrections to e-invoices must follow the same format and content requirements as the original issuance. Legal entities under public law are also subject to these e-invoicing obligations for VAT-taxable services.

AVAILABLE TO DOWNLOAD:

We are pleased to provide you with Guidelines available for download in German and English versions.

• Click here to download ENGLISH Guidelines
• Click here to download GERMAN Guidelines

SOURCES/ RECOMMENDED READ:

• Federal Ministry of Finance - DRAFT: Issuance of invoices in accordance with § 14 UStG; Introduction of mandatory electronic invoicing for transactions between domestic entrepreneurs from 1 January 2025 (bundesfinanzministerium.de)
• ENTWURF: Ausstellung von Rechnungen nach § 14 UStG; Einführung der obligatorischen elektronischen Rechnung bei Umsätzen zwischen inländischen Unternehmern ab dem 1. Januar 2025 (bundesfinanzministerium.de)