On 22 March 2024, the final hurdle for introducing e-invoicing requirements in Germany was cleared when the Bundesrat (upper house of parliament) approved the proposed law (for prior coverage, see the article in the July 2023 issue of Indirect Tax News).
As from 1 January 2025, entrepreneurs established in Germany will be required to issue and receive e-invoices for local taxable transactions involving domestic companies. Entrepreneurs with a permanent establishment (fixed establishment) in Germany could be affected by the e-invoicing requirements, especially in cases where the permanent establishment will be involved in the supply. However, the mere VAT registration of a foreign-established company will not give rise to the obligation to issue and or receive e-invoices.
Transition rules will apply for the issuance of e-invoices but not for the receipt of e-invoices. In general, entrepreneurs can still switch to other invoice formats (e.g., paper invoices or the commonly used PDF invoice) until 31 December 2026 (31 December 2027 for entrepreneurs whose total turnover in the previous calendar year did not exceed EUR 800,000 (total turnover) and for the issuance of EDI (electronic data interchange) invoices).
The Finance Ministry has announced that it will issue a circular to address open issues and questions (e.g., implications of the e-invoicing requirement, the right to deduct input VAT if the obligation to issue an e-invoice is disregarded, specific technical design, recurring invoices, penalties for failure to comply, etc.). The circular, as well as the modified invoice standard (based on EU norm EN 16931), is eagerly awaited.
Affected entrepreneurs should begin now to familiarise themselves with the new e-invoicing requirements and take steps to prepare for the changes becoming effective on 1 January 2025. ERP systems and internal processes, in particular, should be reviewed to determine what modifications or updating will be needed.
Annette Pogodda-Grünwald
Daniel Auer
BDO in Germany
As from 1 January 2025, entrepreneurs established in Germany will be required to issue and receive e-invoices for local taxable transactions involving domestic companies. Entrepreneurs with a permanent establishment (fixed establishment) in Germany could be affected by the e-invoicing requirements, especially in cases where the permanent establishment will be involved in the supply. However, the mere VAT registration of a foreign-established company will not give rise to the obligation to issue and or receive e-invoices.
Transition rules will apply for the issuance of e-invoices but not for the receipt of e-invoices. In general, entrepreneurs can still switch to other invoice formats (e.g., paper invoices or the commonly used PDF invoice) until 31 December 2026 (31 December 2027 for entrepreneurs whose total turnover in the previous calendar year did not exceed EUR 800,000 (total turnover) and for the issuance of EDI (electronic data interchange) invoices).
The Finance Ministry has announced that it will issue a circular to address open issues and questions (e.g., implications of the e-invoicing requirement, the right to deduct input VAT if the obligation to issue an e-invoice is disregarded, specific technical design, recurring invoices, penalties for failure to comply, etc.). The circular, as well as the modified invoice standard (based on EU norm EN 16931), is eagerly awaited.
Affected entrepreneurs should begin now to familiarise themselves with the new e-invoicing requirements and take steps to prepare for the changes becoming effective on 1 January 2025. ERP systems and internal processes, in particular, should be reviewed to determine what modifications or updating will be needed.
Annette Pogodda-Grünwald
Daniel Auer
BDO in Germany