Tax
10. Jan 2025

E-invoicing obligation with transitional periods and simplifications

Digitalisation is forging ahead with the final Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) circular (of 15.10.2024) on the issuing of e-invoices pursuant to Section 14 of the VAT Act (Umsatzsteuergesetz, UstG).  An essential aspect of the new rules is the mandatory introduction of an electronic invoice (e-invoice) that applies for German domestic B2B transactions executed as of 2025.  The fiscal administration has clarified important details on formats, transitional periods and exceptions. Moreover, a number of practical suggestions were fortunately taken into account, such as flexibility with respect to the mode of transmission, and an exemption for VAT- exempt small businesses.

Obligation and transitional periods

As of 1.1.2025, all domestic (German) companies have to be able to receive e-invoices. However transitional periods apply for the issuance of e-invoices:

  • Large companies will have to issue e-invoices as of 1.1.2027.
  • For smaller companies with annual revenues of up to €800,000 the obligation will only apply as of 1.1.2028.
  • Continuous invoices issued in paper form or as a PDF prior to 1.1.2027 will remain valid insofar as the information shown on the invoices does not change.

There are exceptions for VAT-exempt supplies pursuant to Section 4 nos. 8 to 29 UStG, for invoices for small amounts up to €250 (Section 33 of the VAT Implementing Ordinance  [Umsatzsteuer-Durchführungsverordnung, UStDV]) and for travel tickets (Section 34 UStDV).

Formats and requirements

E-invoices will have to be generated in a standardised, machine-readable format that conforms to the European Norm EN 16931. Permissible formats are XRechnung and version 2.0.1 and later of ZUGFeRD (with the exception of the MINIMUM and BASIC-WL profiles). European formats, such as Factur-X are likewise allowed. It is important to ensure the authenticity of origin, integrity of content and the readability of the invoice.

For the transmission of e-invoices there are various options:

  • E-mail dispatch (please note that a PDF document in itself does not constitute an e-invoice).
  • Provision via electronic interfaces or a central storage portal.
  • Shared access within a group of companies, or downloading via an internet portal.

Corrective actions and simplifications

The final circular takes into account a number of practical suggestions that were provided, in particular, by the German Association of Tax Advisers (Deutscher Steuerberaterverband, DStV). It is worth particularly highlighting the following aspects: 

  • Until the end of the transition periods, businesses may continue to issue invoices in paper form, as a PDF file, or a Word file. Corrections to invoices may be carried out in the original format insofar as there is no e-invoicing obligation.
  • The original restriction that USB sticks would not be permitted as a mode of transmission has been deleted.
  • Small businesses that are exempted from VAT (Section 19 UStG) will be excluded from the e-invoicing obligation. This was implemented with the 2024 Annual Tax Act.

Concluding Recommendation

The BMF circular marks a major step forward in the digitalisation of the invoicing process in Germany. It has provided companies with clear rules and transitional periods to make the changeover easier. Companies should acquaint themselves with the new requirements early on in order to be able to successfully manage the transition.