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.