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Tax
24. Jul 2025
StBin Marina Stockel

Draft of a supplementary Federal Ministry of Finance circular on e-invoicing

Frau zeigt Kollegen Arbeit an Bildschirmen

The Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) recently published a second draft circular related to the introduction of mandatory e-invoicing for B2B transactions executed since the start of the year. It contains practical advice about the technical requirements, the content-related prerequisites for input tax deduction and how to deal with errors. Moreover, validation applications and the requirements under the ‘Principles of Proper Keeping and Retention of Accounts, Records and Documents in Electronic Form and for Data Access’ (Grundsätze zur ordnungsmäßigen Führung und Aufbewahrung von Büchern, Aufzeichnungen und Unterlagen in elektronischer Form sowie zum Datenzugriff, GoBD) have been mentioned for the first time in this context.

Background

The draft of 25.6.2025 fleshes out the BMF circular of 15.10.2024 on mandatory e-invoicing between (German) domestic companies, and it amends the requirement for small businesses to issue such invoices. The draft provides for adjustments at numerous points in the ordinance on the application of VAT (Umsatzsteueranwednungserlass, UStAE). Furthermore, retention obligations and the GoBD are briefly mentioned against the background of e-invoicing; these were already comprehensively implemented with the BMF circular, of 14.7.2025, on the amendment of the GoBD. Up to now, the BMF has not considered the issue of the “future transaction-based reporting system”.

In the following section we outline five important changes and key rules.

Requirement to issue e-invoices

Apart from invoices for small amounts and travel tickets, invoices from small businesses will now also be exempt from mandatory e-invoicing. A distinction has to be made however for the receipt of e-invoices. Since 1.1.2025, even small businesses and those that execute solely VAT-exempt transactions must be able to receive electronic invoices like other (German) domestic businesses, too. If the technical prerequisites are lacking then there is at least no legal right to an alternative format.

Please note

For (German) domestic businesses this criterion likewise has to be reviewed accordingly. This would be satisfied, for example, if a foreign business unit of a company that is resident in Germany for tax purposes is involved (planned reference to Section 13b.11(1) sentence 7 UStAE).

Technical requirements and formats

Detailed explanations relating to the technical requirements for e-invoicing formats and specificities for contracts and continuing obligations are provided for in Section 14.1(10 to 19) UStAE. So-called extensions are of particular relevance - using these will enable sector-specific requirements in the standard format.
The updated draft clarifies that formatting errors in a structured electronic file would result in the file being deemed a so-called other invoice (sonstige Rechnung) and would thus not satisfy the requirements for a proper electronic invoice. In this respect, in its draft the BMF refers to validation applications for checking compliance or conformity with the EN 16931 norm.

Please note

During the transitional periods, until the end of 2026 or 2027, there will be a special provision and the described format deviation will not automatically result in the refusal of input tax deduction.

Content-related errors and corrections

If mandatory information for VAT purposes is missing in the structured component, then a norm-conforming e-invoice could be deemed to exist, it would however not be a proper e-invoice. This could in principle lead to the exclusion of the input tax deduction.

Both BMF circulars state that any necessary corrections to invoices have to be likewise carried out in the prescribed format. As is well known, changes in the scope or content of the supply will require corrections to invoices; in the draft, the example given to illustrate this relates to relevant changes in dimensions in the construction sector.
By contrast, invoice corrections will still not be required for agreed changes to the assessment base, such as, for example discount or bonus agreements that are settled retrospectively, or notifications of defects in construction work.

Please note

Formal errors can be reliably identified by using validation tools. Such tools are available, amongst others, as open source software or are already integrated into accounting software. Moreover, certain content-related errors can be detected by validation tools. Frequently, such tools are not yet suitable for a comprehensive content-related review. It is thus still important to carry out a manual check at present.

Additional information and hybrid formats

In structured data sets it would not be sufficient to refer to external attachments or links for the mandatory VAT information. This has to be included in the structured component. Solely additional information, such as, time sheets for the description of the performance, may be included in an attachment to an e-invoice.

Please note

Exercise caution with respect to hybrid formats, such as, for example ZUGFeRD [an e-invoicing format developed by the Electronic Invoice Forum Germany (FeRD)]. When opened (as previously) a PDF invoice is displayed and it is difficult to identify the structured data component that is contained. The displayed PDF file induces you to check this. Moreover, it cannot be ruled out that a software undertakes the check on the basis of the XML file and the view file. However, the structured data component alone is crucial for the input tax deduction.
If there are more than slight discrepancies between the visual component and the structured component of a hybrid invoice format then, moreover, the scope of application of Section 14c of the VAT Act (Umsatzsteuergesetz, UStG) could be opened up. Consequently, caution should likewise be exercised when issuing hybrid e-invoices.

GoBD

For VAT purposes, the storage and archiving outside of a GoBD-compliant data processing system on its own would not constitute a violation of retention obligations arising from Sections 14, 14b UStG. This exemption would only be of interest to companies who do not have to fulfil retention obligations in Germany for other purposes. This is because, from the perspective of other German tax and commercial laws, the strict requirements under GoBD would still apply.  
The structured component of electronic invoices, at least, has to be stored in such a way so that it is maintained unaltered in its original form. A pictorial copy would only have to be stored if additional information that is relevant for taxation has been included (for details please refer to the BMF circular of 14.7.2025).

Outlook and recommendation

The final version of the circular is expected in the 4th quarter of 2025 after the associations have had an opportunity to comment. All in all, the implementation of the draft would bring more legal certainty. Apart from the clarification with respect to the obligation to receive e-invoices and the exemption for small businesses, the circular contains many explanations regarding the technical and content-related requirements for input tax deduction. Experience shows that the practical implementation will raise further questions.
These rules likewise apply to the issuing of electronic invoices; it is therefore high time to address this issue, too, because the transitional periods will expire from the end of 2026.