E-invoices in the B2B sector become mandatory

As of January 1, 2025, e-invoicing will be mandatory for B2B transactions within Germany. There are no transitional provisions for the receipt of e-invoices, but for potential e-invoice issuers. In the following, we provide an overview on the implementation of the electronic invoice in companies.

Changes to the Growth Opportunities Act for electronic invoices

Specifically, the Growth Opportunities Act provides for the following changes to Art. 14 UStG (German VAT Act), among others:

• The obligation to issue electronic invoices for domestic B2B transactions will be included. Such obligation exists if the supplier and the recipient are domiciled in Germany. The definition of electronic invoices and general format requirements are based on the EU standard CEN 16931 (see Art. 14 (1) sentences 2 to 8 UStG, as amended).
• The priority of paper invoices will be abolished. The electronic invoice is to take precedence. In the case of hybrid invoice formats (e.g., according to ZUGFeRD), the electronic part is to take precedence from now on (see Art. 14 (1) sentences 2 to 8 UStG, as amended).
• Specifications as to the cases mandatorily requiring an e-invoice and cases where the use of other invoices remains possible (see Art. 14 (2) UStG, as amended). 
• The statements on the authenticity of the invoice’s origin, the integrity of the content and its legibility will be adapted. An adjustment to the GoBD (German principles for the proper keeping and storage of books, records and documents in electronic form) is also expected (see Art. 14 (3) UStG, as amended).
• Furthermore, the Article contains an authorization provision that allows further details to be regulated by ordinances (see Art. 14 (6) sentence 2 UStG, as amended).

Expected data formats for electronic invoices

Even before the Growth Opportunities Act was passed, the German Federal Ministry of Finance published a letter regarding the permissible invoice formats in order to give practitioners legal and planning certainty as early as possible.

From the perspective of the tax authorities, invoices in both the “XStandard” and the “ZUGFeRD” format from version 2.0.1 generally meet the new VAT requirements for an electronic invoice in accordance with the Growth Opportunities Act.

However, according to the tax authorities, other invoice formats can also meet the requirements. In the case of EDI procedures, which are important for many areas of the economy, a solution is currently still being worked on in order to ensure the continued use of EDI procedures under the future legal framework. To what extent companies currently using EDI procedures will have to change their processes has not yet been finally clarified.

Transitional provisions until December 31, 2027 at the latest

In order to enable companies to better prepare for the planned change and to ease the burden on smaller companies in particular, transitional regulations are planned, which will be gradually phased out by December 31, 2027.

For sales

1. performed after December 31, 2024 and before January 1, 2027, invoices can still be issued and transmitted on paper or, subject to the recipient’s consent, in another format, e.g., PDF file or an electronic format that does not correspond to the legally required structured format, until December 31, 2026;
2. performed after December 31, 2026 and before January 1, 2028, invoices can still be issued and transmitted on paper or, subject to the recipient’s consent, in another format, e.g., PDF file or an electronic format that does not correspond to the legally required structured format, until December 31, 2027, provided the supplier’s total turnover (Art. 19 (3)) did not exceed EUR 800,000 in the previous calendar year;
3. performed after December 31, 2025 and before January 1, 2028, invoices may still be issued in an electronic format other than the structured format pursuant to Art. 14 (1) sentence 6 UStG until December 31, 2027 if this invoice is transmitted by means of electronic data interchange (EDI) in accordance with Article 2 of Commission Recommendation 94/820/EC of October 19, 1994 on the legal aspects of electronic data interchange (OJ L 338 of December 28, 1994, p. 98, EDI procedure) and if the recipient agrees.

Even if the transitional regulations provide for temporary relief for companies, we recommend dealing with the VAT regulations on the introduction of e-invoicing in good time, as all companies will be obliged to be able to receive e-invoices from January 1, 2025.

Assistance with the implementation of e-invoicing

In preparation for the introduction of e-billing, we provide holistic support in reviewing and, if necessary, converting your systems and processes by involving both specialist departments and the relevant IT components.

In doing so, we ensure that invoicing complies with the new VAT regulations and, where applicable, the amended GoBD. Another focus is the analysis of incoming invoice control in order to validate the input tax deduction from any new invoice formats and to identify any need for adjustment.

We also provide support in recording and documenting the underlying processes in terms of GoBD documentation. In addition to the tax requirements, we also consider in particular any necessary changes to IT systems, their operating processes and the (partially) automated controls in the departments involved.

We support the implementation from both the tax side and the system technology side. We support the achievement of regulatory and company-specific objectives with project-related quality assurance in accordance with IDW PS850.

We are already keeping an eye on the planned medium-term introduction of a transaction-based electronic reporting system through the EU's ViDA initiative when introducing the e-invoice in order to minimize the need for subsequent adjustments.

As a management consultancy, Baker Tilly can also support the implementation of relevant processes and ensure the smooth integration of interfaces.

The integration of digital work processes offers considerable potential for improvement, particularly in the area of accounting. Processing invoices manually is time-consuming and generates unnecessary costs. By switching to paperless administration that is tailored to your resources and enables the use of digital incoming invoices, you can make your work processes more efficient. Digitizing your incoming invoices also facilitates such documents’ archiving and processing, ensures greater transparency and eliminates potential sources of error. Furthermore, liquidity is improved through more efficient payment processing.

Further information is also available in our article "Tax reliefs by German Growth Opportunities Act: Upcoming changes and what companies should know now".