Further 1-year delay for small businesses till 2027 on mandatory B2B domestic e-invoices
The latest German tax reform Bill which includes mandatory B2B VAT e-invoicing on domestic transaction now includes a further 1-year delay for small businesses. This follows the recent 1-year extension from 2025 to 2026 for all businesses. The Bill is in Parliament with a target approval date of 15 December 2023.
The proposed phased rollout is:
- Jan 2025 – voluntary e-invoicing for all
- Jan 2026 – mandatory B2B e-invoicing for taxpayers with annual turnover above €800,000
- Jan 2027 – mandatory B2B e-invoicing for all, including small businesses
- Jan 2028 – all e-invoices must comply with the EU’s structured standard, EN 16931
The draft Bill is now in the Bundestag for debate, modifications and approval.
Aug 2023: Delayed e-invoicing Bill approved by Cabinet passes to parliament
The German Bill to strengthen growth opportunities – including mandatory VAT e-invoicing has now passed to the German parliament to review. The parliamentary approval process is as follows:
- 17 July 2023 BMF Draft Bill
- 30 August Govt approves draft
- 10 November Bundestag approval
- 15 December Bundesrat approval
- 1 January 2025 enters into law
27 July Council of EU approves mandatory German e-invoicing; delayed launch proposal January 2026
The request by the European Commission on behalf of Germany to introduce mandatory B2B domestic VAT e-invoicing was approved by the Council of the European Union on 25 July. This allows Germany to impose real time e-invoicing which it is now proposing for 1 January 2026.
The request was backed by the EU Commission in June (see below) to authorise Germany to derogate from the EU VAT Directive and its requirement for paper-based invoices. Germany will be permitted to impose e-invoices until the end of 2027 when there will be a further review.
Learn about VATCalc’s VAT e-invoicing product, which not only creates and submits e-invoices to global tax authorities, but is unique in providing full audit against local tax legislation. And since it is built on the same application as our VAT Filer, all of your sales or purchase e-invoices are fully reconciled to your VAT returns.
17 July 2023: Mandatory domestic live e-invoicing proposals delayed to 1 Jan 2026; soft launch 2025
Germany’s Federal Ministry of Finance (Bundesministerium der Finanzen or BMF) has revised proposed mandatory domestic e-invoicing imposition to 1 January 2026. During a phased implementation from January 2025, e-invoices would become redefined and legalised, but paper or PDF invoices may still be issued until 31 December 2024.
Full structured e-invoicing only had originally been proposed from January 2025. But, following a public consultation on a BMF discussion document, this has been postponed to 2026. This reflects recent calls for delays in the EU VAT in the Digital Age 2028 e-invoicing obligations, which covers intra-community B2B transactions only.
The new timeline is contained within outline BMF proposal – “Growth Opportunities Act‘. Other revised points following the consultation include:
- January 2025, e-invoices will be redefined as structured e-invoices;
- During the voluntary 2025 period, the same German invoice rules, disclosures and timelines would apply to e-invoices;
- By 2028, they must comply with EN 16931, EU’s e-invoicing Directive. Further clarifications and legal definitions are required since this requirement at present would not become effective until 1 January 2028. This means any electronic format could be acceptable until 31 December 2027.
- All mandatory e-invoicing rules would only apply to German resident taxpayers for domestic transactions – which would include foreign entities with a Fixed Establishment in Germany;
- No reference is made to the reporting model – whether pre-clearance or not – but it will likely follow the ViDA lead and therefore no government pre-approval stage required. Also there will likely be a role for e-invoicing agents.
June 2023 – EU commenced derogation proceedings for German mandatory B2B domestic real-time e-invoicing reporting
The European Commission launched approval process for German to launch mandatory e-invoicing on B2B transactions. This was scheduled for January 2025 – although is now to be 2026 per the above BMF revised proposals.
Under current EU rules, Germany must obtain approval from the EC to deviate from the EU VAT Directive’s Articles 219 and 232 which restrict the use of government mandated e-invoicing over paper invoices. Since Germany has opted to largely follow the EC’s proposed VAT in the Digital Age e-invoicing model, it should pass without change.
Germany’s application to the EC lasts until December 2027. However, the EU is proposing to remove this requirement to seek its approval to deviate from the EU VAT Directive on e-invoicing from 1 January 2024. This is part of the ViDA reforms.
April 2023 – discussion document from Ministry of Finance
The BMF issued a discussion document in April 2023 around its proposed mandatory e-invoicing live reporting regime. The consultation ended 8th May 2023.
Key features under consideration include:
- Structured e-invoicing mandatory for live reporting to the tax authorities at the same time as issuing e-invoice to customers;
- New definition of structured e-invoices, based on ViDA, and out-of-scope invoices (use of PDF’s and paper invoices);
- Likely that taxpayers will be able to report via e-invoicing agents or similar outsourced services to the government and their customers at the same time – no pre clearance with the government required;
- Domestic B2B supplies only;
- No clarity yet if this includes non-residents issuing or receiving invoices for domestic transactions;
- Potential staggered introduction for small and medium sized taxpayers’ sales invoices – although they would still be obliged to receive purchase e-invoices from their German suppliers from 2025;
- Potential threshold for low-value invoices, which would then be phased out;
- Based on EU e-invoicing standard EN 16931, and the seller’s reporting would be obliged to verify complete reporting of all data fields; and
- Complies with EC’s proposed VAT in the Digital Age reforms – see 2028 Digital Reporting Requirements for Intra-Community supplies.
This proposal follows a 2022 commitment from the new coalition government to introduce a digital reporting regime to help tackle the VAT Gap.
Nov 2022: Germany applies for temporary departure from Articles 218 and 232 of VAT Directive to impose mandatory electronic invoicing on certain B2B transactions.
Germany is to follow Italy, France, Poland and others by introducing mandatory electronic invoices. It has commenced plans by seeking permission from the European Commission to do so – under the EU Directive rules, businesses must first seek their suppliers’ permission to adopt e-invoicing.
Update: since this announcement, the EC has proposed removing e-invoice derogation approval from January 2024. Once the feedback has been considered, a Bill will be submitted to Parliament.
November 2021: Coalition new leaders confirm electronic invoice reporting system as soon as possible to fight VAT fraud; backing for EU definitive VAT system; import VAT reforms
The new German government coalition of the SPD, Free Democratic Party (FDP) and Green Party have now confirmed on 24 November 2021 plans to implement a country-wide live e-invoicing regime. It is envisaged that this will validate in real-time the creation of sales invoices by taxpayers, and then act as the forwarding channel for invoices to customers. This follows the Italian SdI model, with Continuous Transaction Controls (CTC), which in turn follows similar models adopted across South America and Asia Pacific.
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The new government has also restated its support for the proposed EU definitive VAT system, which aim to shift the EU VAT regime to a destination principle. Check VAT Calc’s global live VAT invoice transaction and e-invoice reporting tracker to see where else real-time submissions of invoices is being implemented. Our VAT Calculator can produce accurate invoice calculations and reporting globally.
The coalition has also committed to reform the import VAT rules to provide similar reverse charge relief as is common across the rest of the European Union.
Read more about German VAT in our national guide.
Germany B2G e-invoices
As per the requirements of the EU VAT Directive on e-invoicing, in April 2020, Germany mandated the acceptance of electronic invoices for Federal governmental transactions with the commercial sector, B2G.The format varies by state (Bundesland) as they adopt the legislation in their local laws. The states have the option of their own format (which should be PEPPOL compliant) or the recommended by Core Invoice User Specification (CIUS).
