Germany publishes draft letter on the e-invoicing regulation

The German Ministry of Finance (BMF) published a draft letter on June 13, 2024, detailing the upcoming mandatory B2B e-invoicing regulations, which will be implemented from January 1, 2025

The letter is open for feedback until July 11, 2024. The final publication of the BMF letter is planned for the beginning of the IV, which is planned for the quarter of 2024. This initiative is part of the broader Growth Opportunities Act, which aims to enhance digitalization and reduce VAT fraud.

Legislative background

The Growth Opportunities Act is the legislative basis for the new e-invoicing mandate. This act signifies a pivotal shift in how businesses in Germany will handle invoicing, transitioning from paper and unstructured electronic formats to structured electronic invoices.

Accepted e-invoice formats

From January 1, 2025, all resident taxpayers must be able to receive structured e-invoices for domestic B2B transactions. These invoices must comply with the EN16931 EU standard or be in a mutually agreed format between counterparties that ensures secure and accurate data extraction.

ZUGFeRD and XRechnung qualify as compliant formats. Hybrid invoices, including a structured electronic part (e.g., XML) and a human-readable part (e.g., PDF), are also allowed.

Transmission and Storage

E-invoices can be transmitted via email, portals, or service providers but not through physical media like USB sticks. To comply with the new regulations, businesses must set up appropriate systems to receive and store these structured e-invoices, like an e-mail box.

Proper storage of the structured part of the e-invoice is required to ensure it remains unaltered and machine-readable for tax purposes.

Input VAT Deduction

Only invoices that meet the structured e-invoice requirements will be valid for VAT deduction purposes. This ensures that businesses maintain compliance and can properly claim VAT credits.

Impact and Preparation

Businesses in Germany need to start preparing for this significant change by upgrading their invoicing systems to handle structured electronic formats. This shift aims to streamline processes, enhance compliance, and reduce tax fraud.

By staying ahead of these changes, businesses can ensure a smooth transition and take advantage of the benefits of digital invoicing.