The German tax authorities published a proposal in April 2023 that would introduce mandatory e-invoicing requirements for German B2B delivery companies from January 1, 2025.

An e-invoice is an invoice that is issued, sent, and received in a structured electronic format that allows for electronic processing. The current proposal in Germany takes into account the new EU rules on e-invoicing. These provisions will allow Member States to introduce requirements for electronic invoicing from 1 January 2024, provided that they comply with the relevant EU standard (i.e. EN 16931).

The insured taxpayers covered  it and how the system works

Under the proposal, taxpayers based in Germany would be required to issue e-invoices for supplies of goods and B2B services in Germany that are subject to VAT in Germany. It is still being discussed whether permanent establishments of taxpayers established abroad would have to issue e-invoices for supplies taxable in Germany, This would probably be the case with a strict interpretation of the proposal.

In addition to e-invoices, paper or PDF versions of invoices could be prepared.

Under the current proposal, the platform operator (public or private) would have to validate the e-invoice before issuing it to the B2B customer. Then it would have to be submitted to the German tax authorities along with specific information about the transaction. However, before an e-invoice could be sent, the data in the ERP system would have to be transformed into an e-invoice based on the EU e-invoicing standard. This may require updates or additions to ERP systems or separate mechanisms for converting data into an e-invoice.

The discussion status and additional steps

Questions regarding the implementation of e-invoicing remain open and at the time the Ministry of Finance presented the proposal, by May 2023, it had sought feedback from relevant associations and industry, in particular, whether:

• The proposed timetable (introduction of e-invoicing from 1 January 2025) is feasible for interested entrepreneurs or whether the e-invoicing requirement should be introduced gradually, especially for small and medium-sized enterprises; and

• Exceptions are necessary, especially for low-value invoices or travel tickets.

The government will review the feedback received and intends to publish a legislative proposal to amend the German VAT law this summer.

Entrepreneurs should review the current (and any future) proposal to determine whether they will be affected by regulation, and whether their ERP systems and/or other internal processes (such as procurement and sales, finance and accounting, etc.) will require modification or updates to meet e-invoicing requirements.