New circular of the German Federal Ministry of Finance on e-invoicing requirements
GermanyIn accordance with Directive 2014/55/EU, Member States are obliged to implement B2B e-invoicing by 2028. Germany aims for an earlier domestic implementation. In principle, e-invoicing will be mandatory for domestic transactions between businesses based in Germany as of 1 January 2025. However, various transitional arrangements regarding the issuing of invoices will apply until the end of 2027. No transitional arrangements will apply regarding the receipt of invoices. Therefore, all businesses must ensure that they are able to receive e-invoices by the end of 2024.
An e-invoice must meet the requirements of the EN16931 standard series or be interoperable with it. In particular, the XRechnung and the ZUGFeRD format as of version 2.0.1 are permitted. The BMF also clarifies that other national formats can meet the requirements of the e-invoice according to Directive 2014/55/EU. The format to be used must be individually agreed between the respective contracting parties.
Incorrect e-invoices will generally lead to input VAT deduction being denied. However, the correction and the issuing of a correct e-invoice will allow input VAT deduction. Whether incorrect e-invoices allow input VAT recovery will remain at the discretion of the tax authorities.
Key takeaway
The circular published on 15 October addresses fundamental questions regarding the introduction of e-invoicing. Cases presented in the circular may provide additional guidance for affected taxpayers. A recent survey of German based companies revealed that 72% of respondents had not yet initiated the processes required for receiving and sending e-invoices. Given that the technical prerequisites for at least receiving e-invoices must be in place by 1 January 2025, companies should take immediate action.
