Mandatory e-invoicing for domestic B2B transactions in Germany as of 1 January 2025

The BMF draft proposes the introduction of e-invoicing for domestic B2B sales starting from 1 January 2025, ahead of the 2028 deadline set by the Commission. This obligation applies to invoices issued by a business to another business for taxable services in Germany. Discussions are underway regarding an amendment to Section 14 of the German VAT Act, which pertains to invoices. It remains to be seen whether small businesses, as defined in section 19 of the German VAT Act, will also be included in this requirement.

Additionally, the implementation of a transaction-based reporting system is being considered as a subsequent step. Although not currently outlined in the BMF discussion draft, such a system is part of the Commission's 'VAT in the Digital Age' Directive proposal for cross-border B2B transactions.

Ultimately, transaction-based reports generated for national and cross-border B2B transactions could be submitted to tax authorities via an e-invoicing platform. This would enable tax authorities to identify and address potentially fraudulent activities in line with the overall objective of combating VAT fraud.

Key takeaway

Businesses must act promptly to address e-invoicing and incorporate it into or upgrade their current systems. Traditional paper and PDF invoices will soon be inadequate. While the BMF discussion draft provides preliminary insights into the upcoming legislation process, specific rules, technical frameworks, and standards are still unknown. However, the obligation to adopt e-invoicing will arrive sooner rather than later. Overall, this draft presents a good opportunity to digitise internal processes and reduce bureaucratic hurdles for businesses.