After the changes in the Fourth Red Tape Reduction Act (Viertes Bürokratieentlastungsgesetz) and the Annual Tax Act 2024 (Jahressteuergesetz 2024), there will be a few key updates.
As of 1 January 2025, the electronic archiving period for invoices will be eight years for invoices that haven't reached their retention period by 31 December 2024. If you're part of the small business scheme (Kleinunternehmerregelung), you won't have to pay VAT.
To qualify for this scheme, you'll need to have made at least €25,000 in sales in the previous tax year and at least €100,000 in sales in the current tax year.
Small businesses below the threshold won't have to issue e-invoices that comply with the EN standard. Just a heads-up: these businesses still have to receive EN-compliant e-invoices.
Status of B2B e-invoicing in Germany
The German Ministry of Finance (BMF) has published an update to the June draft, providing further details regarding the scope and rules for the forthcoming mandatory B2B e-invoicing initiative, scheduled to commence in January 2025.
The letter addresses the scope of electronic invoicing, formats (including the EN 16931 standard), transmission and storage of invoices, and input deductions. The German government has concentrated on the legal framework, stipulating that the initial phase of e-invoicing necessitates the transmission of an e-invoice in a structured format via a mutually acceptable method to customers.
Conversely, during the transition period towards mandatory e-invoicing, specific types of companies, with a lower invoicing volume, may continue to issue invoices in paper or unstructured formats under certain conditions.
The German government has announced the introduction of an electronic mailbox for the receipt of electronic invoices, citing the lack of advanced systems for the processing of such documents as the rationale behind this decision.
Nevertheless, some companies will be permitted to select alternative transmission channels, including electronic interfaces and dedicated portals. This decision is part of the wider initiative to introduce B2B e-invoicing in Germany, scheduled to commence on 1 January 2025. This follows the approval of the Growth Opportunities Act (Wachstumschancengesetz), which formalises the introduction of business-to-business e-invoicing.
Timetable for the implementation of B2B e-invoicing in Germany
The timetable established after the publication of the Growth Opportunities Act (Wachstumschancengesetz) is as follows:
- As of January 2025, the use of B2B e-invoicing will become mandatory in Germany. During the subsequent voluntary adoption period, taxpayers may choose to adopt this new standard. During this period, all German companies are required to be able to receive electronic invoices that comply with the EN 16931 standards. It is permitted for suppliers to continue issuing paper invoices. However, for invoices in unstructured formats and EDI invoices that do not comply with the EN standard, the buyer's consent must be obtained.
- In January 2027, all companies with a turnover exceeding €800,000 will be prohibited from issuing invoices in paper or unstructured electronic formats. The phase-out of paper invoices has commenced, and, for the time being, the use of EDI for issuing invoices will be permitted until 31 December.
- By January 2028, all German businesses, including small businesses, will have adopted electronic invoicing and will no longer be able to issue invoices in paper or unstructured electronic formats. Furthermore, EDI e-invoices that fail to comply with the European standard will no longer be permitted.
The German tax authorities have recognised a number of e-invoice formats, including structured formats such as XML and hybrid formats that combine structured data with human-readable data as ZUGFeRD (version 2.0.1).
In addition, other national formats that correspond to the list of relevant syntaxes in accordance with Directive 2014/55/EU may also meet the requirements of the e-invoicing obligation. Examples of such formats include French Factur-X and PEPPOL.
It is also important to note that no transition period will be permitted for the receipt of e-invoices. Consequently, companies must be fully prepared to receive them by 1 January 2025. The only exception to this rule pertains to invoices of less than €250, which are exempt from the obligation to comply with the full e-invoicing standards.
Background on B2G e-invoicing in Germany
As Germany is divided into a federal structure, the government and the 16 states had to pass their respective e-invoicing laws to implement Directive 2014/55/EU.
At the federal level, the B2G e-invoicing law came into force since 2017, while at the state level different laws have been passed.
With the publication of the e-Invoicing Act in April 2017 and the e-Invoicing Regulation in September 2017, all federal contracting authorities in Germany are obliged to receive and process e-invoices. The law applies exclusively to regulations for federal bodies.
State or local authorities need additional laws from the federal states, also called Länder. At the federal level, these supplementary laws turn the European Directive into legislation. Therefore, since 18 April 2020, state authorities have to accept e-invoices.
How was the B2G e-invoice implemented in Germany?
From 27 November 2018, federal state authorities are required to receive and process invoices electronically. A year later, on 27 November 2019, all subordinate institutions and sectoral contracting authorities at the federal level will also begin to process electronic invoices.
Finally, from 27 November 2020, all public contracting authorities of the federal administrations must issue and process electronic invoices.
What is the B2G e-invoicing model in Germany?
The e-invoicing model in Germany is decentralised. In the B2G context, issuing is mandatory for all suppliers of all federal and Bremen contracting authorities, while receiving is mandatory for all federal authorities of the central government as well as authorities of the Länder.
Although different e-invoicing platforms exist, Germany has implemented a unified routing system. This routing ID (Leitweg ID) enables the platform to transmit invoices to the public contracting authorities.
The Leitweg ID is a mandatory element in the XRechnung scheme, each ID is composed of a state code and a check digit, while government, district and municipality codes remain voluntary.
The Federal Central Invoice Receipt Platform (ZRE) requires companies to submit electronic invoices in the XRechnung format. This format is mandatory for issuing, processing, and accepting invoices by all central and state authorities in Bremen. Additionally, a second platform, OZG-RE, has been developed.
If automated data exchange is available for electronic invoice delivery, all federal and national authorities must use the PEPPOL network. To ensure that PEPPOL transactions can be carried out in Germany, economic operators must select a provider accredited by the PEPPOL Authority, as the XRechnung format is specific to Germany.
E-invoicing in Germany: Key features
Each federal state has the option to either use the standard CIUS model or create its own format for sending, receiving, and processing invoices to state authorities.
This allows for the flexibility of each state to choose between using the central government platform or developing its own platform for handling e-invoices.
The states that have developed their own platform are currently using it are:
- Follow the local ErechVOBW regulations on Service-bw.de in Baden-Württemberg.
- Lower Saxony: Zentrale E-Poststelle. Follows the local regulation Niedersächsischen Verordnung über den elektronischen Rechnungsverkehr.
- Bremen: zERIKA. Adhere to the regulations outlined in the local E-Rechnungs-VO.
- Hamburg via the Elektronische Postselle portal.
- North Rhine-Westphalia: vergabe.NRW. Folgt der örtlichen Regelung Verordnung zur Ausgestaltung des elektronischen Rechnungsverkehrs nach § 7a des E-Government-Gesetzes Nordrhein-Westfalen.
- Rhineland-Palatinate: ZRE RLP (E-Rechnungsportal Rheinland-Pfalz).
- Saxony Anhalt, via the E-Rechnungsportal portal.
- Schleswig-Holstein. Follows the local regulation E-Rechnungsverordnung (ErechVO).
In Berlin, Brandenburg, Mecklenburg-Pomerania, Saxony and Thuringia, the central portal OZG-RE has been used. In Hessen, Bavaria and Saarland no central reception system has been set up.
SERES, an ideal partner for multi-country projects
To comply with international obligations, it is recommended to contract a global e-invoicing solution that is certified in all the countries where your company operates.
The SERES Multi-Country e-Invoicing solution offers several advantages for companies:
- The solution meets all legal and technical requirements in each country where it is used. Electronic invoicing streamlines workflows between subsidiaries or companies located in different countries.
- Our service provides a single point of collaboration for internal information exchange, with automatic integration and report generation.
- Real-time visibility allows for efficient management of treasury, debts, and accounts payable by providing up-to-date information from all subsidiaries.
- The global operator ensures automatic adaptation without the need for each subsidiary to adjust to a different provider. Additionally, a support and help service is available throughout the activation process.
Would you like to know more about e-invoicing in Germany?
