Note
The new electronic invoicing format creates the initial conditions for a reporting system for electronic invoices to the tax authorities. This will enable real-time invoice verification and a more effective approach to combating VAT fraud. When exactly this system will be introduced is currently still unclear. If the current timetable holds, 2024 will be a year of preparation for businesses as they get ready for the new invoicing standards from 2025 onwards. Looking ahead, comprehensive adjustments to corporate software (e.g. ERP systems) are likely to become necessary.
About the electronic invoice
After the EU Commission presented its draft directive for the ViDA initiative (VAT in the Digital Age) on 8 December 2022, the German legislator now intends to establish the necessary framework conditions even earlier. The aim of the European ViDA initiative is to introduce further simplifications for cross-border businesses and to combat potential VAT fraud even more swiftly.
To achieve this, changes are primarily being made to invoicing and the recapitulative statement, with the result that additional registration and reporting obligations in other Member States should be eliminated entirely for businesses operating across borders within the EU. In future, businesses will be able to submit all declarations in their state of residence. Despite the introduction of the OSS procedure, some businesses still face VAT registration obligations abroad (e.g. in the case of warehouses abroad or supplies to other businesses). In addition, to safeguard VAT revenues, recapitulative statements are to be reviewed more quickly and digitally, primarily through the predominance of electronic invoices in commercial transactions between businesses.
The EU initiative is expected to enter into force in early 2028. However, the German legislator intends to anticipate the requirements of this initiative by introducing mandatory electronic invoicing as part of the Wachstumschancengesetz (Growth Opportunities Act).
We would like to point out that this is an ongoing legislative procedure and that we are therefore basing our analysis on the legal status currently adopted by the Bundestag (17 November 2023).
Electronic invoices and other invoices
From 2025 onwards, a distinction is to be drawn between an electronic invoice (referred to as eRechnung) and other invoices.
An eRechnung is an invoice (§ 14 Abs. 1 S. 3 UStG-E) issued in a structured electronic format that can be both received and processed/read digitally. A structured electronic invoice format exists where it conforms to the European standard for electronic invoicing and the corresponding list of syntaxes pursuant to Directive 2014/55/EU.
Notwithstanding these requirements, the issuer and recipient of an invoice may also agree on a proprietary electronic invoice format (e.g. invoices issued via EDI procedures). The key requirement is that all mandatory invoice details under the UStG (§ 14 Abs. 4 UStG) can be extracted from such an electronic invoice into a format conforming to the European standard (§ 14 Abs. 1 Satz 6 Nr. 2 UStG-E).
Further invoice formats meeting the above requirements of the EU standard were specified in an initial BMF circular on the electronic invoicing obligation (BMF circular of 2 October 2023: Wachstumschancengesetz – Introduction of mandatory electronic invoicing). Whether other invoice formats also conform to the standards will need to be clarified after the legislation is adopted.
Under the new rules, any invoice format that does not qualify as an eRechnung is considered an other invoice. This includes, for example, paper invoices and electronic invoices in a different format.
An invoice sent by email in PDF format will therefore no longer be regarded as an electronic invoice from 2025 onwards.
Who is required to issue electronic invoices?
In principle, a business is entitled to issue an invoice for all supplies and other services and is required to do so for services provided to other businesses, unless the transaction is exempt under § 4 Nr. 8-29 UStG. The obligation to issue an electronic invoice applies only to transactions between two businesses (B2B). In addition, both the supplying business and the recipient must be established in Germany or within the territory pursuant to § 1 Abs. 3 UStG. This means the registered office, place of management or a domestic permanent establishment (involved in the transaction); where no registered office exists, a domestic place of residence or habitual abode is also sufficient (§ 14 Abs. 2 Satz 3 UStG-E).
Going forward, landlords who have opted for VAT-liable letting to businesses (§ 9 UStG) will also be required to issue electronic invoices.
Transitional rules and the obligation to issue electronic invoices
The draft legislation is based on the obligation to issue electronic invoices from 1 January 2025. However, in view of the significant implementation effort involved, transitional rules (§ 27 Abs. 39 UStG-E) have been granted. The timeline is as follows:
From 1 January 2025 to 31 December 2026:
- Paper invoices for B2B transactions permitted (subject to the recipient's consent)
- Electronic invoices not conforming to the EU standard permitted (subject to the recipient's consent)
From 1 January to 31 December 2027:
- Paper invoices for B2B transactions permitted (subject to the recipient's consent and provided the issuer's annual turnover in 2026 did not exceed EUR 800,000)
- Electronic invoices not conforming to the EU standard permitted (subject to the recipient's consent and provided the issuer's annual turnover in 2026 did not exceed EUR 800,000)
From 1 January 2028, compliance with the new requirements for electronic invoices and their transmission will be mandatory.
Measures on the recipient's side
Since the electronic invoicing obligation – subject to the transitional rules – applies from 1 January 2025 and the receipt of electronic invoices does not require consent, recipients in B2B transactions must already be in a position to receive and process such eRechnungen in accordance with the new requirements from 2025 onwards. To avoid misunderstandings, the recipient only needs to give consent as described above where the invoice does not conform to the EU standard for electronic invoices.
Exceptions: small-amount invoices and travel tickets
Under the current legal status, an electronic invoice is not mandatory for small-amount invoices (up to EUR 250 gross pursuant to § 33 UStDV) and travel tickets (§ 34 UStDV). Here, an other invoice (paper invoice or non-conforming electronic invoice) may continue to be issued.
Outlook
Discussions are already underway regarding extended transitional periods or a later entry into force, both in respect of the electronic invoicing obligation and the EU Commission's ViDA initiative. Nevertheless, all businesses that do not yet have an electronic invoicing and reading program are advised to address appropriate measures now. As described above, the general rule is that all businesses established in Germany must at least be able to receive and process an electronic invoice in B2B transactions from 2025 onwards (e.g. including doctors and landlords). Taking initial steps now will make timely implementation within the transitional rules considerably easier later on.
Frequently asked questions
Frequently asked questions
From 2025, what qualifies as an electronic invoice under the German VAT Act (UStG)?
From 2025, an electronic invoice (eRechnung) is defined exclusively as an invoice in a structured electronic format that complies with the European standard EN 16931 and the syntaxes of Directive 2014/55/EU, and that can be received and processed digitally. Proprietary formats (e.g. EDI) remain permissible, provided the mandatory information can be extracted into an EU-compliant format. A PDF invoice sent by email therefore no longer qualifies as an electronic invoice, but rather as an 'other invoice' (sonstige Rechnung).
Who is required to issue an electronic invoice?
The eRechnung (electronic invoice) is mandatory only for transactions between two businesses (B2B), provided that both the supplier and the recipient are established in Germany or in the territory defined under § 1 Abs. 3 UStG. Establishment requires a registered office, place of management, or a permanent establishment involved in the transaction within Germany; alternatively, a domicile or habitual residence is sufficient. Landlords who have opted for VAT liability under § 9 UStG are also affected.
Which transitional rules apply to the e-invoicing obligation until 2028?
From 01/01/2025 to 31/12/2026, paper invoices and electronic invoices in non-EU-compliant formats may still be issued for B2B transactions, provided the recipient agrees. In 2027, this remains possible only if the invoice issuer had an annual turnover of no more than EUR 800,000 in 2026. From 01/01/2028, the new requirements must be observed without exception.
Must invoice recipients be able to receive eRechnungen (electronic invoices) starting in 2025?
Yes. Since receiving electronic invoices does not require the recipient's consent, all domestic businesses in the B2B sector must be technically able to receive and process standard-compliant eRechnungen from 01.01.2025. This also applies to physicians and landlords who opt for VAT. The recipient's consent is only required if the invoice does not comply with the EU standard.
Which invoices are exempt from the e-invoicing obligation?
Exempt from the e-invoicing obligation are small-value invoices up to EUR 250 gross (§ 33 UStDV) and tickets for passenger transport (§ 34 UStDV). In these cases, other invoice formats such as paper invoices or electronic invoices in non-compliant formats remain permissible. Also not affected are B2C transactions and supplies that are tax-exempt under § 4 Nr. 8-29 UStG.