Germany to mandate B2B e-invoicing from 2025

Germany will introduce mandatory domestic B2B e-invoicingElectronic invoicing - widely referred to as e-invoicing - is the exchange of a digital document between a supplier and a buyer. E-invoices are issued, transmitted and received in a structured data format that enabled automatic and electronic processing. They contain data in a machine-readable format so that an AP system can read an invoice without manual data entry, leading to faster and more efficient invoicing. from 2025, marking the latest milestone in the country’s journey towards full tax digitalisation.

The Growth Opportunities Act, comprised of a range of measures (including e-invoicing) designed to drive economic growth, was passed by the BundesratThe German Bundesrat is a legislative body that represents the sixteen Länder of Germany at the federal level. last week and will now pass to the Chancellor and the President before it is gazetted.

Prior to its review and approval by the Bundesrat, the bill had been approved by the Bundestag.

Once it is enshrined into law, it will see domestic B2B e-invoicing mandated in a phased approach between 2025 and 2028. It will also provide instructions on the precise use of e-invoices and the structured formats that will be accepted by the tax authorities.

From 1^st January 2025, businesses must be capable of receiving invoices in an electronic format.

From 1^st January 2027, companies with revenue in excess of €800,000 must issue e-invoices.

From 1^st January 2028, all businesses in Germany will be legally required to issue only e-invoices.

Real-time reporting and pre-clearance government scrutiny are not yet included in the bill.

However, Germany – like all EU member states – will likely be required to introduce these by 2030 when the VAT in the Digital Age scheme is scheduled to come into effect.

In June 2023, the EU Commission supported Germany’s move to mandate B2B e-invoicing by allowing it to deviate from the EU VAT Directive, which deems paper invoices to be necessary.

Germany will now press ahead with its introduction of e-invoicing, which will be completed before the ViDAViDA or 'VAT in the Digital Age', is an EU initiative proposed by the European Commission that seeks to modernise and harmonise VAT processes for member states, by embracing new technologies. It is aimed at updating processes for the management of VAT, and reduce the VAT gap and fraud. The proposal also aims to address challenges in the area of VAT raised by the development of the platform economy. requirements are potentially added to the list of requirements for businesses.