Knowledge Base: E-commerce Accounting and VAT Compliance

E-invoicing B2B becomes mandatory in Germany

E-invoicing B2B becomes mandatory in Germany

Date23 May 2024

E-invoicing, which involves issuing and processing invoices in electronic form, has become an integral part of B2G (Business-to-Government) transactions in Germany since 2020. This required businesses to quickly adapt to new requirements and standards, eliminating traditional paper invoicing in favor of digital solutions. Now, the time has come for the B2B (Business-to-Business) sector to take the initiative and transition to digital invoicing methods as well. In response to this need, the German Federal Council has approved a two-step plan for implementing mandatory B2B e-invoicing, set to commence in January 2025. What does this mean for entrepreneurs, and what are the key dates to remember?

E-invoicing in Germany: Key issues

Since the German parliamentary mediation committee took significant steps towards enacting the Growth Opportunities Act (Wachstumschancengesetz) on February 21, 2024, issues related to e-invoicing in Germany have come to the forefront. This crucial legislation aims to amend existing regulations and introduce new standards in the area of electronic invoicing. For entrepreneurs, including e-commerce vendors, this is a significant event requiring an understanding of the legislative changes affecting their daily business operations.

Although these regulations are still under review, their impact on German VAT regulations and e-invoicing standards is substantial. Entrepreneurs must be aware that with the introduction of new rules, new obligations may arise, and existing invoicing practices may change. Adapting systems and procedures to the new legal requirements will be necessary, potentially involving investments in appropriate software and staff training.

Important dates to remember

January 1, 2025:
This is a crucial date that will require all companies operating in Germany to receive e-invoices. Regardless of size and revenue, every business must be prepared to accept invoices in electronic form. However, there is a limitation: only PDF and EDI formats compliant with the EN standard will be accepted, and only with the buyer’s consent.

January 1, 2027:
The next phase of e-invoicing implementation includes the obligation to send and receive electronic invoices for companies with an annual turnover exceeding 800,000 EUR. Paper invoices and PDFs will no longer be accepted, meaning businesses must fully transition to digital invoicing solutions.

January 1, 2028:
The final phase of e-invoicing implementation mandates full electronic invoicing for all companies operating in Germany, regardless of their size or revenue. This date marks a milestone in the digitization of the German business sector, requiring comprehensive adaptation to new e-invoicing standards. However, it also opens up new opportunities for efficiency and process optimization, benefiting both businesses and the entire trade system.

What is an e-invoice?

An e-invoice, or electronic invoice, is not just a simple PDF file or an image of an invoice sent electronically. This is a comprehensive solution that covers the entire process of issuing, sending, receiving, processing and storing invoices exclusively in electronic form. True e-invoices are created using specific data formats, such as XML (Extensible Markup Language), compliant with specified standards, including the EN 16931 standard.

Are PDF invoices still valid in Germany?

From January 1, 2027, PDF invoices will no longer be accepted for companies with an annual revenue exceeding 800,000 EUR, even with the buyer’s consent. For other companies, this form of financial documentation will remain legal until January 1, 2028, after which PDF invoices will also become prohibited for them.

Is EDI still usable?

Electronic Data Interchange (EDI) has played a key role in processing invoices and other commercial documents for many years. However, with the introduction of new e-invoicing standards, questions arise about the future of EDI as a tool for trading data exchange.

Currently, EDI can still be used in Germany, but only with the buyer’s consent. This means that if both parties of the transaction (buyer and seller) agree to use EDI, they can continue exchanging documents this way. However, an important date to remember is January 1, 2028.
After this date, existing EDI connections in Germany will no longer be allowed unless the formats of exchanged e-invoices comply with the requirements specified in the new regulations. This means companies using EDI will need to ensure their systems comply with new e-invoicing standards to continue data exchange without interruption.

What does this mean for your business?

Adapting to these changes will be crucial to ensuring operational smoothness and competitiveness in a dynamic business environment. Transitioning to e-invoicing will require strategic planning and aligning current invoicing processes with new requirements and standards.

For any questions or additional information, we encourage you to contact our team of experts, ready to provide assistance and support: Contact us – amavat®.

Iga Turniak

Junior Process Management & QM Specialist at getsix®, Marketing Assistant at getsix® and amavat®. With the company since March 2022. Interested in SEO, content marketing, and the e-commerce industry.

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