| Image Credits: “Bundesministerium der Finanzen” by Guzmán Lozano
The German Tax Authorities have introduced new guidelines for issuing invoices pursuant to § 14 of the Value Added Tax Act (UStG).
This update follows the Growth Opportunities Act (Federal Law Gazette I 2024 No. 108) and applies to all transactions conducted after December 31, 2024.
SUPERSEDING PREVIOUS VAT REGULATIONS
The new regulation supersedes any provisions in the current VAT Circular that contradict this update. The core change is the requirement to issue electronic invoices for domestic B2B transactions. Exceptions include invoices for tax-exempt services under Section 4 Nos. 8 to 29 of the German VAT Act, invoices for amounts up to 250 euros (as specified in Section 33 of the VAT Implementing Ordinance), and driving tickets (Section 34 of the VAT Implementing Ordinance).
MANDATORY REPORTING SYSTEM
Along with the shift to electronic invoicing, businesses will need to report certain invoice information to tax authorities promptly and on a transaction-related basis. This reporting system is aimed at accelerating the digitization of invoicing processes, making them more efficient and transparent. Although the legal definition of an invoice remains unchanged, existing tax regulations must be adapted to the new framework.
TRANSITIONAL PROVISIONS AND ADAPTATION
Transitional provisions, outlined in Section 27 Para. 38 of the VAT Act, will accompany the initial implementation of the new regulations. These provisions are designed to ease businesses into the new system and allow time for adaptation to the changing requirements.
AGREEMENTS ON ELECTRONIC INVOICE FORMATS AND TRANSMISSION
Entrepreneurs will need to reach agreements with their contracting parties on the electronic format and transmission method for invoices. Acceptable methods include sending e-invoices via email, providing access through an electronic interface, sharing access to a central storage location, or enabling downloads via an internet portal.
REQUIREMENTS FOR RECEIVING ELECTRONIC INVOICES
Starting January 1, 2025, businesses must be prepared to receive e-invoices. A standard email inbox will suffice for this purpose; there is no requirement for a separate inbox exclusively for e-invoices. If the recipient refuses to accept an e-invoice or is unable to receive one for technical reasons, the sender is still considered compliant with VAT obligations if they have made reasonable efforts to transmit the e-invoice, such as through a transmission protocol.
