Germany Closes in on E-Invoicing Compliance Mandate for 2025
By Marcus Gray, Product Manager, Tax and Compliance Interoperability at Tradeshift
This blog is part 2 of our series, The Regulatory Round-Up, where we're spotlighting the latest changes in e-invoicing mandates across the globe. In part 1, we delved into the evolving landscape of Australia and New Zealand.
Don't miss out - catch up on that insightful analysis by reading it here. Now, join us as we continue our journey, exploring even more global e-invoicing developments that are shaping the way businesses, specifically in Germany, will operate.
The Forecast for e-Invoicing in Germany
Germany looks almost certain to move ahead with plans to introduce mandatory e-invoicing covering domestic B2B transactions following the release of a draft consultation paper from the Federal Ministry of Finance (BMF), which included a timeline for implementation of the changes commencing 1st January 2025.
Released on 17th April 2023, the paper requested feedback from business associations in Germany on the BMF’s plans to introduce mandatory e-invoicing and e-reporting requirements for B2B transactions. Contributors had until 8th May 2023 to submit feedback on the proposal and talking points.
Germany first made clear its intention to introduce clearance controls in 2021 when the coalition government was formed. The government formally allow mandatory e-invoicing in November 2022, joining the likes of Italy, France, and Poland in Europe. The EU has proposed removing the need for this approval moving forward, as it’s unlikely that requests would ever be declined.
In the EU’s VAT Gap Report 2022, Germany reported an €11 billion VAT Gap, second only to France. The changes being announced intend to address the issue. Once plans are finalized, it will expedite the digitization of accounts payable and receivable processes.
What Is Being Proposed?
Feedback was requested in 2 areas - e-invoicing and e-reporting.
1. Mandatory E-invoicing by 1st January 2025
Under the plans, it will be required to issue e-invoices for domestic business-to-business transactions from 1st January 2025. The definition of an e-invoice would follow ViDA’s(VAT in the Digital Age) approach, which, importantly, means that email and PDF invoices do not constitute an e-invoice. Documents would follow a format based on the EN 16931 standard. We expect evolution of this document format standard in the future as it is primarily suited to Business to Government transactions.
The way in which documents can be exchanged could be a state-owned e-invoicing platform with the use of private platforms allowed, which is similar to France’s plans. Businesses would be required to send and receive invoices via the platform. This means that the platforms will be at the center of document exchange between parties.
The primary area in discussion at this stage is the timetable for rolling out requirements, and the options presented were:
- Roll out depending on company size
- Roll out depending on invoice volume
- All to receive invoices from day 1 and then roll out sending invoices based on company size
There are still many key decisions and discussions to take place.
2. E-reporting For Domestic and Cross Border Business to Business Transactions by 1st January 2028
ViDA’s proposals are requiring e-reporting of intra-community transactions by 1st January 2028, and the BMF have aligned their plans for domestic e-reporting requirements with these dates to help to ease the cost of transition. The domestic requirements will include all cross-border transactions.
The phased approach of e-invoicing before e-reporting requirements is something that would be welcomed as it means that data from the e-invoicing platform can be used to generate any national or intra-community reporting requirements.
What Happens Next?
Responses to the consultation paper have been received and are being considered and more detailed discussions are in progress. The overall design of the system to be introduced in Germany will be dependent on the feedback received, and there will be opportunities to exchange ideas between parties over the next few months. Plans will need to be agreed between the different states within Germany.
With a planned launch date of 1st January we would hope that final specifications would be available before the end of the year to allow businesses time to implement the requirements.
It will be an interesting time for businesses as we expect more plans to be announced soon and changes across Europe to be implemented by 2028.
What Do I Need To Do Now?
Until technical specifications have been published, it’s not possible to start preparing to fulfill requirements with confidence. However, if you are planning changes to your ERP systems or accounting software, it would be a good idea to future-proof your systems to include likely data points that will be required.
Tradeshift offers clearance services in multiple countries and will plan to offer the ability to transact in compliance with Germany’s new requirements when they are announced. You can reach out to one of our experts to find out how Tradeshift can support you.
Tradeshift is fully prepared to support your shift to e-invoicing globally. and ensure compliance today and forever. See how.
