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April 20, 2023

German Finance Ministry releases discussion draft on pending introduction of e-invoice

  • The German Federal Ministry of Finance sent a long-awaited discussion draft to significant business associations on the introduction of mandatory business-to-business e-invoicing in Germany.
  • The associations are invited to comment until 8 May 2023.
  • The introduction of e-invoice is planned for 1 January 2025.

The German Federal Ministry of Finance (BMF) sent a discussion proposal to the most significant German business associations on 17 April 2023, addressing how sec 14 of the German Value Added Tax (VAT) Act would be amended to introduce mandatory business-to-business (B2B) e-invoicing. The BMF's proposal represents a step toward implementing a nationwide standardized reporting system for the creation, verification and forwarding of e-invoices — a goal enunciated in the November 2021 coalition agreement among the ruling parties in Germany.

The proposed amendment to sec 14 of the German VAT Act foresees that e-invoices must meet the European e-invoice standard CEN 16931. The EU Commission also proposed mandatory use of this standard in its VAT in the Digital Age initiative (ViDA). These changes should make it possible to issue, transmit and receive an e-invoice in a structured electronic format and enable electronic processing. For domestic B2B transactions, the issuance of an e-invoice will be mandatory. In addition, paper and electronic invoices that do not meet the requirements of the new e-invoice will be grouped under the new term "other invoice."

Ultimately, the proposed introduction of mandatory e-invoicing constitutes an early adoption of ViDA, which would implement mandatory e-invoicing from 1 January 2028, but also allows EU Member States to voluntarily introduce mandatory e-invoicing as of 1 January 2024. From 1 January 2028, a transaction-based reporting system for intra-community B2B transactions is also to be introduced. In this transaction-based reporting system, only certain invoice data — not the complete invoices — would be transmitted to the tax authorities. Establishing use of e-invoices is a prerequisite for such a system. Although the current discussion proposal does not address introduction of a transaction-based reporting system, the BMF states in its cover letter to the associations that the aim is to provide a uniform electronic system for transaction-based reporting for both national and cross-border B2B transactions.

In its cover letter, the BMF asks the business associations for their opinion, in particular on the timetable, on providing a temporary exception for small and medium-sized companies and on the need for other exceptions. The associations have until 8 May 2023 to submit corresponding statements.


For additional information with respect to this Alert, please contact the following:

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Hamburg

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Berlin

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


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