The German Federal Ministry of Finance (MoF), on 15 October 2024, finalized its guidance on the issuance mandatory electronic invoices in the business-to-business (B2B) sector. The introduction of mandatory electronic invoicing had been decided at the beginning of the year with passage of the Growth Opportunities Act (Wachstumschancengesetz). The new regulations will apply from 1 January 2025.

The use of electronic invoicing (E-Invoicing) is prescribed from1 January 2025 for certain sales between domestic companies (i.e., B2B). A domestic entrepreneur is, according to regular principles, one who is resident in the country. A domestic branch is also a domestic entrepreneur if it is involved in a relevant sales transaction. However, the MoF intends to also apply the obligation to use E-Invoicing to entrepreneurs based abroad who own and rent out property located in Germany.

The E-Invoice must generally be issued, transmitted and received in a structured electronic format and must enable electronic processing (Section 14 para. 1 UStG n.F.). Certain invoices are exempt, however, including small-amount invoices totaling up to €250 and transport tickets (e.g., train or bus tickets). The electronic format must generally comply with the requirements of Directive 2014/55/EU of 16 April 2014 (so-called CEN format EN 16931; see Section 14 para. 1 sentence 6 UStG n.F.). Transitional arrangements are provided for the invoice issuer, but not for the invoice recipient. Therefore, an entrepreneur receiving an applicable service and invoice must be able to accept and process an electronic invoice beginning 1 January 2025.

The application guidance that the MoF published on 15 October 2024 makes changes and additions to the draft published in June (see EY Global Tax Alert, Germany publishes e-invoicing draft administrative guideline, accepting feedback until 11 July, dated 20 June 2024). Some of the modifications are highlighted below:

• Permissible formats/scope: The MoF comments in its guidance on details of an E-Invoice according to the European standard series EN 16931 (structured electronic format, Section 14 para. 1 sentence 6 no. 1 UStG). Invoices according to the XInvoice standard and the ZUGFeRD format from version 2.0.1. (excluding the profiles MINIMUM and BASIC-WL) are listed as generally permissible invoices in the structured electronic format at the national level. The standards Factur-X (France) and Peppol-BIS Billing are mentioned as examples of permissible European invoice formats. The standard FatturaPA (Italy), which was mentioned in the draft guidance, is no longer mentioned as an example. Regarding contracts that also serve as invoices, the MoF clarifies its statements in the draft guidance of June 2024. According to the financial administration's view, contracts can be considered as invoices if they contain the information required by Section 14, 14a UStG. In these cases, a distinction must be made between the obligation to issue an E-Invoice and the option to issue another type of invoice. If there is an obligation to issue an E-Invoice, the underlying contract can be included as additional information in an attachment contained in the E-Invoice.
• Final invoices for previously issued advance and partial payment invoices: If invoices stating VAT have already been issued for advance or partial payments, a final invoice must normally deduct the VAT amounts. If such a deduction is made, the MoF will not object if a final invoice issued as an E-Invoice up to 31 December 2027 includes an attachment as an unstructured file stating the required details.
• Correction of an invoice: The invoice issuer can correct an issued E-Invoice under the further general conditions (i.e., general rules for invoice corrections). The correction of an E-Invoice must meet the form and content requirements established in Section 14 UStG and must be made in the prescribed form that was to be applied to the original E-Invoice. Transmission of the missing or incorrect information in a different form is not sufficient. If E-Invoicing was not yet mandatory when a supply was invoiced, an invoice correction for the relevant sale can be made without using the new E-Invoice format.

The principles of the MoF's guidance are to be applied to all sales made after 31 December 2024. As the new rules apply by law beginning 1 Jan 2025, the MoF's guidance on the rules is also considered in place as of 1 Jan 2025.