Preliminary information on the introduction of the e-bill

The Federal Ministry of Finance has provided initial information on the planned obligation to issue electronic invoices in the B2B sector from 2025.

The Growth Opportunities Act aims to make electronic invoicing (e-invoicing) the standard for deliveries and services to other entrepreneurs from 2025. This plan is based on EU plans and is the first step towards the introduction of a national reporting system for all sales, with which the tax authorities want to combat VAT fraud. However, nothing will initially change for supplies and services to end consumers.

In order to achieve the goal set by the tax authorities for the e-invoice, it must have a structured electronic format that can be processed automatically. It is therefore not only important to have an electronic transmission channel, but also to use the correct electronic format. Pure PDF files, which have been popular as "electronic invoices" to date, will no longer be permitted without further ado from 2025. Even though the law has not yet been passed, the Federal Ministry of Finance has provided advance information on which formats will be recognized for e-invoices in the future and what companies should consider now.

The tax authorities have come to the conclusion that an invoice in accordance with the XStandard or the ZUGFeRD format from version 2.0.1 is an invoice in a structured electronic format that complies with the European standard for electronic invoicing. If the law is passed unchanged on this point, invoices in these two formats would therefore also meet the new VAT requirements for an e-invoice from 2025.

This statement is important because various software solutions already support at least one of the two formats, especially as all invoices to authorities over 1,000 euros have had to be issued as e-invoices in accordance with the XStandard since November 2020. However, for the sake of completeness, the ministry points out that other invoice formats can also meet the legal requirements for an e-invoice. As the e-invoice will initially only be mandatory for domestic transactions, discussions have so far been limited to the most common domestic formats.

In addition, the tax authorities have decided that from the introduction of the mandatory e-invoice, in the case of a hybrid format that combines a structured part with a human-readable part (e.g. PDF file with ZUGFeRD invoice embedded as XML), the structured part will be decisive, unlike previously. In the event of a discrepancy between the two parts, the data from the structured part will then take precedence over the data from the image file. However, this does not change the fundamental permissibility of a hybrid format.

With regard to the EDI procedure, the Ministry is aware of the importance of the procedure for certain areas of the economy. The tax authorities are therefore currently working on a solution to ensure the continued use of EDI procedures under the future legal framework as far as possible. However, it cannot be ruled out at present that technical adjustments will have to be made to certain EDI procedures at a later date with the introduction of the transaction-based reporting system.

According to the draft version of the law, companies can also issue other invoices instead of e-invoices during a transitional period until the end of 2025. For companies whose total turnover in the previous year did not exceed 800,000 euros, this transitional period even applies until the end of 2026. However, the ministry points out that at least the acceptance of an e-invoice will be mandatory for all domestic entrepreneurs from January 1, 2025. As things stand, the transitional regulation only affects the issuing of an invoice. If the invoice issuer decides to use an electronic invoice, the invoice recipient must therefore also accept it.

However, in its statement on the Growth Opportunities Act, the Federal Council has already called for the introduction of e-invoicing to be postponed by two years. In order to give the economy enough time to clarify the many application issues, take into account industry-specific features and adapt business processes and IT systems, the Federal Council therefore wants the receipt of e-invoices to be mandatory from January 1, 2027.

The Bundestag has already extended the general transitional period for the use of other invoices by one year until the end of 2026, albeit with the proviso that the issue of other invoices instead of e-invoices during this period requires the recipient's consent. Following the Federal Council's decision to refer the Growth Opportunities Act to the Mediation Committee at its November meeting, further changes to this regulation are also conceivable. Parliaments are expected to decide on the final date of introduction shortly before the end of the year.