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Navigating Germany's E-Invoicing Landscape: Key Milestones and Compliance Insights
Category: E-invoicing-in-Europe, Posted on: 14/05/2025 , Posted By: Webtel
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Germany is embarking on a significant digital transformation in its invoicing system, with the introduction of mandatory B2B e-invoicing starting January 1, 2025. The initiative aims to modernize VAT reporting, reduce tax fraud, and streamline administrative processes. By mandating e-invoicing, Germany is aligning itself with broader European efforts to promote digitalization in business transactions. This blog provides a detailed overview of the upcoming changes and the steps businesses must take to comply with the new regulations.

What’s Changing?

Started from January 2025, businesses in Germany are required to receive e-invoices that comply with the European standard EN 16931. This marks the beginning of a phased transition to mandatory e-invoicing, with further requirements rolling out in the years to follow. The full implementation, which includes both the reception and issuance of e-invoices in EN 16931-compliant formats, will be completed by January 2028.

Key milestones include:

     January 1, 2025: Businesses must be capable of receiving EN 16931-compliant e-invoices.

     January 1, 2027: Companies with a turnover exceeding €800,000 will no longer be able to issue paper or unstructured invoices like PDFs.

     January 1, 2028: All businesses must fully comply with the e-invoicing mandate, including issuing and receiving structured e-invoices.

The Ministry of Finance (BMF) is at the forefront of issuing regulatory guidance, and platforms like Peppol are gaining traction as tools for efficient e-invoice exchange.

The EN 16931 Standard: The Backbone of E-Invoicing

The EN 16931 standard is the European benchmark for e-invoicing. By adhering to this standard, Germany is ensuring that e-invoices can be processed automatically across different platforms, fostering interoperability and streamlining cross-border trade within Europe.

Key Compliant Formats:

     XRechnung: A format specifically designed for government transactions in Germany.

     Peppol BIS: A common framework used across Europe for the electronic exchange of invoices.

     ZUGFeRD: A hybrid format combining PDF with embedded XML data, which allows for easier adoption while moving towards full compliance.

It is crucial for businesses to ensure that their invoicing systems support these formats to avoid compliance issues in the future.

Exemptions for Small Businesses

Germany has taken a balanced approach by offering exemptions for small businesses, particularly those under the Kleinunternehmerregelung (Small Business Scheme). These businesses, with a turnover of under €25,000, are exempt from issuing EN 16931-compliant e-invoices. However, they must still be able to receive these invoices.

The updated turnover thresholds for small businesses are:

     €25,000 for the previous fiscal year

     €100,000 for the current fiscal year

While these businesses are exempt from issuing e-invoices, they must ensure that their systems can receive structured e-invoices to comply with the regulations. Peppol is a secure, standardized platform that simplifies e-invoice exchange, ensuring compliance with both local and international regulations.

As of January 1, 2025, businesses must be able to receive e-invoices, and while an email address will suffice in the early stages, adopting Peppol is highly recommended for long-term efficiency. Peppol enhances the reliability, accuracy, and automation of e-invoicing, helping businesses streamline their processes and avoid potential compliance risks.

Enforcement and Customer Refusal: A Critical Consideration

The enforcement rules for not complying with the e-invoicing mandate are still being finalized. However, businesses should know that if a customer refuses to accept an e-invoice, the supplier’s VAT obligations will still be considered met. This means businesses don't have to issue paper invoices if a customer refuses an e-invoice. This rule may encourage businesses to adopt e-invoicing systems early, as it reduces the hassle of dealing with disputes over invoice formats.

 

Invoice Retention Times: Adjustments to Archiving

From January 2025, businesses will need to keep e-invoices for eight years instead of ten. This change only applies to e-invoices, while other documents like accounting records still need to be kept for ten years. Businesses should update their archiving systems to store and access e-invoices for the required period.

The Bavarian Model: A Local Approach to E-Invoicing

Bavaria is taking a proactive role in the implementation of e-invoicing by centralizing the e-invoice exchange process through the OZG-RE platform. This platform, set to be fully operational in the first half of 2025, will serve as a one-stop solution for businesses and government authorities, streamlining the invoicing process and reducing administrative overhead.

The Bavarian model may serve as a blueprint for other states in Germany and could play a key role in accelerating the nationwide adoption of e-invoicing.

Implications for Businesses: What You Need to Do

The transition to mandatory e-invoicing presents both challenges and opportunities for businesses. To ensure a smooth transition, businesses should:

     Preparedness: Make sure your systems can receive EN 16931-compliant e-invoices by the deadline.

     Select the Right Format: Choose from compliant formats like XRechnung or Peppol BIS and upgrade your systems if necessary.

     Automate the Process: Consider adopting platforms like Peppol for e-invoice exchange to streamline operations.

     Stay Informed: Keep up with updates from the BMF and other regulatory bodies to ensure compliance with any new developments.

     Small Businesses: Even if exempt from issuing e-invoices, ensure that you can receive them to meet the regulatory requirements.

Open Questions and Areas for Further Research

While the regulatory framework for e-invoicing in Germany is still developing, there are a few areas that need further progress, including:

     Enforcement Details: The exact penalties for non-compliance and how strictly they will be enforced are still unclear.

     Impact on Economic Efficiency: The long-term effects of e-invoicing on VAT collection and overall tax revenue have yet to be fully understood.

     Implementation in Bavaria: The specific details of the OZG-RE platform and its rollout across the state are still being defined.

     Role of Email: It remains to be seen whether email will continue to be a valid method for receiving e-invoices, or if more secure systems will be required.

Conclusion

Germany's mandatory e-invoicing is a big step in digital transformation, aiming to modernize processes and reduce fraud. Businesses need to adopt compliant formats, automate their systems, and stay updated on regulations.

With the right tools, businesses can smoothly transition to e-invoicing and set themselves up for future growth in a digital economy.

As a Peppol member, Webtel is here to help you navigate Germany's e-invoicing requirements. Contact us today to ensure compliance and simplify your invoicing processes.


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