Germany is set to implement mandatory e-invoicing in an effort to modernize tax administration processes and combat tax evasion. The new law, approved by the federal government, mandates the use of electronic invoices for domestic business-to-business sales starting in January 2027 for companies with turnovers exceeding €800,000. The move aligns with the EU's proposal to adopt the European e-invoicing standard EN 16931, with a phased approach to implementation. Additionally, the law doesn't include an obligation to report data to the tax administration, focusing solely on the formats allowed for electronic invoices and the conditions for issuing and receiving them.
Key Takeaways
- Governments globally are adopting mandatory e-invoicing regulations to modernize tax administration processes and combat tax evasion.
- Germany received authorization from the EU Council to introduce regulations making the use of electronic invoices obligatory.
- The new law mandates the issuance of electronic invoices in domestic B2B sales, commencing in January 2027 for companies with a turnover exceeding €800,000, and in January 2028 for companies with turnovers below €800,000.
- The Growth Opportunities Act highlights the format of the invoice and distinguishes between electronic invoices compliant with the EU standard EN 16931 and "other invoices."
- The e-invoicing obligation will roll out gradually from 2025 to 2028, aiming to make the transition smoother for businesses.
News Content
Germany is set to implement mandatory e-invoicing as part of efforts to modernize tax administration and combat tax evasion. This move follows a global trend towards digitalizing tax processes. The new law mandates the use of electronic invoices for domestic business-to-business (B2B) sales, aligning with the European e-invoicing standard EN 16931. The gradual implementation from 2025 to 2028 allows businesses time to adapt to the new rules.
The Growth Opportunities Act aims to foster business growth, simplify taxes, and ensure tax fairness by mandating the use of e-invoicing. Germany's unique approach focuses on the formats allowed for electronic invoices and the conditions for issuing and receiving them, rather than specifying how invoices should be exchanged and reported. This phased approach aims to make the transition smoother and enable businesses to comply more easily.
The move reflects a global trend towards digitalizing tax processes and tax administration systems. It's worth noting that businesses will need to be equipped to receive structured electronic invoices adhering to the EN 16931 standard from January 1, 2025, with the obligation to issue electronic invoices for all businesses set to begin in 2028.
Analysis
Germany's decision to mandate e-invoicing is driven by the need to modernize tax administration and combat tax evasion. The move aligns with the global trend of digitalizing tax processes and aims to foster business growth, simplify taxes, and ensure tax fairness. In the short term, businesses will need to adapt to the new e-invoicing regulations, while in the long term, it may streamline tax processes and reduce instances of tax fraud. This phased approach to implementation from 2025 to 2028 aims to smoothen the transition and enable easier compliance for businesses. The global trend towards digitalizing tax processes suggests that more countries may follow suit, leading to widespread adoption of e-invoicing in the future.
Do You Know?
-
Mandatory e-invoicing in Germany:
- Germany is implementing mandatory e-invoicing to modernize tax administration and combat tax evasion.
- The new law mandates the use of electronic invoices for domestic business-to-business sales, aligning with the European e-invoicing standard EN 16931, with gradual implementation from 2025 to 2028.
-
Growth Opportunities Act and e-invoicing:
- The Growth Opportunities Act in Germany aims to foster business growth, simplify taxes, and ensure tax fairness by mandating the use of e-invoicing.
- The law focuses on the formats allowed for electronic invoices and the conditions for issuing and receiving them, rather than specifying how invoices should be exchanged and reported.
-
Global trend in digitalizing tax processes:
- The move in Germany reflects a global trend towards digitalizing tax processes and tax administration systems.
- Businesses will need to be equipped to receive structured electronic invoices adhering to the EN 16931 standard from January 1, 2025, with the obligation to issue electronic invoices for all businesses set to begin in 2028.