BMF Releases E-Invoicing Regulations Draft Letter

The German Ministry of Finance (BMF) has released regulatory guidance to the general public regarding the German e-invoicing mandate starting on January 1, 2025.

With six months to go, there are still many questions about the practicalities of the mandate. To prepare taxpayers and increase public awareness, the German Ministry of Finance (BMF) published a regulatory draft letter on June 13, 2024.

In the letter, the BMF outlines the regulatory changes introduced by the Growth Opportunities Act (Wachstumschancengesetz) and offers more practical guidance on what this means for businesses in Germany.

The draft letter contains guidance on the following topics:

• Regulations introduced by the Growth Opportunities Act

• Invoice formats (electronic/hybrid/other)

• Issuance and reception of e-invoices

• Storage of e-invoices

• Input VAT deductions

• Transitional provisions

Key Takeaways

Some main takeaways from the draft letter concern what is expected of German businesses with the introduction of the mandate. The German mandate starts on January 1, 2025, with a requirement for businesses to have the capability to receive e-invoices that are compliant with or interoperable with EN 16931. The requirement for mandatory issuance will be introduced in phases during 2027 and 2028. Initially, it will be sufficient to provide an email address to meet the requirement for receiving capabilities. Parties may also decide on other methods of distributing the e-invoice.

The BMF provides additional clarifications on what counts as a compliant distribution of an e-invoice under the mandate. The e-invoice must be distributed electronically (e.g., via email, electronic interface, or downloadable link), meaning you cannot put the e-invoice on a USB stick and send it by carrier pigeon, as was previously theorized to be a compliant solution under current legislation.

There is also information on cases where the customer refuses to accept an e-invoice or lacks the capability to receive one. The draft letter states that in such cases, the customer has no right to an alternative invoice, and the supplier's VAT obligations are considered fulfilled. This does, however, raise the question of whether the initial incentives and penalties of the German mandate will be sufficient to drive change.

The draft letter is expected to be published in its final state in the fourth quarter of 2024.