Looking at the magnitude of the German economy, the Government has been operating meticulously in the last few years, looking at ways to create a business environment that is more efficient, streamlined, and less bureaucratic. This was observed both from the perspective of private and public sectors.
One of the main challenges was reducing the administrative burden, costs, and not-so-efficient modality of invoicing used within the country.
A few years ago, the Federal Ministry of Finance and connected institutions within federal states initiated the digitization procedure regarding invoicing by implementing mandatory usage of the e-invoicing system within public procurement transactions.
The B2G E-Invoicing at the Federal and State levels is still ongoing since not all States have mandated the mandatory usage of e-invoicing in public procurement, as well as not for all commercial entities included in these transactions.
Last November and December, the EU Commission officials prepared a Proposal to amend the EU VAT Directive, which includes changes to Articles 218 and 232. Around the same time, the German Federal Ministry of Finance worked on a proposal for the Commission regarding e-invoicing for business-to-business transactions involving German businesses.
The Council of the European Union adopted the Implementing Decision, which gave the German government the green light to introduce mandatory B2B e-invoicing between businesses established in the country.
Timeline
The Decision shall apply from January 1, 2025, until the earlier of the following dates:
- December 31, 2027, or
- The date from which the Member States should apply any national provisions based on the Council Directive which amends the VAT Directive – by the initiative for the digitalization of VAT, primarily based on the changes of the respectable Articles 218 and 232 of VAT Directive
Aleksandar Delic
1stopVAT Indirect Tax Researcher (Global Content)