Germany: Ministry of Finance releases draft regulation for implementing e-invoicing mandate

E-invoicing mandate for domestic B2B transactions will be gradually introduced effective January 1, 2025

E-invoicing mandate for domestic B2B transactions will be gradually introduced

Germany's federal Ministry of Finance on June 14, 2024, published draft guidance on the implementation of the electronic invoicing (e-invoicing) mandate for domestic business-to-business (B2B) transactions, which will be gradually introduced effective January 1, 2025. Read TaxNewsFlash

New e-invoice definition

Starting January 1, 2025, an e-invoice will only be recognized as such if it is sent and received in a specific electronic format that allows electronic processing. This format must either follow the European standard (EN 16931) for e-invoices, or it can be agreed upon by the sender and receiver of the invoice. The chosen format needs to allow for all necessary information to be extracted correctly and completely. The e-invoice must be authentic, its content must remain intact, and it must be readable by machines. While it is not necessary to create a version of the invoice that is readable by humans, it is possible to do so. Any invoices that are in paper form or in electronic formats that do not meet these requirements will be considered as "other invoices." This includes all unstructured electronic files, like JPEG or plain PDF files.

Requirement to issue e-invoices for domestic transactions

Businesses will be required to issue an e-invoice for transactions between them if they are both located in Germany or in areas specified in the German value added tax (VAT) law. In this respect, the recipient will not be required to give their consent for this, but they must have the technical capabilities to receive an e-invoice. If at least one of the business owners involved in the transaction is not located in Germany or in the specified areas, they do not have to issue an e-invoice. In these situations, the business owner can issue the invoice on paper or, with the recipient's consent, as an e-invoice or in another electronic format.

The mandatory use of e-invoices also applies to invoices issued as a credit note, invoices when the recipient owes the tax, invoices from small businesses, invoices for transactions subject to flat-rate taxation for agricultural and forestry businesses, invoices for travel services, and invoices for transactions when differential taxation is applied. This rule also applies if the invoice recipient is a small business owner, a farmer or forester, or only performs tax-exempt transactions.

The draft guidance allows for exceptions to the requirement to issue e-invoices. For invoices involving transactions to a legal entity that is not a taxpayer for VAT purposes, or for taxable work deliveries or other services related to a property to a non-taxpayer for VAT purposes, a different type of invoice can be issued. In these cases, sellers are allowed to issue and send a paper invoice. However, issuing and sending an e-invoice or a different type of invoice in another electronic format is only possible if the recipient agrees. Moreover, if an invoice's total amount does not exceed €250, or if it is a ticket for transporting people, it can always be issued and sent as a different type of invoice. The key factor for this simplification is the total amount of the invoice, even if it includes multiple services.

E-invoicing formats

E-invoices can be made in a purely structured or a hybrid format. A valid e-invoice format needs to allow the mandatory invoice information to be sent and read electronically. Using structured invoice formats that follow the European standard is always allowed. In Germany, the XStandard and the ZUGFeRD format from version 2.0.1 onwards are examples of valid national e-invoice formats that meet the European standard for e-invoicing.

Hybrid formats, like the ZUGFeRD format, are also allowed. A hybrid format has a structured data part (like an XML file) and a human-readable data part (like a PDF document). Both parts are combined into one file.

Invoices can also be issued in other formats that the invoice issuer and recipient agree upon, if the format allows for the correct and complete extraction of the necessary information from the e-invoice into a format that follows or is compatible with the European standard.

For hybrid formats, the data in the XML format is the main part. If there are differences between the structured invoice data and the other information, the data of the structured part is more important than the data of the image file. However, this does not change the fact that a hybrid format is allowed.

Transmission of e-invoices

The transmission of an e-invoice must occur electronically. This could be through email, an electronic interface, or a customer portal for download. Businesses are free to use external service providers to create or transmit e-invoices, but they must ensure these providers comply with the formal requirements of the VAT law.

The draft guidance authorizes businesses to send e-invoice files multiple times, as long as it's the same invoice and the transmission is an identical copy. However, handing over the XML file on an external storage device, like a USB stick, does not meet the requirements for electronic transmission, and is considered a different type of invoice.

Starting January 1, 2025, domestic businesses must be able to receive an e-invoice. Simply providing an email inbox is sufficient for this, but businesses can agree on different electronic transmission methods. If the invoice recipient refuses to accept an e-invoice or is technically unable to do so, they have no right to an alternative invoice. In this case, the invoice issuer's VAT obligations are considered fulfilled if they have issued an e-invoice and made a verifiable effort to transmit it properly.


Taxpayers must store the structured part of an e-invoice in its original form and ensure it meets the requirements for immutability. Taxpayers must also ensure that the tax authorities can evaluate it electronically. If a document that was sent along with the e-invoice contains important records for taxation, such as booking notes, you must also store these in their original form and ensure they meet the requirements for immutability. 

Impact of e-invoicing mandate on right to deduct VAT incurred on expenditures

If a business is required to issue an e-invoice but issues a different type of invoice instead, it's not a proper invoice according to the VAT law. Therefore, the issued invoice doesn't allow the recipient to deduct VAT.

If an invoice issuer was supposed to issue an e-invoice, they can correct a different type of invoice that they issued instead by issuing an e-invoice. The e-invoice must clearly reference the original invoice to show that it's a corrected invoice. This correction takes effect at the time of the issuance of the other invoice, even if the recipient couldn't initially deduct VAT.

If an invoice issuer does not correct an invoice by issuing an e-invoice later, a VAT deduction may still be possible from a different type of invoice. This is the case if the tax authorities have all the necessary information to check the requirements for the VAT deduction. The information in a different type of invoice is considered as possible evidence for the VAT deduction. Lastly, the tax authorities won't object to a VAT deduction just because the invoice was issued in the wrong format. This is the case if the invoice recipient could assume that the invoice issuer could use the transitional regulations according to the VAT Act based on the information they have.

Transitional rules

Different transitional rules apply to the obligation to issue an e-invoice according to the VAT law. Under certain conditions, the invoice issuer can still issue a different type of invoice. However, starting from January 1, 2025, the invoice recipient must be able to receive an e-invoice.

Until the end of 2026, the invoice issuer can still issue and transmit a different type of invoice. They can always issue and transmit a paper invoice for tax purposes until then. The recipient does not need to give their consent in a special form to receive the invoice in a different electronic format. The invoice issuer and recipient just need to agree on the format to use.

If the invoice-issuing business's total gross receipts in the previous calendar year did not exceed €800,000, the business can also issue and transmit a different type of invoice until the end of 2027 for a service performed by then.

Until the end of 2027, with the recipient's consent, the invoice issuer can also issue and transmit an invoice via electronic data interchange (EDI) for a service performed by then. This is the case if the invoice doesn't already meet the requirements of the VAT Act.

Effective January 1, 2028, all businesses in Germany must issue e-invoices.

For further information, contact a KPMG tax professional:

Kathya Capote Peimbert |

Philippe Stephanny |

Ramon Frias |



The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.