Tungsten Automation is closely following the impending January 2025 e-invoice receipt obligations in Germany further to our previous post. As a reminder: from 1 January 2025, German businesses must accept invoices that comply with, or are interoperable with, the European e-invoicing standard, the 16931. Buyer consent is required for all other invoices that do not comply with the European e-invoicing standard.

Germany has published draft regulations pertaining to both the January 2025 obligations and the subsequent e-invoicing mandate obligations, which will commence from 1 January 2027. The draft regulation covers the following topics:

• Invoice formats and obligations from 1 January 2025
• The legislative progress concerning the Growth Opportunities Act
• E-invoice transmission methods
• Invoice storage
• Input VAT considerations. 

Tungsten Automation has analysed the draft regulations. The German government is expected to provide a final version of the regulations in Q4. Tungsten Automation is currently evaluating how it will support the January 2025 obligations based on the draft regulations and will communicate to this effect with our German market shortly.

The Ukraine – Russia conflict imposed marked pressure on gas and energy prices, both in Europe and globally. In turn, multiple EU governments were obligated to offer concessions on gas and electricity VAT rates, to render affordable prices for consumers.

While it is an overstatement to say that gas prices have returned to their original values prior to the conflict, there is evidence to suggest that gas and electricity prices are stabilising. This has had a direct correlation with fiscal policies that counties deploy and is a sharp illustration of the measure significant global affairs hold on a constantly shifting tax landscape.

Germany has also been assessing its VAT rates in light of this evolution. From 1 April 2024, the standard VAT rate of 19% will be applied to gas and electricity, in line with rates prior to the conflict, up from the 7% VAT rate that was introduced as a consequence of the conflict.

Germany is a compliant territory for Tungsten Automation, and our e-invoicing solution supports all valid VAT rates in the country.

Germany has finally approved the Growth Opportunities Act, which outlines the schedule for Business-to-Business (B2B) e-invoicing in the country. This has followed months of uncertainty, as both the Upper and Lower Parliament Houses failed to reach consensus on a final vision for e-invoicing in Germany.

Despite other key territories taking prominence in the e-invoicing community in recent months, such as Romania, Malaysia and Poland, Germany has propagated an ambitious timeline, with e-invoicing receipt obligations set to take effect from 1 January 2025. From this date, German businesses must have the capability to receive e-invoices which confirm to the European standard, the EN16931.

In terms of a full, comprehensive timetable:

• January 2025: E-invoice receipt obligations commence, with businesses obligated to accept invoices in accordance with the European norm. Buyer consent will be required for all other invoice formats. Limited exceptions apply, including invoices for under 250 Euros and specific tickets. German taxpayers may voluntarily issue e-invoices from this point.
• January 2025 - 31 December 2026: Paper is still permitted, as well as e-invoices that do not comply with the EU norm. However, paper invoices no longer have priority.
• January 2027: Mandatory e-invoicing for companies with a turnover of over 800,000 Euros.
• January 2028: Mandatory e-invoicing for remaining taxpayers.

Tungsten Automation is acutely aware the January 2025 is impending, and our preliminary analysis has already unearthed some outstanding, critical questions. Notably, while the mandate enforces an invoice format that complies with the European norm, the method of transmission has not. We are awaiting clarification of this, alongside other elements of the process, including if and how the current established Business-to-Government (B2G) infrastructure will influence Germany’s B2B e-invoicing trajectory.

Tungsten Automation will prioritise an analysis of further information provided by the German government once published given the deadline, and we are urgently assessing how we can assist our German market considering these new obligations.

Last month, Tungsten Automation communicated that the Bundesrat (Parliament upper House) and Bundestag (Parliament lower House) could not reach consensus on the e-invoicing trajectory Germany would adopt, specifically with regard to the Growth Opportunities Act, which endorses B2B e-invoicing in Germany.

Contentious points were referred to the Mediation Committee of the Bundestag and Bundesrat, with discussions set to resume on 21 February 2024.

Currently, e-invoicing receipt obligations are scheduled to commence in January 2025. A further timeline confirming subsequent obligations for German taxpayers can be accessed here. Tungsten Automation is aware that the 2025 obligation is impending. For this reason, we are very closely monitoring the outcome of these discussions, which we hope will outline the e-invoicing curvature in Germany.

The German government is currently occupied planning for its upcoming Business-to-Business (B2B) e-invoicing mandate. Presently, obligations for invoice receipt are expected to take place in January 2025, although the date has not yet been set in stone. Germany is also in the advanced stages of implementing its Business-to-Government (B2G) e-invoicing initiative, which already has an established platform in the country.

It is without question that e-invoicing in Germany is expanding. Further to this, the German tax authorities are responding to the need for additional taxpayer material which can supplement taxpayer awareness around e-invoicing, and compliance obligations pertaining to it.

The Federal Ministry of the Interior and Community has published some generic FAQs on e-invoicing. This includes answers relating to content and format e-invoicing requirements, as well as general information concerning the e-invoicing process.

The FAQs can be accessed here.

More generally, Tungsten Automation is closely following movements concerning Germany’s B2B e-invoicing mandate. You can read more about that here.

Environmental, Social and Governance (ESG) taxes have seen an exponential growth in the past four years, alongside increasing awareness of ecological and conservation agendas. Alongside e-invoicing mandates, Kofax has been monitoring the ESG landscape in Europe and beyond. Today, it forms a part of our wider solution, and Kofax supports plastic tax initiatives in the United Kingdom and Spain today.

Germany has also been considering an imposition of the plastic tax. The levy which was to be enforced on the use of single-use plastic tax in Germany will now, however, be delayed to 1 January 2025. The initiative, referred to as EWKFondG, is Germany’s take on the EU Single-Use Plastic Directive, which is in the process of being translated into German domestic legislation.

The tax will be imposed on specific items, including containers, cups and drink holders, wet wipes and bags and will be charged on a per kilogram basis, which provides it with a similar infrastructure to plastic taxes operational today. Businesses must report annually on impacted products and calculate tax payable.

Kofax will consider its obligations in respect of the tax.

Kofax is also currently occupied following the upcoming B2B e-invoicing mandate in Germany. You can read more about that here.

While Business-to-Business (B2B) e-invoicing has been dominating headlines recently in Germany, it is important to remember that Germany is currently also in the process of fostering its B2G e-invoicing initiative.

B2G obligations in Germany operate on a federal level, with an increasing number of federal states being tasked with B2G obligations incrementally.

Rhineland-Palatinate is the latest state where e-invoicing obligations have transpired, where B2G e-invoicing has been mandatory from 1 January 2024.

The state of Hessen is expected to follow next, with a projected date of 1 April 2024.

Germany is also undertaking planning for the execution of its upcoming Business-to-Business (B2B) e-invoicing mandate. Kofax is following this closely. You can read more about this here.

Kofax has closely followed the progress of the Growth Opportunities Act in Germany, which sets out Germany’s proposed timeline for e-invoicing.

The German Federal Government has now rejected the timeframes outlined in the draft e-invoicing law.

Presently, it is expected that e-invoicing in Germany will follow the following trajectory:

• All German businesses must have the capability to receive e-invoices from 1 January 2025
• Paper invoices will be accepted until the end of 2026
• Most German companies will be subject to e-invoicing obligations from 2027, with companies falling under the definition of small companies commencing from 2028.

The German Upper House rejection of this schedule means that once again, these timeframes have been thrown into doubt.

The Federal States have now referred the matter to the Mediation Committee of the Bundesrat and Bundestag for revision.

Germany is a critical market for Kofax. We are closely following e-invoicing mandate requirements, with a view to determining the mandate inception date, e-invoicing model and scope.

While countries globally are now sensing greater security from the effects of the pandemic, the adjustment process pertaining to fiscal stability, however, has been slow to come for some EU Member States. While the overall objective will have been to restore an economic stability that mirrors pre-pandemic norms, this is only now becoming more discernible in the fiscal measures that countries deploy.

From 1 January 2024, Germany will raise the VAT rate on restaurant and catering services back to its original standard rate of 19%, up from the temporary rate of 7%, in a bid to obtain parity with pre-pandemic fiscal measures.

Germany is a compliant territory for Kofax. Kofax’s e-invoicing solution supports all valid VAT rates in  the country, including both the 7% and 19% VAT rates which are currently effective in the country.

The German government has also released some significant updates regarding its anticipated e-invoicing mandate, particularly relating to its schedule for e-invoicing implementation. You can read more about this here.

Germany’s mandate inception date has always been subject to revision, fluctuating between a suggested 2025 or 2026 start date. The divisions regarding the country’s B2B e-invoicing commencement date are now starting to become more visible.

Last month, Kofax communicated that the German Ministry of Finance, the BMF, were presenting some further information to the German Parliament, proposing that German businesses possess the capability to receive e-invoices from 1 January 2025.

Germany’s current proposed timeline, in line with the current Tax Bill, is expected to follow the following trajectory:

• January 2025: E-invoicing (pertaining to e-invoice exchange between suppliers and buyers) is optional.
• January 2026: Taxpayers with an annual turnover exceeding 800,000 Euros must adhere to e-invoicing obligations.
• 1 January 2027: E-invoicing obligations extend to small businesses.

In a marked contrast, the German Bundesrat is proposing to delay e-invoicing for all business yet further, to January 2027. The Bundersat is a different institutional body to the BMF; it represents all German Federal States on a legislative level, and it will be tasked with reviewing the e-invoicing law by the end of the year.

The German Bundersat overwhelmingly supports the e-invoicing initiative, but, in addition to the timeframes, holds some concerns around the process, particularly relating to the admissibility of specific invoice formats and adherence to a common e-invoicing standard. Furthermore, representing states on Federal level, the Bundersat will be acutely aware of the need for all 16 states to adjust to the e-invoicing regulations.

Further information on the Bundersat’s e-invoicing reasoning can be accessed below:

https://www.bundesrat.de/SharedDocs/drucksachen/2023/0401-0500/433-23(B).pdf;jsessionid=5417585DF8CB195A7F7194E1E4A0096C.live542?__blob=publicationFile&v=1

Germany is a significant and compliant territory for Kofax, and the confirmation of Germany’s e-invoicing mandate inception will be critical for Kofax to commence its e-invoicing strategy in Germany. Kofax is closely monitoring progress in respect of the start date, as well as more defined details around Germany’s e-invoicing model.

Kofax’s recent update indicated that Germany’s B2B e-invoicing mandate had been set for January 2026. While January 2026 is still (currently) the confirmed date for which Germany’s e-invoicing obligations come into effect in their entirety, closer inspection of the Germany’s draft Growth Opportunities Act reveals that e-invoicing obligations, at least partially, come into effect earlier, from January 2025. This more clearly came to light because of further documentation that the German Federal Ministry of Finance’s (MoF) intends to present to Parliament, to clarify some outstanding questions concerning the mandate.

Amongst the most critical clarifications is the requirement for all domestic businesses to receive e-invoices from 1 January 2025.

This means that while the 1 January 2026 date has been touted widely as the inception date for Germany’s mandate, based on current timelines, preparations for invoice receipt need to commence much earlier, to accommodate a 1 January 2025 initiation date.

In other points, the letter also comments on:

• The admissibility of certain invoice formats, such as XRechnung and ZUGFeRD;
• Phased implementation is advocated, with further detail on this still expected;
• The retention of Electronic Data Interchange (EDI), which has a significant following in Germany.

Germany’s obligations for companies to receive invoices from 1 January 2025 raises as many questions as it answers, as there is no corresponding obligation to issue invoices at this stage. Kofax is analysing the implications of this and how this obligation could be translated to a practical, working solution. 

Germany is a critical compliant market for Kofax. We have analysed the Growth Opportunities Act and are awaiting further direction from the German government concerning the B2B e-invoicing mandate.

Kofax firmly intends to support our German market with their e-invoicing obligations, being mindful that we are yet to see final technical specifications for the market. Once available, we will assess these and confirm our capability to support the mandate.

The pandemic triggered a whole host of VAT changes on a scale previously unseen. Other seismic events, such as Russia-Ukraine conflict, similarly had a significant effect on VAT rates, critically impacting supply chains and particularly impacting the energy sector. This, coupled with inflation, means VAT rates and their recurring assessment has always been an integral part of country fiscal planning.

Germany had initially planned to cease its temporary energy reduction from 19% to 7% on 31 March 2024. However, easing inflation has meant that it is now contemplating reversing the VAT rate to its original rate somewhat earlier, from 31 December 2023.

The VAT rate re-instatement is yet to be confirmed.

Germany is a compliant territory for Kofax, and our e-invoicing solution supports all valid VAT rates in the country today.