Issuance of Invoices According to § 14 VAT Act;

Introduction of Mandatory Electronic Invoicing for Transactions Between Domestic Entrepreneurs Starting January 1, 2025

I. General Information

1. With the Growth Opportunities Act (BGBl. I 2024 No. 108), the regulations for issuing invoices according to § 14 UStG (German VAT Act) for transactions carried out after December 31, 2024, have been revised. A key aspect of the new regulation is the mandatory use of electronic invoices for transactions between domestic businesses (domestic B2B transactions). Exceptions include invoices for services that are tax-exempt according to § 4 Numbers 8 to 29 UStG, invoices for small amounts up to 250 Euros (§ 33 UStDV), and travel tickets (§ 34 UStDV). Closely related to the introduction of mandatory electronic invoicing for domestic B2B transactions is the legally required, subsequent introduction of a system for timely and transaction-specific electronic reporting of certain invoice details to the authorities (reporting system).
2. The new regulation starting January 1, 2025, represents a significant component of the digitalization of business transactions. Therefore, the processes and procedures for creating and processing an electronic invoice at various levels must be digitalized. Additionally, the existing tax regulations must be adapted to these new conditions, while the material legal content of an invoice under VAT law remains unchanged. The tax authorities will take into account the transformation process during the transitional phase supported by transitional provisions (§ 27 Paragraph 38 UStG) in a reasonable manner.

II. Current Legal Situation and Changes Introduced by the Growth Opportunities Act

1. Legal Situation Until December 31, 2024
   
   3. Until December 31, 2024, invoices could already be issued electronically with the recipient’s consent, in addition to paper invoices. For transactions carried out until December 31, 2024, an electronic invoice is defined as a document issued and received in an electronic format (e.g., a PDF document or an email with the required invoice information), according to § 14 Paragraph 1 Sentence 8 UStG in its version until December 31, 2024. The mentioned formats for electronic invoices will only be regularly permissible for domestic business transactions during specific transitional periods (see Rn. 53 to 56).
      
      
2. New Regulations on Mandatory Electronic Invoicing Introduced by the Growth Opportunities Act
   
   2.1 Types of Invoices from January 1, 2025
   
   2.1.1 Electronic Invoice (E-Invoice)
   
   
   4. Starting January 1, 2025, § 14 Paragraph 1 UStG will redefine the concept of an electronic invoice. In the future, an electronic invoice (hereinafter: E-Invoice) will only be considered as such if it is issued, transmitted, and received in a structured electronic format that allows for electronic processing (§ 14 Paragraph 1 Sentence 3 UStG). The structured electronic format of an electronic invoice must either:
   • Comply with the European standard for electronic invoicing and the list of corresponding syntaxes according to Directive 2014/55/EU of the European Parliament and Council of April 16, 2014, on electronic invoicing in public procurement (OJ L 133 of May 6, 2014, p. 1) (§ 14 Paragraph 1 Sentence 6 Number 1 UStG, see also details under Rn. 24 regarding standard EN 16931), orBe agreed upon between the invoice issuer and the invoice recipient. The condition for such an agreement is that the format used enables the correct and complete extraction of the details required by the UStG from the E-Invoice into a format that complies with or is interoperable with standard EN 16931 (§ 14 Paragraph 1 Sentence 6 Number 2 UStG; see also Rn. 29 and 30).
   5. Furthermore, the authenticity of the origin, the integrity of the content, and the readability of the invoice must be ensured. “Readability” in this context means that the XML file must be machine-readable (machine readability). Therefore, the additional creation of a human-readable document is not required. The machine readability of a standardized file also means that it can be displayed in a human-readable form through a visualization tool. However, the additional provision of a human-readable document (e.g., through a hybrid format, see Rn. 26 to 28, or an additional PDF document) is optional.

2.1.2 Other Invoices

6. From January 1, 2025, other invoices will include all paper invoices or electronic formats that do not comply with the requirements of § 14 Paragraph 1 Sentence 6 UStG (different electronic formats). This also includes all non-structured electronic files, such as JPEG or simple PDF files.

2.2 Obligation to Issue Invoices

2.2.1 General

7. A business is obligated to issue an invoice if the transaction is not tax-exempt under § 4 Numbers 8 to 29 UStG:
   a) For a service provided to another business for its enterprise (§ 14 Paragraph 2 Sentence 2 Number 1 UStG),
   b) For a service provided to a legal entity that is not a business (§ 14 Paragraph 2 Sentence 2 Number 2 UStG),
   c) For a taxable supply of goods (§ 3 Paragraph 4 Sentence 1 UStG) or other services related to a property to a recipient other than those mentioned under letter a) or b) (§ 14 Paragraph 2 Sentence 2 Number 3 UStG).
8. The obligation to issue an invoice also applies to services provided to a legally incorporated entity that is not a business.
9. The new version of § 14 Paragraph 2 UStG introduces a distinction between the obligation to issue an E-Invoice (see Rn. 4) and the option to issue other types of invoices (see Rn. 6).
10. The obligation to issue an invoice within six months after the performance of the service remains unchanged for all invoices, regardless of the format used (§ 14 Paragraph 2 Sentence 2 UStG).

2.2.2 Obligation to Issue an E-Invoice

11. For transactions between domestic businesses, an E-Invoice (see Rn. 21 to 30) must generally be issued according to § 14 Paragraph 2 Sentence 2 Number 1, 2nd Clause UStG. Transactions between domestic businesses occur when both the supplying business and the recipient are located within Germany or in one of the territories specified in § 1 Paragraph 3 UStG. The location in Germany or one of the specified territories is determined if the business has its seat, its management, a (VAT) place of business involved in the transaction, or, in the absence of a seat, its residence or habitual abode in one of these areas.
12. In these cases, the issuance of an E-Invoice no longer requires the recipient’s consent; however, this assumes that the recipient has the technical capability to receive an E-Invoice (see Rn. 36 and 53).
13. If at least one of the involved businesses is not located in Germany or in one of the territories specified in § 1 Paragraph 3 UStG, there is no obligation to issue an E-Invoice according to § 14 Paragraph 2 Sentence 2 Number 1, 2nd Clause UStG. In these cases, the invoice to be issued according to § 14 Paragraph 2 Sentence 2 Number 1, 1st Clause UStG may be:

• On paper, or
• With the recipient’s consent, as an E-Invoice or other type of invoice in a different electronic format.

14. The rules for mandatory E-Invoice usage also apply to the issuance of credit notes (§ 14 Paragraph 2 Sentence 5 UStG) and invoices for:

• Transactions where the recipient is liable for VAT (§ 13b UStG),
• Transactions issued by small businesses (§ 19 UStG),
• Transactions subject to the flat-rate taxation for agricultural and forestry businesses (§ 24 UStG),
• Travel services (§ 25 UStG), and
• Transactions where margin taxation (§ 25a UStG) is applied.

These rules also apply if the invoice recipient is a business that is a small business or engaged in agriculture and forestry or only performs tax-exempt activities (e.g., a landlord).

15. For specifics regarding small invoices and travel tickets, see Rn. 19 and 20.

2.2.3 Option to Issue Other Types of Invoices

16. For invoices:

• For a transaction to a legal entity that is not a business, or
• For taxable supplies of goods (§ 3 Paragraph 4 Sentence 1 UStG) or other services related to a property to a recipient other than those mentioned under Rn. 7 Letter a) or b) (non-businesses or businesses for their non-business sector),

an alternative invoice (see Rn. 6) may be issued.

17. In these cases, issuing and transmitting a paper invoice is always permitted under VAT law. However, issuing and transmitting as an E-Invoice or another electronic format is only possible with the recipient’s consent (§ 14 Paragraph 1 Sentence 5 UStG). This consent does not need to be in a specific form and can also be implied (e.g., through an acceptance without objection). The obligation to issue an E-Invoice according to other regulations (e.g., the E-Invoicing Regulation – ERechV) must be observed independently of VAT regulations.
18. If a transaction is conducted for both the business and non-business sectors of a legal entity, the obligation to issue an E-Invoice according to Rn. 7 Letter a) takes precedence.

2.2.4 Small Invoices and Travel Tickets

19. Invoices where the total amount does not exceed 250 Euros (small invoices) and travel tickets issued for the transportation of persons may be issued and transmitted as other types of invoices, deviating from the obligation in § 14 Paragraph 2 Sentence 2 Number 1, 2nd Clause UStG (§ 33 Sentence 4, § 34 Paragraph 1 Sentence 2 UStDV).
20. The simplification under § 33 Sentence 4 UStDV is determined solely by the total amount of the invoice, even if multiple services are invoiced within a single invoice. If the total amount of the invoice exceeds 250 Euros, an E-Invoice must be issued, even if the gross amount of the portion of the services subject to the E-Invoice requirement is less than 250 Euros (e.g., when certain tax-exempt or non-taxable services are also included).

2.3 Permissible Formats for an E-Invoice

21. E-Invoices can be created in either a purely structured format or a hybrid format. A permissible electronic invoice format must ensure that the invoice details required under § 14 Paragraph 4 UStG can be transmitted and extracted electronically. The use of structured invoice formats based on the EN 16931 standard (see Rn. 24) is always permitted. Additionally, under certain conditions, other invoice formats can be used (e.g., EDI procedures according to Article 2 of Recommendation 94/820/EC of October 19, 1994, on the legal aspects of electronic data interchange, OJ L 338 of December 28, 1994, p. 98, see also Rn. 29 and 30). The choice of a permissible format is a civil law issue to be determined solely between the contracting parties.
22. Examples of Permissible National Electronic Invoice Formats

In particular, invoices in the XStandard format (see Rn. 25) and the ZUGFeRD format (see Rn. 26) from Version 2.0.1 onwards generally represent an invoice in a structured electronic format that complies with the European standard for electronic invoicing and the list of corresponding syntaxes according to Directive 2014/55/EU. Invoices in these two formats can meet the new VAT requirements for an E-Invoice after December 31, 2024.

23. Examples of Permissible European Electronic Invoice Formats

The use of electronic invoice formats is not restricted to national formats, provided they comply with the European standard for electronic invoicing and the list of corresponding syntaxes according to Directive 2014/55/EU. For electronic invoicing of domestic B2B transactions, other European invoice formats that adhere to this standard may also be used, such as FatturaPA (Italy) or Factur-X (France).

2.3.1 E-Invoice According to the Requirements of Directive 2014/55/EU of April 16, 2014, in a Purely Structured Electronic Format

24. An E-Invoice is considered compliant with § 14 Paragraph 1 Sentence 6 Number 1 UStG if it meets the requirements of Directive 2014/55/EU of April 16, 2014, on electronic invoicing in public procurement. The requirements of this directive—originally issued for invoicing to public administrations (B2G sector)—have been technically implemented by the CEN (European Committee for Standardization) with the European standard EN 16931. The standard has been adapted to meet the needs of private businesses (B2B sector) and is continuously updated. This E-Invoice is designed as a purely semantic data format, enabling invoice data to be imported directly into processing systems without media disruption. It is based on an XML format, primarily intended for machine processing, and is not suitable for visual inspection by the human eye. However, XML data can be made human-readable through visualization tools.
25. The EN 16931 series of standards specifies the use of the XML structured data format for E-Invoices. In Germany, based on these standards, the XRechnung format has been developed as a purely structured format (as opposed to a hybrid format, see Rn. 26) based on the semantic core model. The XRechnung standard incorporates national specifics and thus represents an acknowledged national implementation of the EN 16931 standard. Besides the core data model, the XRechnung standard also offers an extension (known as Extension XRechnung) to accommodate industry-specific requirements without having to expand the core data model for all users. The VAT-related mandatory details are included in the core data model.

2.3.2 Hybrid Formats

26. In addition to purely structured E-Invoices, hybrid invoice formats can also meet the requirements for an E-Invoice. A hybrid format consists of both a structured data part (e.g., XML file) and a human-readable data part (e.g., PDF document). Both data parts are combined in a single file. For example, the ZUGFeRD format is considered a hybrid invoice format. While the original ZUGFeRD format did not adhere to the EN 16931 standard, version 2.0.1 and later does comply, meaning a ZUGFeRD invoice from this version onward meets the E-Invoice requirements.
27. Invoice data transmitted in a structured electronic format (e.g., XML file) is generally not human-readable but must be converted for readability. Previously, “readability” required the invoice to be legible to the human eye. In hybrid formats, if there is a discrepancy between the electronic information and the human-readable image part, the latter would prevail. With the introduction of mandatory E-Invoicing, this has reversed. “Readable” now refers to the file being machine-readable (see also Rn. 5). In a hybrid format, the XML-based structured data part takes precedence. In cases of discrepancies between the structured data and other information, the structured data prevails over the image file. However, the basic acceptability of a hybrid format remains unchanged.
28. If the image part does not contain any differing invoice information from the structured part as per §§ 14, 14a UStG, the image part is considered an identical duplicate (see also Section 14c.1 Paragraph 4 UStAE). If the image part contains differing invoice information (e.g., due to manipulative changes in the description of services or a different VAT amount), it may represent an additional (alternative) invoice for which the requirements of § 14c UStG must be checked.

2.3.3 Other Formats

29. The structured electronic format of an E-Invoice can also be agreed upon between the invoice issuer and recipient (§ 14 Paragraph 1 Sentence 6 Number 2 UStG), thus deviating from the EN 16931 standard. The condition is that the format allows for the correct and complete extraction of the required VAT information from the E-Invoice into a format that either complies with EN 16931 or is interoperable with it. This provision also allows for the continued use of established electronic invoice formats (e.g., EDI procedures like EDIFACT) beyond the transition periods described in Rn. 54 and 56.
30. “Interoperable” means that the VAT-required information can be converted from the source file (extraction of data from the invoice format used) to the target format (according to EN 16931) without information loss. Information loss occurs if the content or meaning of information changes or becomes unrecognizable.

3. Special Issues

3.1. Scope of an E-Invoice

31. For an E-Invoice to be valid, it must enable electronic processing. This means that all VAT-required details according to §§ 14, 14a UStG must be included in the structured part of the E-Invoice. Regarding the description of services, the details in the structured part must allow for clear identification of the billed service, but supplementary details may be included in an annex integrated into the E-Invoice.

3.2. Transmission and Receipt of E-Invoices

32. The transmission of an E-Invoice must occur electronically. Possible methods include sending via email, providing data through an electronic interface, or enabling download via a (customer) portal.
33. It is permissible for a business to use external service providers for creating or transmitting E-Invoices. In such cases, the issuing business must ensure that the external service provider complies with the formal requirements set out in §§ 14, 14a UStG.
34. It is not detrimental if the E-Invoice file is sent multiple times, provided it is the same invoice and the transmission constitutes a content-identical duplicate (see Section 14c.1 Paragraph 4 UStAE).
35. Transferring the XML file via an external storage medium (e.g., USB stick) does not meet the requirements for electronic transmission and is thus considered an alternative invoice.
36. From January 1, 2025, domestic businesses must be capable of receiving E-Invoices. It is sufficient for the recipient to provide an email inbox. The parties may agree on other electronic transmission methods.
37. If the invoice recipient refuses to accept an E-Invoice or is technically unable to do so, they do not have the right to demand an alternative issuance of a different invoice. In such cases, VAT obligations are considered fulfilled if the E-Invoice has been issued and there is proof of the attempt to transmit it correctly.

3.3. Contracts as Invoices

38. Contracts can be considered invoices if they contain the required details according to § 14 Paragraph 4 UStG. If an E-Invoice is required for a continuous obligation (e.g., rental agreement), it is sufficient if an E-Invoice is issued for the first period of performance, with the underlying contract attached or clearly indicated as a continuous invoice in the content.
39. For continuous obligations, an initial E-Invoice must be issued by the end of the transition period applied by the issuer under § 27 Paragraph 38 UStG. This also applies to continuous obligations established before January 1, 2025.

3.4. Correction

40 The invoice issuer can correct the issued e-invoice. For the correction of an invoice, the same requirements for form and content apply as specified in § 14 UStG, according to § 31 Absatz 5 Satz 3 UStDV. Therefore, the correction of an e-invoice must also be made in the prescribed format (using the appropriate document type). Providing missing or incorrect information in another format is not sufficient. An effective correction will retroactively affect the date of issuance of the original e-invoice, provided other conditions are met (see BMF letter of September 18, 2020, BStBl I p. 976). For VAT deductions from an uncorrected e-invoice, see §§ 45 to 50.

41 In cases of changes to the tax base, it is not necessary to correct the tax amount in the original e-invoice. The obligation to exchange documents in the cases specified in § 17 Absatz 4 UStG remains unaffected.

3.5 Legal Entities under Public Law

42 For the obligation to issue an e-invoice, it does not matter whether the service is provided on a civil-law or public-law basis, as long as a taxable supply or other service is being invoiced. Therefore, legal entities under public law (jPöR) are also subject to the VAT obligation to issue and receive an e-invoice, regardless of any obligation under the ERechV.

43 If a service is partially performed within the scope of the business and partially from the non-economic area of a jPöR, it is not considered a single service but rather two VAT-independent transactions (see also section 15.2c Absatz 4 UStAE). If the service performed within the business is subject to the obligation to issue an e-invoice and these two services are invoiced together, the invoice must be issued as an e-invoice in total.

44 Regardless of the amount of VAT deduction to be claimed, an e-invoice must be issued to a jPöR if the conditions are met. This expressly applies even if the supply is not considered a business expense under § 15 Absatz 1 Satz 2 UStG or the other service is only marginally used for business purposes (e.g., 1.2%).

4. E-Invoice and VAT Deduction

45 If there is an obligation to issue an e-invoice according to § 14 Absatz 2 Satz 2 in conjunction with § 27 Absatz 38 UStG, only such an invoice generally meets the requirements of §§ 14, 14a UStG. A regular invoice does not meet the legal requirements for a proper invoice in these cases.

46 An invoice issuer can rely on the information provided by the recipient regarding whether the recipient is a domestic entrepreneur, provided no contrary information is available.

47 If there was an obligation to issue an e-invoice and instead a regular invoice is issued according to § 14 Absatz 1 Satz 4 UStG, it does not constitute a proper invoice according to §§ 14, 14a UStG. Therefore, the issued invoice does not generally entitle the issuer to a VAT deduction according to § 15 Absatz 1 Satz 1 Nummer 1 UStG.

48 If the invoice issuer was indeed obligated to issue an e-invoice, a regular invoice issued instead can be corrected by issuing an e-invoice according to section 15.2a Absatz 7 UStAE. The e-invoice must explicitly reference the original invoice to indicate that it is a corrected invoice. Such a correction will retroactively affect the date of issuance of the regular invoice, even if the VAT deduction was initially not possible according to § 47.

49 If no correction is made by subsequently issuing an e-invoice, a VAT deduction may still be possible from a regular invoice, provided the tax authorities have all the necessary information to verify the material requirements for VAT deduction (a business provides a service to another business that is subject to VAT and for which VAT has actually been paid). The information contained in a regular invoice can be considered as potential objective evidence for VAT deduction according to section 15.2a Absatz 1a UStAE.

50 Furthermore, the VAT deduction will not be challenged solely because the invoice was issued in the wrong format, provided the recipient could reasonably assume that the issuer was eligible to use the transitional provisions according to § 27 Absatz 38 UStG.

5. Record-Keeping

51 The structured part of an e-invoice must be kept in a manner that maintains its original form and meets the immutability requirements. Machine readability by the tax authorities must be ensured. If additional documents are sent that are relevant for taxation, such as booking notes, these must also be kept in their original form and meet the immutability requirements. For details, see BMF letter of November 28, 2019, BStBl I p. 1269, §§ 131 and 133.

52 Regarding the record-keeping requirement for regular invoices (see § 6), refer to the BMF letter of November 28, 2019, BStBl I p. 1269, §§ 130 ff.

III. Transitional Provisions

53 Various transitional provisions apply to the obligation to issue e-invoices according to § 14 Absatz 1 and 2 UStG, as specified in § 27 Absatz 38 UStG, which allow the issuer to issue a regular invoice under certain conditions.

54 Until the end of the calendar year 2026, an invoice for a transaction performed until then can also be issued and transmitted as a regular invoice (see § 6). The issuance and transmission of a paper invoice will remain VAT-compliant until then. The recipient’s consent to receive the invoice in another electronic format (see § 17) does not require a specific form. It only needs agreement between the issuer and recipient on the format to be used. Consent can be given in the form of a framework agreement (e.g., in general terms and conditions) or implicitly.

55 If the total turnover of the invoice-issuing business was no more than 800,000 euros in the previous calendar year, an invoice can also be issued and transmitted as a regular invoice until the end of the calendar year 2027 for a transaction performed until then. The 800,000-euro limit applies regardless of whether the issuer calculates their turnover according to the accrual basis (§ 16 UStG) or the cash basis (§ 20 UStG). In cases of VAT group taxation, the turnover of the entire group is considered. If the invoice is issued as a credit note (§ 14 Absatz 2 Satz 5 UStG), the total turnover of the credit note issuer is considered. If the invoice is issued by a third party not involved in the supply, the total turnover of the principal is relevant.

56 Until the end of the calendar year 2027, invoice issuance and transmission – subject to the recipient’s consent – can also be done via electronic data interchange (EDI) according to Article 2 of the Commission Recommendation 94/820/EC of October 19, 1994, on the legal aspects of electronic data interchange (OJ L 338 of December 28, 1994, p. 98), if the invoice does not already meet the requirements of § 14 Absatz 1 Satz 6 Nummer 1 or Nummer 2 UStG.

IV. Changes to the VAT Application Decree

57 The VAT Application Decree (UStAE) of October 1, 2010, BStBl I p. 846, will be adjusted by a separate BMF letter to the above statements.

V. Application Regulation

58 The principles outlined in this letter apply to all transactions performed after December 31, 2024. The BMF letter of July 2, 2012, BStBl I p. 726, will be repealed as of December 31, 2024.

Final Provision
This letter will be published in the Federal Tax Gazette Part I.