Future of Accounting: Introduction of Mandatory E-Invoicing from 2025
With the passing of the Growth Opportunities Act, the German government has taken a significant step towards combating value-added tax fraud and reducing the VAT gap in the country. A key measure is the introduction of mandatory e-invoicing for domestic B2B transactions starting January 1, 2025. This decision, also endorsed by the Federal Council on March 23, 2024, signifies a turning point in the way business transactions are conducted between companies in Germany.
The introduction of mandatory e-invoicing from the year 2025 entails several crucial aspects that businesses need to consider:
1. Mandatory e-invoicing from 2025: Starting January 1, 2025, domestic B2B transactions must be electronically invoiced. This applies to taxable and tax-obligated transactions between companies.
2. E-invoicing accordingto standard EN 16931:The legal definition of an e-invoice refers to the European standard EN 16931.This standard sets the criteria for electronic invoices, which are met by the already established formats such as ZUGFeRD 2.x and XRechnung.
3. Obligation for all companies: From January 1, 2025, all companies, including small businesses, must be capable of receiving and sending electronic invoices. However, there will be transitional provisions to facilitate the process.
4. Transitional provisions until 2028: Until December 31, 2026, paper invoices can still be sent. After this date, there will be phased requirements for electronic invoicing, depending on the company'sprevious year's turnover in the B2B sector.
5. Exceptions frome-invoicing obligation: Invoices below 250 euros and transport tickets are exemptfrom the e-invoicing requirement.
6. Introduction of areporting system: At a later stage, a reporting system will be implemented to transmit transaction data to the authorities. This will be in line with EU guidelines for cross-border transactions.
Conclusion:
The introduction of mandatory e-invoicing for domestic B2B transactions starting in 2025 marks a significant step in modernizing the tax system and combating tax fraud in Germany. Companies are encouraged to prepare early for these changes to ensure a smooth transition to electronic invoicing and avoid potential penalties. The establishment of uniform standards in accordance with EU regulations will help increase efficiency and transparency in business transactions and enhance the competitiveness of the German market.