Dear Sir or Madam, Dear clients,

We are now all used to receive invoices in PDF format or sending them by ourselves. The planned obligation to issue e-invoices may just be the next logical step in terms of ongoing digitalization. But what happens if we tell you that an invoice in PDF format does not fulfil the requirement for an e-invoice? What is the ViDA initiative all about and are private individuals also affected by the obligations?

In the following, we will give you an overview of the planned changes and the next steps so that you can look forward to the changeover with peace of mind.

The most important key points:

1. What is changing?

Electronic invoices will be mandatory for companies in the future. An electronic invoice, or "e-invoice" for short, is an invoice that consists of a structured, electronic format and enables electronic processing. What format must e-invoices have?

In order to facilitate the compatibility and exchange of electronic invoices, a standardized format is prescribed. The format requirements are met, for example, by XStandard or the ZUGFeRD format. This should help to ensure that systems from different providers can communicate with each other without any problems. In principle, however, the wording for the format to be selected is open to all technologies, so that other electronic invoice formats might be also possible.

A PDF invoice sent by e-mail is therefore not considered an e-invoice!

Incidentally, the e-invoice only represents a structured data record. This means that it is not visualized and therefore not readable in the proper meaning.

2. Who is affected by the obligation?

From 1 January 2025, it will be mandatory for companies to prepare and send electronic invoices. The changes only apply to business relationships between business persons (B2B - business-to-business) However, this is only applicable if both, the supplier and the recipient of the service, are domiciled in Germany. If the recipient of the service is a private person, an e-invoice is therefore not obligatory.

It is important to note that, as things stand at present, landlords who have opted for VAT-liable letting would also be affected, for example. The rental agreement, which could previously be used as an invoice, would then no longer fulfil the requirements for a proper invoice.

3. Are there any exceptions?

Exemptions for transmission in e-invoice format apply to small-value invoices (≤ EUR 250), tickets and transactions that are tax-exempt in accordance with Section 4 No. 8-29 of the VAT Act.

4. Are there transition periods?

In order to give companies sufficient time for the changeover, transitional periods are provided for the obligation to issue invoices electronically:

5. What applies to invoice recipients?

Companies must be able to receive and process e-invoices from 1 January 2025. Thereby, no transitional periods are applicable. This also applies regardless of whether the company itself issues e-invoices from 2025.

The obligation to receive and process e-invoices also applies to residential landlords, operators of photovoltaic systems and small businesses. Entrepreneurs such as doctors, for example, who only provide VAT-free services, must also be able to receive and process e-invoices in future.

The only exceptions are private individuals. In theory, they will even need to consent to electronic invoicing in order to receive them.

Outlook:

The introduction of a transaction-based reporting system is planned, which is intended to replace the current "recapitulative statement". This so-called ViDA initiative of the European Commission should come into force from 2028, although a postponement to 2030 or even 2032 is currently being discussed. "ViDA" stands for VAT in the Digital Age.

What does this mean for you?

The preparation and sending of e-invoices will be mandatory in future. The obligation to receive and process e-invoices already exists from 1^st January 2025. The extent to which this will also require you to make changes depends on your individual situation. In any case, we recommend that you check in good time whether your invoicing program can create e-invoices. You should also check whether you can receive e-invoices and whether your accounting software can process e-invoices.

If you see a need for action or advice, please contact us - we will be happy to support you!

Kind regards