News from Brussels

Authorization to introduce e-invoicing

Germany applied for approval from the EU Commission last year to introduce mandatory electronic invoicing for sales between tax-paying businesses based in Germany (B2B transactions) starting from January 1, 2025. The primary objective of this measure is to combat tax fraud and reduce the so-called “VAT gap” in tax revenues. The EU Commission has now granted approval to this request with a proposal for an implementing decision by the Council dated June 23, 2023.

In its application to the EU Commission, Germany specifically argued that the introduction of mandatory electronic invoicing would not impose a significant financial burden on businesses. The elimination of paper invoices would lead to long-term savings, primarily by eliminating costs associated with the issuance, delivery, processing, and storage of paper invoices.

The extent to which this is true and the necessary conditions to ensure that electronic invoicing brings the desired benefits for businesses depend crucially on the detailed design of the regulations. This is the main focus of Expert Committee III of the IDSt, which has put forth the following demands in several statements:

• The definition of a realistic timetable to establish the technical framework before a 12-month testing phase should be implemented
• Immediate commencement of standardization for the “Requirements for Secure Transmission” that private e-invoicing platforms must meet in the future
• The German government’s efforts at the Union level to ensure that the intended amendment of Regulation (EU) 904/2010 regarding the cooperation of administrative authorities in the field of value-added tax, particularly the changes to Articles 24f and subsequent ones, are adopted by December 31, 2023
• Prompt clarification is needed on whether the requirements for secure transmission apply solely to the transmission of reporting data from e-invoicing platforms to the government portal (receiving portal) or also to the exchange of invoices between e-invoicing platforms (if necessary, small businesses should be enabled to receive structured invoices by providing them with free software and possibly hardware)
• Simultaneous introduction of mandatory e-invoicing for all companies regardless of their size (“Big Bang approach”) on both the invoicing sender and recipient side
• It is determined that the principles for proper accounting of computerized systems (GoBD) requirements shall remain unaffected in dealing with both existing and new invoice formats. This enables even small businesses to receive structured invoices via email
• no differentiation in the mandatory e-invoicing based on the amount of the invoice

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