BMF (Federal Ministry of Finance) circulates draft letter on e-invoicing on 13 June 2024

The BMF letter is quite comprehensive and sets out the legal principles of e-invoicing, derived from the law.  Details on the legal basis of e-invoicing and the corresponding fields of action described in our previous articles are summarised here. In the following sections, we only cover topics included in the BMF letter that provide new information on questions that have not yet been explicitly clarified.

Here is a brief recap to aid understanding: Unless the invoice issuer takes advantage of the transitional regulations, an e-invoice must be issued if both the supplier and the supply recipient are VAT-taxable persons based in Germany, the supply recipient receives the supply for business purposes, the place of supply for VAT purposes is in Germany, and the supply is VAT-taxable or VAT-exempt in accordance with § 4 Nos. 1-7 UStG (German VAT Code). In principle, the e-invoice must comply with CEN standard EN 16931. If the invoice issuer and recipient agree, a different format can be used if that format is interoperable with this standard or enables the correct and complete extraction of the information into a format that complies with the EN 16931 standard.

Situations in which no e-invoice is required

• Supplies to legal entities that are not VAT-taxable persons, as well as work supplies or services in connection with real estate to non-taxable persons or taxable persons for their non-business purposes. Paper invoices are always permitted here, whereas e-invoices in accordance with the EN 16931 standard or other electronic formats require the recipient’s consent.
• Invoices for small amounts totalling up to EUR 250 can be issued as other invoices (i.e. in paper form or in an electronic format that does not comply with CEN standard EN 16931). All remuneration amounts invoiced in an invoice must be included in the total amount - even those for which there is no e-invoicing obligation. Tickets for personal transportation can always be issued as other invoices.

E-invoicing obligation in special situations

• Self-billing invoices must also be issued as e-invoices.
• The e-invoicing obligation also applies to reverse charge transactions, invoices from and to small businesses, invoices from and to farmers and foresters whose transactions are subject to average rate taxation in accordance with § 24 UStG, invoices for travel services in accordance with § 25 UStG and transactions that are subject to margin taxation in accordance with § 25a UStG. 
• Even if the invoice recipient only carries out VAT-exempt transactions (e.g. landlord of residential property), e-invoices must be issued to this recipient.
• If a transaction is carried out for both the business and the non-business purposes of a legal entity, an e-invoice must be issued.

Permitted formats

• E-invoices can be issued in a completely structured format or a hybrid format.  The use of structured invoice formats based on the CEN standard EN 16931 is always permitted. Other structured formats such as EDI can be considered under certain conditions.
• Which permissible e-invoice format is chosen is a civil law issue that the contracting parties decide among themselves.  
• Not only German formats, but also other European formats that comply with the standard of Directive 2014/55/EU (e.g. The Italian FatturaPA and the French Factur-X) can be considered.
• The German ZUGFeRD format only fulfils the requirements from version 2.0.1 onward.

Content and dispatch of the e-invoice

• If, in the case of a hybrid format, the image part contains information that differs from the structured part, the image part may constitute a (further) other invoice for which the requirements for incorrect/unauthorised VAT in accordance with § 14c UStG must be checked.. If the image part and the structured part are identical, the image part is only a supplemental item with identical content that does not trigger § 14c VAT. The same applies if a file is sent multiple times.
• All the mandatory VAT information must be included in the structured part, especially the correct description of the supply. (Only) additions may be included in the annex.
• The e-invoice can be transmitted, for example, via email, electronic interface, or download from a portal, but not via an external storage medium - the latter can be another invoice, but not an e-invoice.
• For VAT-taxable persons who must enable the receipt of e-invoices, it is sufficient to provide an email address. If they refuse to accept an e-invoice or are technically unable to do so, they are not entitled to an alternative issue.. The issuer's VAT obligations are deemed to have been fulfilled if they can prove that they made sufficient effort to properly transmit the invoice.
• In the case of continuing supplies (e.g. rent), a contract can already be regarded as an invoice if it contains all mandatory information. If an e-invoice must be issued, it is sufficient to issue one for the first partial performance period, to which the contract is attached, or it is clear from the other information included that it is a recurring invoice. An initial e-invoice must be issued before the end of the transitional period applied by the invoice issuer, even for continuing obligations that were established before 1 January 2025.
• Corrections to e-invoices must also be made as e-invoices.

Input VAT deduction

• The invoice issuer can rely on the information provided by the recipient of the supply as to whether the recipient is a domestic VAT-taxable person, provided that the invoice issuer has no information to the contrary.
• If another form of invoice is issued although there was an obligation to issue an e-invoice, the other invoice does not allow an input VAT deduction. Correction by the subsequent issue of an e-invoice has a retroactive effect. If no correction is made, an input VAT deduction from the other invoice can be considered, applying a strict standard, if the tax authorities have all the necessary information.
• If the invoice recipient could assume that the issuer had made use of the transitional rule, the input VAT deduction will not be objected to simply because the invoice was issued in the wrong format.