Deutschland

Bavaria proposal to abolish VAT on all food   Dissimilar to many of its counterparts across the continent, Germany operates a Feudal System, where, for the most part, Feudal States maintain a distinct sense of autonomy in the conducting of their tax affairs. This looks set to change with the introduction of Germany’s B2B e-invoicing mandate.  However, VAT rates are still currently determined on a Federal, rather than nationwide, level. Bavaria is a good example of this, proposing a zero VAT on all basic food products. Its proposal follows the path of nearing countries Polen und Spanien, who have proposed and implemented similar initiatives this year.   The proposal precedes elections in Bavaria, indicating how fiscal policies are linked to wider political agendas, and how fiscal policies can play a pivotal role in influencing resident votes.  Germany is a critical market for Kofax. We are closely following tax rate changes in the country, alongside the upcoming B2B mandate. You can read more about Germany’s e-invoicing mandate here.    

‘Growth Opportunity Act’, including e-invoicing delay Germany’s April 2023 discussion paper had proposed a 1 January 2025 start date for the inception of the country’s B2B e-invoicing mandate.   As is the case with other e-invoicing mandates however, mandate inception dates will always be subject to revision and influenced by externals factors- such as public readiness for the mandate, amongst others.   Germany’s ‘Growth Opportunity Act’ has responded to the concerns raised in the public consultation regarding the inception date and has, for now, re-instated the mandate inception date to 1 January 2026.   In other important timeframes communicated:   

• E-invoicing will still be possible from 1 January 2025, although, in line with current regulations, recipient consent for e-invoicing will be required. However, paper, PDF and other invoice forms will still be permissible in 2025. 
• All structured e-invoice formats, including EDI, will be permitted up to 31 December 2027.  
• From 1 January 2028, structured formats must adhere to the EU common standard. 
• Presently, simplified invoices are expected to be precluded from Germany’s mandate. 

EDI has a robust following in Germany, particularly in the automotive and manufacturing industries. Adherence to the EU standard may accomplish harmonisation- but will be at odds with Germany’s powerful EDI following. It is inevitable that the question of the EU standard will come under scrutiny, especially given the proposed limitations post January 2028.  It is important to note that the ‘Growth Opportunity Act’ is a draft bill only. Kofax is still waiting for the BMF to provide final technical specifications which will provide a definitive reflection of Germany’s mandate.    

Legislative amendments to accommodate e-invoicing The German Ministry of Finance (BMF) April 2023 discussion paper provided a good indication of Germany’s projected e-invoicing model. However, Germany’s legislative divisions have also been working to accommodate the mandate and cement e-invoicing into the country’s legislative framework.   Draft amendments to the country’s Value Added Tax Law, Umsatzsteuergesetz (or UStG) are currently being drafted in Germany, which will provide the critical foundation for establishing e-invoicing in the country.  More specifically within the legislation, the definition of an e-invoice is limited to that which is: 

• issued and received in a structured format, and 
• is compliant with the EU e-invoicing standard, the EN16931.  

The legislative draft amendments therefore align the definition of an e-invoice more robustly with the ideology expressed in the VAT in the Digital Age proposal.   Please refer to this month’s update, ‘Growth Opportunity Act, including e-invoicing delay’ for further information concerning Germany’s e-invoicing timeline.  

European Union Council derogation approval Only a few weeks ago, Kofax’s recent post commented on the European’s Union’s draft proposal to authorise Germany to mandate B2B e-invoicing in the country.   And e-invoicing advancements are developing swiftly. The Council of the European Union has now approved this request, authorising Germany to mandate B2B e-invoicing in the country. The timeframes for approval remain the same as previously outlined in the draft- i.e., from 1 January 2025 to 31 December 2027, or alternatively, when Digital Reporting Requirements for ViDA come into effect.   The EU approval can be located via the link below:  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32023D1551   The derogation approval represents a significant milestone relating to Germany’s e-invoicing trajectory. Germany is a critical market for Kofax, and we are closely monitoring e-invoicing developments in the country.  

Germany – EU derogation to mandate B2B e-invoicing While Germany’s discussion paper published in April 2023 provided a solid foundation regarding its e-invoicing plans, it was notable that the corresponding derogation required to mandate B2B e-invoicing in the country had not yet been granted. The European Commission has now, however, commenced the process to grant Germany permission to mandate B2B e-invoicing in the country, further to Germany’s initial derogation request in November 2022.   The publication of the draft proposal for a Council Implementation Decision which authorises Germany to apply for a derogation to mandate B2B e-invoicing represents a constructive development for Germany in their e-invoicing drive, who have now begun to disclose further details around their mandate.   The draft proposal envisages that Germany would receive a temporary derogation from 1 January 2025 until 31 December 2027 (or conversely, until the VAT in the Digital Age (ViDA) proposal is adopted). The derogation inception date is significant, as it aligns with Germany’s current proposed mandate start date, although we must be cognizant that this is currently in public consultation.   Germany is a compliant territory for Kofax and we are closely monitoring the derogation progression, as well as further details around the e-invoicing mandate itself, which is expected in June / July 2023.   Further information relating to Germany’s derogation can be located below:  https://ec.europa.eu/transparency/documents-register/detail?ref=COM(2023)340&lang=en 

European E-Invoicing Service Providers Association (EESPA) position on German mandate In April 2023, via the publication of a discussion paper, Germany unveiled its plans for an e-invoicing and e-reporting mandate. General consensus surrounding the mandate has been positive, with major organisations are now coming forward in support of Germany’s mandate plans.    The European e-invoicing service providers association, EESPA is one such organisation strongly advocating the 2-tiered e-invoicing and e-reporting approach. In addition, it supports the typical associated measures with e-invoicing, such as reduced frequency of errors, cost-saving measures, automation, etc.    Germany is a critical, compliant territory for Kofax and we are closely monitoring the mandate. We are expecting to hear further information around the mandate from the German tax authorities at the end of June 2023 and will analyse this information once available.      

Introduction of the Einwegkunststofffondsgesetz (plastic tax) As increasing awareness of environmental and conservation issues continues on an upward trajectory, countries are reflecting this consciousness into their own regulatory and legislative frameworks.     Following the path of the Vereinigtes Königreich, Spanien und Polen, who have either already implemented or are in the process of implementing plastic tax initiatives, Germany is the latest country to enact a similar measure. On 15 May 2023, the German government published Einwegkunststofffondsgesetz (otherwise referred to as the Single-Use Plastic Fund Act). As the name suggests, the Act aims to curtail the use of single-use plastic, by imposing a levy on producers, sellers and importers of single-use plastic.    The tax is expected to go live on 1 January 2024, although the first plastic tax declaration is expected in May 2025. This means companies must start collating data on single-use plastic usage from 1 January 2024.     Though superficially united in terms of their aims- to reduce the use of single-use plastic- plastic taxes in different countries operate very differently on a practical level. Plastic taxes may or may not form part of the taxable basis; they may or may not need to be included on an invoice; they can be negotiated between the buyer and seller or must be charged to the buyer, depending on specific country specifications. Today, Kofax can accommodate the UK and Spanish Plastic Tax. We are currently analysing further details in respect of the plastic tax in Germany and will consider our obligations in respect of it.    

B2B e-invoicing discussion paper The e-invoicing trajectory in Germany is gaining pace, in line with its neighbouring European counterparts on the continent. Last month, we commented on Germany’s intention to produce a discussion paper which would incorporate further details in respect of the proposed B2B e-invoicing mandate in the country. The process of producing the discussion paper has now concluded and, while the discussion paper is not yet publicly available, we do now have some indications regarding its content.   The first striking element within the paper is the proposed timeline of Germany’s e-invoicing mandate- which is touted for 1 January 2025- a year sooner than expected, indicating Germany’s intention to expedite e-invoicing in the country. Other elements are perhaps less surprising- especially those which align Germany’s proposed e-invoicing model with the VAT in the Digital Age (ViDA) proposal.   Exact details around the e-invoicing model are as of yet unknown, but it does appear that service providers can act on behalf of buyers and suppliers, with invoices processed via a central government platform. The model also confirms to ViDA standards, by undertaking plausibility and syntax checks on the invoice data, rather than ‘conventional’ clearance, which does not appear to contravene the spirit of the proposal.   Moreover, in line with the ViDA proposal, the structured format is expected to align with the European common standard- the EN16931. Presently, the German solution does not comment explicitly on e-reporting- and so for now we do not expect this to be implemented in tandem with the e-invoicing component of the solution.    By means of a reminder, the German government requested a derogation to mandate e-invoicing in the country in November 2022- one month before the European Commission published the ViDA proposal. It is important to note that derogation has not been granted to mandate e-invoicing in the country. However, the proposed e-invoicing model- which for all intents and purposes seems to have been dictated largely by the ViDA framework- seems to suggest that at least on a surface level, little resistance would be provided to this effect. As the e-invoicing model is envisaged before all the ViDA obligations come into effect (I.e. 1 January 2028), it looks likely that Germany will continue to strive for the derogation. Given that the derogation process is projected to become redundant from 1 January 2024, the European Commission’s response to Germany’s derogation request will be an intriguing one.  Germany has already commenced the process of public consultation with business stakeholders, specifically, select larger German enterprises requesting detailed information around the e-invoicing process, no doubt to sharpen and refine its current plans for e-invoicing implementation.    Germany is a critical market for Tungsten Network. We are closely monitoring further details the German government confirms in respect of the proposed B2B e-invoicing mandate with a view as to how we can best serve our German market.      

Discussion paper for B2B e-invoicing The Bundesministerium der Finanzen announced that they will shortly publish draft details of the proposed domestic B2B e-invoicing solution that will take effect between German businesses.  We are expecting this during April 2023. By means of some background, Germany requested a derogation to mandate e-invoicing in November 2022- just a month before the European Commission published its much-anticipated VAT in the Digital Age (ViDA) proposal.   The discussion paper is, in all likelihood, triggered by the proposal. However, the roots of this may extend back yet further- the new coalition government in Germany had also considered the reduction of the VAT gap via digitisation of its fiscal procedures as far back as 2021.   Finer details around the e-invoicing solution are yet to be revealed, but it does appear in all respects that it will be incumbent on the German tax authorities to produce a model that is ViDA compliant.   Germany is a critical market for Tungsten and we are looking forward to probing Germany’s proposed e-invoicing solution once unveiled.  

Single-use plastic levy Germany is the latest country this month to advance a distinctly environmental agenda, following in the footsteps of the Vereinigtes Königreich und Spanien, and more recently, Scotland, via the Deposit Return Scheme.   Expected in the first quarter of 2025, the legislation in Germany outlines the scope, refunds and penalties associated with such a levy, which, as the name suggests, applies to single-use non-recyclable plastic.  The legislation has passed through the Federal Parliament and is awaiting approval in the Federal Council.  Tungsten will monitor progression of the tax and consider its obligations in respect of the levy.   

Exemption for supplies for victims of Turkey and Syria earthquake While 2022 and the start of 2023 has seen an explosion of fiscal-related policies specifically pertaining to an environmental agenda, fiscal policies intrinsically can also be linked to humanitarian disasters. Most discernibly, we saw this exemplified during the pandemic.    Similarly, we can expect to see countries enact similar policies in respect of the recent earthquake in Turkey and Syria, which has sparked a significant humanitarian disaster in the region. Germany is at the forefront of such policies, and it has announced specific exemptions for victims of the earthquake.    You can read more about the exemptions in Germany’s publication here.  

VAT rate revisions The ongoing inflation crisis has a direct correlation with the VAT rates that countries deploy.   Germany has introduced the following VAT rate revisions: 

• Temporary VAT reduction to 7% on energy supplies- specifically gas supplies, as well as supplies of heat via a heating network, effective 1 October 2022 to 31 March 2024 
• Restaurant and catering services were subject to a reduced rate since the start of the Covid pandemic. The reduced rate of 7% has now been extended until 31 December 2023 
• Subject to certain conditions, certain photovoltaic systems and their main components will be zero-rated from January 2023.  

Such policies serve to illustrate how societal issues and seismic events, such as inflation and the Covid pandemic, dictate VAT rates both in Europe and globally.  Germany is a compliant territory for Tungsten Network and our e-invoicing solution supports all valid VAT rates in the country.    

Tour operator VAT delayed Germany has delayed the implementation of a VAT obligation on non-residents that sell German travel packages to tourists.   This was due to take effect on 1 January 2023 but has been delayed to at least 2024. 

Formal derogation request to mandate e-invoicing Germany is following the lead of multiple European countries and has formally requested the European Commission for a derogation to mandate e-invoicing in the country. A country-wide e-invoicing model has been proposed by the German tax authorities but presently, very little detail is known about the proposed e-invoicing model and how this will operate.  Recent developments regarding the VAT in the Digital Age (ViDA) proposal (please refer to Europe updates) may impact the German e-invoicing mandate. However, it is anticipated, in line with the new regulations, that Germany will adopt the EU standard on e-invoicing (EN 16931).   Germany is a key compliant territory for Tungsten and we are closely monitoring e-invoicing developments in the country, including how the ViDA developments will influence Germany’s e-invoicing mandate.  

Obligation to report income on digital platforms As 2022 draws to a close, a significant observation over the past year has been the number of countries who are imposing obligations to report income on digital platforms.   Germany is the latest country to impose such obligations.   The Finance Committee approved the draft law introduced by the Federal Government to implement Council Directive (EU) 2021/514 of 22 March 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation and modernising tax procedural law.  Please refer to 20/3436 for further details. 

Extension of VAT reduction for hospitality services Due to surging inflation in the country, Germany has extended the VAT reduction on hospitality services to 31 December 2023. The VAT rate for hospitality services was initially reduced from19% to 7% and was due to expire on 31 December 2022. We can expect other countries to adopt similar fiscal measures as inflation continues to have a significant impact on the tax measures countries deploy.

Factur-X – updated version The National Forum for Electronic Invoicing and Electronic Public Procurement (FNFE-MPE) and the Forum Elektronische Rechnung Deutschland (FeRD) have published an updated version of the Factur-X 1.0.06/ZuGFeRD 2.2. Technically, these are identical hybrid formats (PDF invoices with embedded XML). Therefore, the technical specifications are now combined in one uniform document, and are available in English, German and French. The links can be found as follows: https://fnfe-mpe.org/factur-x/factur-x-et-zugferd-2-2/ https://fnfe-mpe.org/factur-x

B2G E-invoicing in German Federal States – update

There have been large strides made in the B2G landscape in the German Federal States.
In the Federal States of Sarre, Baden Wurttemberg and Hamburg, it is now mandatory for suppliers to issue electronic invoices as of 1st January 2022. This excludes direct orders with a value of under 1,000 Euros.
Other states are expected to follow, including West Mecklenburg-Pomerania in 2023, Hesse in 2024 and Rhineland-Palatinate in January 2024.

New Government coalition plans to introduce continuous transactions controls (CTC)

Governments introduce continuous transaction controls (CTC) to more effectively counter tax fraud and increase revenue. As part of introducing CTCs in their mandates, governments often require invoice data to be sent to tax authorities in real-time or require invoices to be cleared by the government before they are paid.

Germany is planning to introduce CTCs to this effect. There are no specific details, but Tungsten will keep up to date with any development around this.

Mehrwertsteuersatz Deutschland: temporäre Mehrwertsteuersenkung wieder aufgehoben

Deutschland senkte im Rahmen der wirtschaftlichen Hilfsmaßnahmen im Juli 2020 die Mehrwertsteuer auf 16 % beim regulären und auf 5 % beim reduzierten Satz. Diese Steuermaßnahme lief am 31. Dezember 2020 wie geplant aus.
Ab 1. Januar 2021 gelten erneut die „alten“ Mehrwertsteuersätze (19 % regulärer und 7 % reduzierter Satz) wie vor Juli 2020. Was das bedeutet:
• Rechnungen für Waren und Dienstleistungen, die nach dem 31. Dezember 2020 geliefert oder bereitgestellt werden, müssen die ursprünglichen Steuersätze enthalten (19 % und 7 %).
• Rechnungen für Waren und Dienstleistungen, die vor dem 1. Januar 2021 geliefert oder bereitgestellt wurden, müssen weiterhin die Mehrwertsteuersätze ab Juli 2020 enthalten (16 % und 5 %).

Click here to learn more about the German mandate.

Germany’s B2G e-invoicing approaches second phase

Deutschland hat seinen Plan für die obligatorische elektronische B2G-Rechnungsstellung vorgestellt. Der April rückt näher – in diesem Monat soll die zweite Phase auf regionaler und kommunaler Ebene in Kraft treten. Tungsten hilft Ihnen gerne weiter. Wir können Ihre Rechnungslieferung der XRechnung durch unsere PEPPOL-Verbindung verbessern.

Click here to learn more about the German mandate.

Deutschland schreibt elektronische B2G-Rechnungstellung vor

Gemäß der EU-Richtlinie 55 zur Mehrwertsteuer müssen alle EU-Behörden elektronische Rechnungen ab dem 27. November 2018 berücksichtigen.

Click here to learn more about the German mandate.