The Federal Ministry of Finance is phasing out PDF and paper invoices for (almost) all B2B transactions

The draft bill (TRAFFIQX) presented here is part of the federal government’s efforts to strengthen growth opportunities in the German economy, promote investment in Germany as a business location, support innovation and digital transformation, and make the tax system fundamentally simpler and fairer. The implementation of the “Growth Opportunities Act” now being presented is thus also in line with the EU’s ViDA initiative and the increasing use of CTC (Continuous Transaction Control) models to successfully combat large-scale VAT fraud throughout Europe.

To ensure Germany does not fall behind digitally, the Federal Ministry has put together a whole package of measures designed to make the European Union’s largest economy digitally future-proof (and thus significantly more attractive to businesses) in what amounts to a “quick-fix” approach.

The catalog of measures from the nearly 280-page draft Growth Opportunities Act includes, among numerous other areas, five far-reaching changes for B2B invoice exchange—whether digital or (still) paper-based:

Mandatory eInvoice: Starting January 1, 2025, all B2B receivers must not only be able to receive eInvoicing in accordance with the requirements of EU Directive 2014/55/EU, but also archive it electronically (and ideally perform downstream processing of the data sets). Rejecting an electronically transmitted data set that complies with the EU standard EN 16931, however, is not permitted.

Only a few exceptions: These obligations do not apply to invoices under 250 euros and travel tickets.

The end of paper invoices: Starting in 2025, paper invoices will lose their priority over eInvoicing, which will become the new “best practice.” The receiver’s consent to receive electronic invoices in accordance with the aforementioned EU directive is no longer mandatory—instead, delivery in all “other” formats such as PDF or other digital formats like EDI/EDIFACT is only possible with the receiver’s consent. Only paper invoices remain unaffected by this.

Transition period for “other” invoice formats: Until the end of 2025, other digital invoice formats are also permitted, provided the receiver consents. Starting in 2026, “standard” PDF and paper invoices will no longer be permitted. For all other “other” digital formats, however, there is a final “grace period” until the end of 2027. After that, only electronic B2B invoices in EU-compliant formats such as (currently) X-Rechnungen or ZUGFeRD 2.X will be allowed.

Possible “special treatment” for EDI: The current draft bill suggests a certain degree of grandfathering—which was also discussed with the attending BMF representatives at this year’s eInvoice Summit—for the EDI process, which is currently widespread in industry—at least for the next three and a half years.

However, it remains unclear for the time being how EU-compliant invoice data formats via EDI (which may be in place by the deadline) will be handled. This is because it is not yet clear which transmission channels will ultimately be permitted to implement the planned digital VAT reporting system based on electronic invoice exchange in Germany starting in 2028. In this regard, the draft merely refers to the “introduction of the reporting system,” presumably leaving some leeway and discretion for later clarification.

However, one thing is already clear today: As soon as the second “phase” of the planned electronic reporting system goes live in Germany, simply sending EU-compliant eInvoicing formats WITHOUT a corresponding platform connection will no longer suffice. Or to put it another way: By the end of 2027 at the latest, every company in Germany must be connected to a government or private-sector eInvoicing platform.

BMF is stepping on the gas with the timeline

Following the planned hearings and votes in the Bundestag and Bundesrat, the law is expected to be published as early as the beginning of 2024. No wonder, because time is indeed of the essence if the self-proclaimed digitalization coalition of the SPD, FDP, and Alliance 90/The Greens wants to achieve its goals for implementing a digital reporting system in Germany in time for the Europe-wide deadline of January 1, 2028—and thereby gain control over the estimated tens of billions of euros in unpaid sales tax that have so far slipped past the tax authorities year after year.

No matter what formats and transmission channels will be required in the future for the tax-compliant, legally compliant, fast, environmentally friendly, and secure exchange of invoice data: With the TRAFFIQX network, you—as both sender and receiver—are always on the safe side.