BMF publishes new draft Circular on e-invoicing

We summarise below the most important changes compared to the BMF Circular dated 15 October 2024, and further amendments to the VAT Application Decree (UStAE). Information on the content of the Circular dated 15 October 2024 may be found here.

• If an e-invoice does not comply with the permissible format, it qualifies only as an "other invoice" within the meaning of § 14 (1) sentence 4 of the VAT Act (UStG). However, content errors (identified in the validation process as "critical errors", for instance), render an e-invoice invalid. This yields a two-stage invoice verification process: a technical check (performed by a validation tool to verify compliance with the business rules of CEN standard EN 16931 on e-invoice structure) and a content check (to verify that the information is not only present but also correct according to VAT law). The content check must be carried out independently of the technical check.
• The supply description must also be included in the structured part of the e-invoice so that the supply can be clearly and easily verified. Only supplementary information (e.g. detailed time sheets) may be added as attachments. Mere hyperlinks to supplementary information are not permitted.
• Date of supply must also be included in the structured part. The reference "date of supply/delivery note date" is therefore not permitted for e-invoices.
• The provision stating that the regulations on mandatory use of e-invoices also apply to invoices issued by small businesses has been deleted. This adjustment became necessary due to the removal of small businesses from mandatory e-invoicing during the legislative process.
• Reductions in taxable amount under § 17 UStG in the construction sector do not require an invoice correction (which already follows from § 17 (4) UStG if the change does not relate to transactions taxed differently in a given period). However, changes to the scope or content of a supply require an invoice correction in terms of the supply description.
• The provision on retention has been reworded compared to the Circular dated 15 October 2024. This aligns the provision with the BMF Circular dated 14 July 2025 on the Principles of Proper Keeping and Retention of Accounts, Records and Documents in Electronic Form and for Data Access (GoBD). Accordingly, only the structured part of an e-invoice must be retained for eight years unaltered in its original form. The Circular of 14 July 2025 also states that the part of a hybrid e-invoice consisting of human-readable data (e.g. the PDF element of a ZUGFeRD invoice) need only be retained if it contains additional or differing information relevant for tax purposes (e.g. accounting notes). Mere storage and archiving outside a GoBD-compliant data processing system does not constitute a violation of § 14b (1) UStG, nor does it violate integrity of content within the meaning of § 14 (3) (though it may constitute a violation of the General Fiscal Code (AO)).
• If a foreign division of a company established in Germany is involved in a taxable supply, the supply is deemed to have been provided by a company established in Germany. Section 14.1 (4) refers in this respect to Section 13b.11 (1) sentence 7 UStAE.

The BMF draft still leaves some questions open, e.g.:

• Are transactions between German taxable persons subject to the e-invoicing obligation if they are VAT-exempt but have opted to be taxed?
• How should mandatory information such as reference to the reverse charge procedure be provided, and what are the consequences of failing to provide such information?
• With regard to the question of the conditions under which a taxable person is to be deemed resident in Germany (possibly via a fixed establishment), the BMF Circular of 15 October 2024 refers to section 13b.11 (2) sentence 2 UStAE. Under this section, a domestic rented property liable to tax is to be considered a fixed establishment of the owner. However, according to the ECJ's ruling in the Titanium case, this does not apply if there are no own staff on site. The tax authorities have long resisted adapting to the ECJ case law and have chosen not to do so here either, meaning that the reference to Section 13b.11 (2) sentence 2 UStAE remains unchanged.

Author: Nadia Schulte