Mandatory e-invoicing since 2025 and transitional periods
With the Wachstumschancengesetz (Growth Opportunities Act), Germany introduced, as of 1 January 2025, an obligation to invoice certain transactions between entrepreneurs established in Germany by means of a structured electronic invoice. This covers taxable transactions that are not exempt from VAT under § 4 nos. 8 to 29 UStG (German Value Added Tax Act).
The introduction of e-invoicing is accompanied by transitional rules. The general transitional rule for issuing and transmitting invoices ends at the close of 31 December 2026. Only for companies whose turnover in 2026 did not exceed EUR 800,000 does § 27 para. 38 UStG provide for an extended transitional rule until 31 December 2027.
The option to issue an e-invoice lies exclusively with the invoice issuer. Irrespective of whether an entrepreneur himself carries out taxable and VAT-liable transactions, he must, since 1 January 2025, be able to receive e-invoices and retain them properly in electronic form.
Basic principles of e-invoicing under the UStG
Mandatory invoice details remain unchanged
The formal invoice content requirements under § 14 para. 4 sentence 1 UStG remain unchanged. The statutorily required information must be included in the structured part of the electronic invoice. Since technical implementation is causing difficulties in parts of practice, the tax authorities have provided for extended transitional and non-objection rules in this respect.
Scope of mandatory e-invoicing
Invoicing by e-invoice is mandatory if a supply taxable in Germany is made by a domestic entrepreneur to another domestic entrepreneur within the meaning of § 14 para. 2 sentence 3 UStG and that supply is not exempt from VAT under § 4 nos. 8 to 29 UStG.
The e-invoice must be created in a structured electronic format in accordance with the EN 16931 series of standards. Both a pure XML file and a hybrid invoice are permissible, for example a ZUGFeRD invoice with a human-readable PDF file and an embedded XML file. ZUGFeRD from version 2.0.1 onward, with the exception of the MINIMUM and BASIC-WL profiles, is based on EN 16931 and is therefore one of the permissible formats.
The invoice must be issued, transmitted, received and archived in this structured format. Electronic further processing must be possible for the recipient of the supply; however, it is not mandatory actually to carry it out.
No additional reporting obligations until 2030
At present, there are no further reporting obligations vis-à-vis the tax authorities. However, additional electronic reporting obligations are to be introduced as of 1 July 2030.
Other invoices and exceptions
Invoices in other formats are deemed to be other invoices. This includes paper invoices as well as electronic invoices without a structured format, such as fax invoices or pure PDF invoices without an integrated XML file.
For supplies performed up to 31 December 2026, entrepreneurs may, by way of derogation from the new statutory requirements, still invoice using another invoice. This corresponds to the general transitional rule under § 27 para. 38 sentence 1 no. 1 UStG. Entrepreneurs whose total turnover in 2026 did not exceed EUR 800,000 may also issue other invoices for supplies up to 31 December 2027, § 27 para. 38 sentence 1 no. 2 UStG.
Small-value invoices up to a total amount of EUR 250 under § 33 UStDV (German VAT Implementation Regulation) and tickets under § 34 UStDV may continue to be issued as other invoices irrespective of the transitional rules. However, where the general requirements for an e-invoice are met, an e-invoice is also possible in these cases. Small entrepreneurs are likewise not required to issue e-invoices for their supplies.
All entrepreneurs must, since 1 January 2025, be able to receive e-invoices and archive them electronically. This also applies to small entrepreneurs and to entrepreneurs who exclusively carry out tax-exempt transactions that preclude input VAT deduction, for example entrepreneurs with exclusively VAT-exempt residential letting or exclusively medical therapeutic activity. The recipient’s consent is not required for this.
Third official BMF letter dated 15 October 2026
Classification of the administrative instruction
The Bundesministerium der Finanzen (BMF, Federal Ministry of Finance) had already commented on the principles of e-invoicing in two officially published letters. The first letter dated 15 October 2024 was published in Bundessteuerblatt 2024 I, page 1320 (BStBl, Federal Tax Gazette) and concerned the introduction of e-invoicing. The second letter dated 15 October 2025, BStBl 2025 I, page 1806, reference III C 2 – S 7287-a/00019/007/243, served to amend the Umsatzsteuer-Anwendungserlass (UStAE, VAT Application Decree).
On 15 October 2026, the BMF published a third official letter with the reference III C 5 – S 7287-a/00019/021/017. It is entitled “Introduction of mandatory electronic invoicing for transactions between domestic entrepreneurs from 1 January 2025 – Supplementary rules” and is published as a PDF on the Federal Ministry of Finance website. NWB-Verlag also confirms the date, reference and the related amendments to the Umsatzsteuer-Anwendungserlass.
The letter summarises key content from previously non-officially published association letters and also contains further provisions. It was preceded in particular by letters dated 23 February 2026, including to the Zentralverband des Deutschen Handwerks, dated 2 July 2026 to the Verband der Automobilindustrie e. V. with reference III C 5 – S 7287-a/00019/015/057, dated 21 July 2026, including to the DIHK, with reference III C 5 – S 7287-a/00019/008/166, and dated 1 September 2026, including to the DIHK, with reference III C 5 – S 7287-a/00019/015/071.
According to the published account, the tax authorities’ official letter dated 15 October 2026 partly falls short of the statements made in the non-officially published association letters. To the extent that those letters addressed individual practical questions relating to e-invoicing, their statements have therefore not been fully incorporated into the official letter.
Individual BMF rules on e-invoicing
Down-payment, advance-payment, interim and final invoices
If down-payment, advance-payment or interim invoices were issued with VAT shown separately, the VAT shown therein must not again be shown separately in the final invoice. It must be taken into account accordingly in the final invoice or deducted openly.
The tax authorities have included the various forms of presentation in sec. 14.8 para. 8 UStAE. Since the open deduction of VAT shown in down-payment invoices cannot technically be reflected in every case in the structured part of the e-invoice, the tax authorities provide for a non-objection rule until 30 June 2030.
Accordingly, the deduction of partial consideration already received under § 14 para. 5 UStG may be made in the structured part as a sum via field BT-113 “Paid amount”. Details of the partial consideration may be included via the free-text field BT-22 “Invoice note”.
Alternatively, the deduction of partial consideration received in a final invoice issued as an e-invoice may be made in an embedded, unstructured annex if that annex meets the requirements under sec. 14.8 para. 8 no. 2 UStAE. The structured part of the e-invoice must then expressly refer to the annex. A corresponding option was already included in the BMF letter dated 15 October 2024, but there with a non-objection period until 31 December 2027.
Obligation to issue an e-invoice
Subject to the further requirements, an obligation to issue an e-invoice generally exists only if the recipient of the supply is an entrepreneur and obtains the supply for his business. The tax authorities clarify that a breach of this obligation will not be objected to if the supplying entrepreneur had no knowledge of the recipient’s status as an entrepreneur and could not have identified it even by exercising the diligence of a prudent merchant.
In mass transactions involving continuing obligations and a mixed customer structure, for example energy supplies by a utility, the administrative view is that clarification at the start of the contract or upon an amendment to the contract is sufficient. Repeated enquiries during the term of the contract are not required.
If the invoice issuer is obliged to issue an e-invoice and instead issues another invoice, the tax authorities do not regard this as an administrative offence under § 26a para. 2 no. 1 UStG.
Mandatory details in the structured part
All mandatory details under § 14 para. 4 sentence 1 UStG and, in special cases, under § 14a UStG must be included in the structured part of the e-invoice. For the allocation of the individual items of information to the designated fields, the tax authorities refer to published mapping tables of the Koordinierungsstelle für IT-Standards and the Forum elektronische Rechnung Deutschland.
Where supply content is extensive, full inclusion in the structured e-invoice is sometimes difficult. In February 2026, the BMF had already stated for construction services that, until 30 June 2030, it will not be objected to if the structured part contains only totals by individual trades, provided that a human-readable annex contains a detailed breakdown according to the bill of quantities and the structured part clearly refers to it.
At the same time, the tax authorities clarified that a mere reference to unstructured annexes or external documents does not meet the requirements for an e-invoice. The structured part must contain the information to an extent that enables the control function of the e-invoice.
The description of the supply must therefore allow clear identification of the invoiced supplies and their VAT treatment. A mere reference to a contract is not sufficient for this purpose. In particular, the structured part should contain the type of supply, scope of supply, substance of the supply and, where applicable, the place of supply with sufficient clarity to enable an abstract determination of the other tax bases and verification of the input VAT deduction.
Additional information, such as a more detailed breakdown of timesheets that is not required for the control function, does not have to be included in the structured part. It may be transmitted in an embedded annex. Embedding a contract is possible, but is not required for VAT law purposes.
E-invoices for construction services
The core data model currently does not yet allow a complete presentation of the construction service performed according to the bill of quantities. The tax authorities therefore do not currently object if, in the structured part of the e-invoice, only the individual trades with the corresponding totals appear as the description of the supply.
The prerequisite is that a human-readable embedded annex contains a detailed breakdown according to the bill of quantities. The structured part must clearly refer to this annex. In addition, the bill of quantities may also be transmitted as a structured file, for example in accordance with the GAEB standard.
Discount agreements, bonuses and cash discounts
If there is an agreement between the supplying entrepreneur and the recipient of the supply on reductions of consideration, such as bonuses, cash discounts or rebates, the invoice must refer to this under § 14 para. 4 no. 7 UStG. This also applies if the amount of the reduction of consideration has not yet been determined.
The BMF clarifies that a general reference to a written agreement on a reduction of consideration will not be objected to. The prerequisite is that the documents relating to the reduction of consideration can be presented within a short time as part of the records under § 22 UStG and can be reviewed easily and clearly. If an agreement made before the invoice was issued changes after issuance, an invoice correction is not required.
This clarification was also incorporated into sec. 14.5 para. 19 sentences 6 and 7 UStAE.
Gross-price invoices
In principle, VAT in an invoice must be calculated on the basis of the net price. The tax amount must be stated to the cent and rounded according to standard commercial practice.
The core data model of the e-invoice currently does not allow a presentation based on a gross amount, for example in the case of the supply of a fixed-price book. If no other interoperable invoice format is used, the tax authorities will not object if, for e-invoices under EN 16931 that are based on gross prices and issued by 31 December 2027, the structured part contains only certain aggregate data instead of a complete description of the supply with individual line items.
In that case, the total amounts of the consideration broken down by tax rates and individual tax exemptions, the respective tax rate and the corresponding tax amount or a reference to the tax exemption are required. In addition, a human-readable embedded annex must contain a proper description of the supply with individual line items from which the totals in the structured part are derived. The structured part must clearly refer to this annex.
Invoice correction and validation
Correction of an e-invoice
If there is an obligation to issue an e-invoice, a correction under § 31 para. 5 UStDV must also be made as an e-invoice. The invoice type for a correction must be used. There is no final technical requirement as to whether the correction is made by replacement, cumulatively or by commercial credit note.
Invoices can generally continue to be corrected, irrespective of whether they are other invoices or e-invoices. In the case of changes in connection with the supply performed, the overall view of the original and corrected invoice must leave no doubt as to the quantity and type of the goods supplied or as to the scope and nature of the other service.
Special notes on certain sectors were not included in the officially published letter. In advance, the BMF had referred, for certain areas, in particular the construction sector, to the so-called red-pencil procedure. Under this procedure, invoices are checked by the invoice recipient or an authorised representative and adjusted by deletions. If the invoice issuer adopts these changes as its own, this has previously been recognised by the tax authorities as an invoice correction, so that no incorrect tax statement under § 14c para. 1 UStG arose for the invoice issuer.
In the course of adapting the UStAE to e-invoicing, this correction option was restricted to other invoices. The BMF confirms that deletions or comparable changes to the original invoice by the recipient of the supply are possible only for other invoices. In the case of electronic invoices, in the BMF’s view, this would lead to the original content being overwritten, as a result of which the overwritten content would no longer be readable.
In such cases, the recipient of the supply may correct the original invoice by means of a credit note. The prerequisite is that the credit note clearly refers to the corrected invoice and that the supplying entrepreneur and the recipient of the supply have agreed that a correction may be made by credit note.
Validation and error categories
Validation of an e-invoice is not a legal requirement for its validity. It serves as an aid for checking compliance with formal requirements and for being able to demonstrate this to the tax authorities.
The BMF will not offer any state validation tool and will not recommend any specific applications. In its letter dated 15 October 2025, the tax authorities had already commented on error categories. That letter distinguishes between format errors, business rule errors and content errors, including in marginal nos. 6a, 6b and 35a and in sec. 14b.1 para. 5 UStAE.
The letter dated 15 October 2026 clarifies once again that this classification is made from a VAT law perspective. A business rule error leads to a content error only if it concerns a mandatory VAT detail.
Therefore, not every error displayed during validation means that the e-invoice is not to be recognised for VAT law purposes. VAT law consequences, in particular for input VAT deduction, may arise if the error concerns a mandatory detail under VAT law.
Public administration and e-invoicing
Public administration is also bound by the principles of e-invoicing insofar as it acts in an entrepreneurial capacity. In addition, obligations to issue invoices in a structured data format may arise for other legal reasons.
This may mean that one provision provides for an option in relation to a particular matter, while another provision in fact restricts that freedom of choice. This concerns, for example, different threshold amounts or transmission channels. In such a case, the stricter requirement is decisive in order to comply with both rules.
If an administrative notice invoices both an entrepreneurial supply and a sovereign, non-entrepreneurial supply, the notice must be issued in the form of an e-invoice. If the VAT invoice is created separately, it must be ensured that VAT is not shown twice, thereby creating an unauthorised tax statement under § 14c para. 2 UStG.
Due to technical restrictions, VAT obligations when issuing an administrative notice that is at the same time an invoice within the meaning of the UStG currently cannot yet be fulfilled, or can be fulfilled only under more difficult conditions. The tax authorities therefore do not object, in the case of notices on public-law charges issued up to 30 June 2030, if these are issued and transmitted as other invoices by way of derogation from the statutory requirements.
Application of the supplementary rules
Subject to the statutory transitional rules under § 27 para. 38 UStG, the principles apply to all transactions performed after 31 December 2024. For input VAT deduction, it will not be objected to if an e-invoice issued by 31 December 2026 complies with the requirements of the first two BMF letters but not with the additional requirements of the letter dated 15 October 2026.
The issuance of an e-invoice may also be deemed fulfilled if the entrepreneur creates an e-invoice and demonstrably endeavours to transmit it properly, for example on the basis of a transmission log. This statement concerns the question of issuance and transmission and does not replace the other statutory requirements for the invoice.
Practical significance for companies
Implementation status after two years
The e-invoicing rules have applied since 2025. Due to the transitional rules, however, implementation in parts of practice has not yet been fully completed. From 2027 at the latest, the e-invoicing obligation will move more strongly into focus for many affected scenarios.
Following the letters dated 15 October 2024 and 15 October 2025, the tax authorities also addressed further questions on 15 October 2026. The new letter provides clarifications at various points, but still leaves individual questions of practical importance open or does not fully take up statements from non-officially published letters.
Other invoice instead of the required e-invoice
A practically important question concerns the recipient’s input VAT deduction if, instead of a legally required e-invoice, only another invoice is issued. In the cases under § 15 para. 1 sentence 1 no. 1 UStG, input VAT deduction generally requires a complete and proper invoice if the supplying entrepreneur owes the VAT for the supply.
For invoices issued up to 31 December 2026, this usually does not cause difficulties because the general transitional rule applies in this respect. If the supplying entrepreneur generated total turnover of no more than EUR 800,000 in 2026, the transitional period is extended until 31 December 2027. In this case, the recipient of the supply does not have to demand special evidence from the supplying entrepreneur; whether the turnover threshold was exceeded is to be assessed by reference to the diligence of a prudent merchant.
After expiry of the transitional rules, a paper invoice or other electronic invoice is generally not a proper invoice if an e-invoice is required. However, in a non-officially published letter dated 21 July 2026, the tax authorities stated that, in individual cases, input VAT deduction may be possible even where an invoice is formally not proper if the invoice shows all the requirements necessary for this.
From the administrative perspective, this question cannot be answered in general terms, but depends on the circumstances of the individual case. For the transitional periods 2025 and 2026, input VAT deduction will generally not be objected to solely because of an incorrect invoice format if, based on the information available to him, the recipient could assume that the invoice issuer was making use of the transitional rule.
Transitional rule under § 27 para. 38 UStG
With regard to the practical implementation of the transitional rule, the official letter dated 15 October 2026 contains no express statement on a further individual question. However, in a non-officially published letter to the energy sector dated 12 October 2026 with reference III C 5 – S 7287-a/00019/015/077, the BMF commented on this.
According to the wording of the statute, an invoice may, until 31 December 2026, be transmitted on paper for a transaction performed after 31 December 2024 and before 1 January 2027, or, with the recipient’s consent, in an electronic format that does not comply with § 14 para. 1 sentence 6 UStG. In the case of successive supplies in particular, for example annual statements for electricity, gas or water, the question arises whether a supply performed by 31 December 2026 may still be invoiced in 2027 by means of another invoice.
In the non-officially published letter, the BMF confirmed the view that an invoice for a transaction performed after 31 December 2024 and before 1 January 2027 may continue to be issued as another invoice even if it is not issued or transmitted until 2027. The reason given is that § 27 para. 38 UStG expressly links the transitional periods to the performance of the transaction and not to the issuance or transmission of the invoice.
This statement is significant for practice and is likely to be relevant accordingly for the extended transitional rule under § 27 para. 38 sentence 1 no. 2 UStG. At the same time, it should be noted that the wording of the statutory provision is viewed critically because it expressly refers to issuance by 31 December 2026. The view taken by the BMF is therefore understandable from a practical perspective, but is in tension with the statutory wording.
Key points at a glance
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The e-invoicing obligation has applied since 1 January 2025 to certain transactions between domestic entrepreneurs.
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The general transitional rule ends at the close of 31 December 2026.
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For entrepreneurs with total turnover of no more than EUR 800,000 in 2026, an extended transitional rule applies until 31 December 2027.
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All entrepreneurs must, since 1 January 2025, be able to receive e-invoices and archive them electronically.
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The BMF letter dated 15 October 2026 summarises content from several non-officially published association letters and makes supplementary provisions.
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Validation errors do not in every case lead to non-recognition of an e-invoice for VAT law purposes.
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For e-invoices issued up to 31 December 2026, it will also not be objected to for input VAT deduction purposes if they do not yet comply with the additional requirements of the letter dated 15 October 2026.
Frequently asked questions
BMF letter dated 15 October 2026 on e-invoicing: What was regulated?
The third official BMF letter dated 15 October 2026 with reference III C 5 – S 7287-a/00019/021/017 contains supplementary rules on mandatory e-invoicing. It summarises key points from previously non-officially published association letters and amends the Umsatzsteuer-Anwendungserlass at individual points.
E-invoicing from 2025: What practical consequences does this have for companies?
Since 1 January 2025, entrepreneurs must be able to receive e-invoices and archive them electronically. Transitional rules apply to issuance, generally extending until 31 December 2026 and, for certain smaller companies, until 31 December 2027.
Input VAT deduction with the wrong format: What applies under the transitional rules for e-invoicing?
Within the transitional periods, input VAT deduction will generally not be objected to solely because of an incorrect invoice format if, based on the available information, the recipient could assume that the transitional rule was being applied. After expiry of the transitional rules, an invoice in the correct e-invoice format is generally required if the e-invoicing obligation applies.
Classification for tax-law issues
The BMF’s supplementary rules on e-invoicing concern numerous detailed VAT issues, from mandatory details and invoice corrections through to transitional and non-objection rules. For companies, investors and high-net-worth individuals, the distinction between a statutory obligation, a transitional rule and an administrative non-objection approach may be particularly significant. MTR Legal Rechtsanwälte advises on tax-law issues in connection with e-invoicing and other VAT matters; further information can be found under Legal advice in tax law.
