The German Bundesrat will make a major leap this Friday and approve the Steuervereinfachungsgesetz 2011 (Tax-simplification law), which also includes a major change to electronic invoicing regulations (affecting § 14 UStG).
With the new regulation in place, invoices can not only be sent and received digitally within an EDI network (like Tradeshift) or with a qualified digital signature to make the invoice input VAT deductible on the receiving side (which Tradeshift also supports with an app). Invoices in digital data formats like PDF are now holding the same legal status as a hardcopy invoice. This regulatory change in Germany concerns companies that are eligible for deducting input VAT – that is, companies over 17.5k EUR revenue p.a. (smaller companies were allowed to receive e-invoices when not deducting the so called Mehrwertsteuer).
The law (a bundle of various regulations) had been rejected previously by the Bundesrat because of other parts then the e-invoicing regulation. With minor changes by a Arbitration Commission (a regulation to allow biennial tax filing was dropped for instance), the tax-simplification law was passed on yesterday for approval to the Bundestag and Bundesrat.
The new e-invoicing regulation – which will be valid from the 01.07.2011, comes as an early reaction to the directive of the European Union Council for Economic and Finance Affairs from 2010. As a result, EU member states have to simplify VAT invoicing requirements in regards of electronic invoicing by 2013. This latest development comes as a strong signal to other members to adopt this regulation sooner rather than later. And more so, it is a signal to German companies to adopt e-invoicing as a way of increasing efficiency and cutting costs.
Some aspects and implications of the regulatory changes for German companies sending and receiving invoices are:
- The need for digital archiving. As with paper invoices, an electronic invoice must be archived for at least 10 years, in a way that does not allow alteration of the invoice. The German finance ministry is suggesting burning the data on a CD or DVD. Interestingly, printing the invoice would mean breaking the medium and is therefore not a valid way of archiving a digital invoice! Luckily If you receive invoices on Tradeshift you are actually fulfilling these requirements, as we store all invoices and archive the together with digital signatures.
- The need for validating the authenticity of the invoice on the receiving side. This can be an automated process and/or just comparing the invoice to internal records, e.g. purchase orders, received products.
- Requirements on business identifiers and specifications on invoices have not changed. Therefore all mandatory information on an electronic invoice match the ones for the equivalent on paper.
The coming months will tell us if this regulatory change will lead to a surge in e-invoicing adoption rates amongs German businesses. What we can see from our own data however is that over the last few weeks, we have noticed a considerably growing interest in Tradeshift across both the SME and Enterprise space in the German market. This is of course an encouraging sign. We will continue to support our many German users!
