Germany: Reminder of VAT Invoice Changes

Germany has updated its VAT invoicing and archiving rules to support mandatory B2B e-invoicing from January 1, 2025, requiring structured XML formats to be retained as the legal record and shortening the invoice retention period from 10 to 8 years. Additionally, from December 6, 2024, credit notes issued to non-entrepreneurs showing VAT without prompt objection may trigger unauthorized tax liability under §14c(2) UStG.

Germany updated its invoice archiving and VAT retention rules to align with mandatory B2B e-invoicing from January 1, 2025, and modernized GoBD compliance.

1. GoBD Update: Structured E-Invoices

Effective July 14, 2025 (BMF clarification):

·         XML as Legal Record: Only the XML component of e-invoices (e.g., ZUGFeRD hybrids) must be archived; PDFs are optional if a readable view can be generated.

·         Original Format Retention: Invoices must be stored in their received format, even if converted internally, to meet audit requirements.

·         Hybrid Formats: For ZUGFeRD or similar, the embedded XML is the tax-binding element.

·         GoBD Compliance: Electronic archiving must ensure real-time tax authority access, with data generally stored in Germany.

2. Retention Period Shortened

Per July 8, 2025 BMF letter:

·         Invoice retention period reduced from 10 to 8 years for invoices unexpired by December 31, 2024.

·         Invoices issued before January 1, 2017, need not be retained unless relevant for open tax periods (e.g., §15a UStG input tax adjustments for real estate).

·         VAT records remain unaffected.

3. Unauthorised VAT in Credit Notes

From December 6, 2024:

·         Unauthorised tax certificate arises if a non-entrepreneurial person includes VAT in an invoice or credit note and does not immediately object to the incorrect credit note.

·         Overrides 2019 BFH ruling (V R 23/19), which excluded credit notes from §14c(2) UStG.