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Electronic invoices are becoming increasingly popular

4 years ago

Invoices are increasingly being transmitted electronically, as an analysis by BITKOM shows. Around 500 companies were surveyed by telephone: 43 percent of the companies send electronic invoices. In the previous year’s analysis, it was only 30 percent. Small and medium-sized enterprises in particular are making more and more use of the digital option.

Advantages of electronic invoices

But what makes the switch from paper invoices to electronic invoices so attractive? The advantages are obvious:

Electronic invoices are much more cost-effective (no postage, no paper costs, etc.).
Invoices are transmitted more quickly – so that earlier payments can also be received.
Electronic invoices are environmentally friendly.

VAT requirements for invoices

The German VAT Act expressly refers to the possibility that invoices can be transmitted electronically – subject to the consent of the recipient. The electronic invoice is defined as an invoice that is issued and received in an electronic format. However, sec. 14 para. 1 sentence 2 of the German VAT Act stipulates the following requirements: “The authenticity of the origin of the invoice, the integrity of its content and its legibility must be guaranteed.”

In terms of content, the same mandatory information applies to electronic invoices as to invoices in paper form. According to sec. 14 para. 4 of the German VAT Act, these are in particular:

Name and address of the supplier and the recipient of the service
Tax number and/or VAT identification number of the supplier
Date
Sequential invoice number
Quantity and type of goods supplied/scope and type of other service
Delivery time/time of performance
Tax rate and tax amount or reference to tax exemption
Reference to retention obligation in cases of sec. 14b para. 1 sentence 5 of the German VAT Act
If applicable, note “credit note” when issued by the recipient of the service

In cases of sec. 13b of the German VAT Act: Reference to reversal of the VAT liability

Electronic invoices must be kept

It is important that the tax retention obligations must also be fulfilled for electronic invoices. The “Principles for the proper management and storage of books, records and documents in electronic form as well as for data access (GoBD)” apply. For example, anyone who does not store incoming invoices in compliance with the GoBD risks input VAT deduction. The company must bear this in mind and also ensure archiving: electronic invoices must be kept for 10 years.

Electronic invoices are the future

BITKOM’s analysis makes it clear: More and more companies are saying goodbye to paper invoices and using the option of electronic transmission of invoices. However, there is only an obligation to do so in exceptional cases: If private companies work for public clients, invoices must be transmitted electronically.

You can also find more information here.

Digression: In other EU countries, some legislators are already going one step further. In France , for example, it was decided that electronic invoices would become mandatory. The changeover will take place in several steps: From 2024, large companies, from 2025 medium-sized companies and from 2026 also small companies will be obliged to submit invoices electronically.

As a BPO partner, ICS adminservice supports its customers in accounts receivable management as well as in accounts payable management and in getting started with digital accounting. Benefit from the experience in processing incoming invoices in digital workflows, among other things.

Image source: iStock, Photographer: AndreyPopov