E-invoicing – an overview of the new Federal Ministry of Finance circular

A new class of errors

Specifications on format and content errors were already provided for in the draft of the second Federal Ministry of Finance circular. In this final circular the tax authorities have now introduced another class of errors and will in future distinguish between three classes of errors:

1. Format errors (para. 6a):
Format errors occur when the invoice file does not conform to the syntaxes permitted under EN 16931 or, when formats have been freely agreed, are not machine-readable. The kind of error is not important – these cases are not considered e-invoices but rather “other electronic invoices” according to German VAT Code (Umsatzsteuergesetz – UStG). 

2. Business-rule errors (para. 6b):
Business-rule errors occur when an e-invoice does not comply with the business rules applicable to that specific format. The logical dependencies of the information contained are defined by the business rules, such as missing required fields (e.g. “BT-10 buyer reference”) or contradictory disclosures (e.g. tax amount does not match the tax rate). Such errors can be recognised as “critical errors” in validation. They are only relevant to VAT, however, if these business-rule errors relate to mandatory invoicing information according to section 14 German VAT Code. 

3. Content errors (para. 35a):
Content errors are established if sections 14 and 14a of the German VAT Act are infringed. If they are, the invoice is not properly issued. By introducing the error classes, checking and validating e-invoices will become considerably more significant in the future, especially for invoice recipients.

Invoice issuers can avoid complaints by validating their invoices before sending them. Careful checking and validation thereby become a central success factor for smooth and compliant e-invoicing.

Validating e-invoices

In its second Circular, the tax authorities have defined more precisely the requirements on checking and validating e-invoices when receiving them. Input VAT deduction is dependent on the e-invoice being properly issued, which is to be ensured by suitable validating procedures. 

But validation does not replace the invoice recipient’s duty to check the completeness and correctness of the invoice – it is purely for technical support. The tax authority stresses, however, that entrepreneurs can rely on the results of validating the format and business rules if the validation tool used has been selected carefully and been used properly.

An overview of further clarifications

Sending invoices in exceptional circumstances
According to the new Circular invoices for small amounts (below EUR 250), invoices issued by small-scale entrepreneurs and tickets for public transport can still be issued and sent as “other electronic invoices” – such as PDF-files. There is no requirement to issue these as an e-invoice. 

However, using other kinds of electronic invoices to a large extent requires the recipient’s consent, which can be implied. Sending e-invoices voluntarily, on the other hand, never requires consent.

The structured part of the e-invoice
The tax authorities clarify that a reference within the structured data (XML) to an unstructured attachment (e.g. a PDF) containing legal requirements according to Sec. 14 (4) German VAT Act is by itself not sufficient to ensure the compliance of the e-invoice. Therefore, for hybrid invoicing formats like ZUGFerRD only the structured part (XML) is the relevant one that needs to be archived.

Archiving the e-invoices
E-invoices must be archived for eight years. The authenticity of the origin, integrity of the content and legibility must be ensured at all times. The structured part must be retained unmodified and in its original form.

Changes to the taxable amount
If the taxable amount is reduced after the invoice is issued, it is not necessary to correct the invoice. This particularly applies to early payment discounts, rebates based on complaints for defects or when a supply is returned. Changes to the scope or contents of the supply are not considered just a reduction to the taxable amount, however, and the description of the goods or services needs to be corrected.

Small-scale entrepreneurs
Exceptions for small-scale entrepreneurs have been added, which were not included in the first Federal Ministry of Finance circular. The Annual Tax Act 2024 amended the VAT Implementing Ordinance (Umsatzsteuer-Durchführungsverordnung – UStDV) so that small-scale entrepreneurs are now exempted from the requirement to issue e-invoices.

Conclusion

The Federal Ministry of Finance circular of 15 October 2025 further specifies the rules on e-invoices. Businesses should familiarise themselves in advance with the new requirements to check and validate e-invoices to drive forward the digitalisation of their invoicing processes in compliance and efficiently.