VAT updates Germany

From 1 January 2022, several German federal states introduced significant VAT and electronic invoicing (e-invoicing) changes as part of Germany’s ongoing digitalisation strategy and efforts to modernise tax compliance procedures.

The latest developments focus primarily on Business-to-Government (B2G) e-invoicing requirements, affecting suppliers, contractors, and businesses providing goods and services to public sector entities.

This article outlines the key VAT and e-invoicing updates introduced in Hamburg, Baden-Württemberg, and Saarland.

Germany’s move towards mandatory E-invoicing

Germany continues to advance the implementation of electronic invoicing across public procurement processes. The new requirements aim to improve efficiency, transparency, and compliance while reducing administrative burdens for government authorities and suppliers.

Businesses involved in public sector contracts should ensure that their invoicing systems comply with the latest regional requirements.

Hamburg: new B2G E-invoicing rules

Effective from 1 January 2022, the federal state of Hamburg introduced new obligations relating to Business-to-Government (B2G) invoicing.

Under the updated rules, contractors are required to submit electronic invoices for:

• Public procurement contracts.
• Supplies of goods and services to government entities.
• Contracts relating to concessions.

The changes are designed to streamline invoicing processes and support the broader adoption of digital tax administration within Germany.

Baden-Württemberg: mandatory electronic invoicing

Baden-Württemberg has made the issuance and transmission of B2G electronic invoices mandatory.

Businesses supplying goods or services to public authorities must ensure that invoices are submitted electronically and that the receiving public body is informed of the electronic invoicing arrangement.

Exceptions to mandatory E-invoicing

Certain transactions remain exempt from the mandatory e-invoicing requirements, including:

• Suppliers established in third countries that do not possess the technical capability to issue electronic invoices.
• Transactions where either the supplier or recipient is a municipality or an association of municipalities.
• Invoices with a value below EUR 1,000 (excluding VAT).

Accepted E-invoicing methods

Electronic invoices may be submitted through various approved channels, including:

• PEPPOL (Pan-European Public Procurement Online).
• Email transmission.
• Web-based invoice upload portals.

Businesses should verify the preferred submission method required by the relevant public authority before issuing invoices.

Saarland: mandatory B2G E-invoicing introduced

The federal state of Saarland also introduced mandatory Business-to-Government e-invoicing requirements from 1 January 2022.

Suppliers providing goods or services to public sector bodies must generally submit invoices electronically to ensure compliance with local regulations.

Exemptions in Saarland

The mandatory e-invoicing rules do not apply to:

• Cash transactions and immediate payment arrangements that have a debt-discharging effect.
• Invoices with a total value of EUR 1,000 or less.

These exemptions are intended to reduce administrative obligations for smaller transactions and specific payment arrangements.

Impact on businesses

Companies conducting business with German public authorities should review their invoicing procedures to ensure compliance with regional e-invoicing requirements.

Key considerations include:

• Implementing compliant e-invoicing software.
• Ensuring compatibility with PEPPOL and other approved platforms.
• Training finance and accounts receivable teams on new requirements.
• Reviewing exemption eligibility where applicable.

Failure to comply with mandatory e-invoicing rules may result in delays in payment processing and potential administrative complications.

Final thought

The VAT and e-invoicing changes introduced in Hamburg, Baden-Württemberg, and Saarland represent another important step in Germany’s digital transformation of tax administration and public procurement processes.

Businesses supplying goods or services to government entities should assess their current invoicing systems and ensure they meet the applicable regional requirements. As Germany continues expanding electronic invoicing obligations, staying informed and maintaining compliance will be essential for organisations operating in the public sector marketplace.

For expert guidance on German VAT compliance, e-invoicing requirements, and international tax obligations, businesses should seek professional advice to ensure a smooth transition to the evolving regulatory framework.