Mandatory E-Invoicing in Germany in 2025: New Regulations and Their Impact on Small Businesses

With the new tax law changes coming into effect in 2025, there are several significant adjustments that will affect businesses. The Federal Ministry of Finance (BMF) has introduced measures aimed at easing the burden on smaller companies, particularly regarding document retention periods and the B2B e-invoicing mandate. In this post, we’ll explore how these regulations could impact the day-to-day operations of businesses.

Shorter Retention Periods: What Changes in 2025

Starting in 2025, businesses will only need to keep invoices and other tax-relevant documents for 8 years, instead of the previous 10 years. This change is designed to reduce bureaucratic burdens, especially for small businesses that may struggle to maintain a full 10-year archive. In practice, however, many businesses may find it easier to continue storing everything for 10 years, as many other documents still fall under the longer retention period.

B2B E-Invoicing Mandate: Exceptions for Small Businesses

From 2026, the e-invoicing mandate will apply in the B2B sector. However, businesses with low revenue and exempt from VAT will not be required to issue electronic invoices. These small businesses can still use paper or PDF invoices but must ensure they can receive e-invoices.

This seems like a relief, but it also presents challenges: Larger businesses will still need to handle unstructured invoices from small companies, which adds additional effort. This could also lead to small businesses being asked to issue e-invoices to keep up with digitalization.

Practical Challenges for Businesses

While the new regulations for e-invoices seem to provide simplifications for small businesses at first glance, the reality might be more complicated, especially for companies that deal with both structured and unstructured invoices. The obligation to receive e-invoices still applies, meaning businesses will likely need to switch to e-invoicing systems. This could be more work than initially expected.

Digitalization and Bureaucracy Reduction: Long-Term Impacts

These changes are a step toward reducing bureaucracy and promoting digitalization. However, it remains to be seen how these changes will impact the economy in the long term. While some businesses may benefit from these changes, others may face challenges due to additional requirements and complexity. The road to full digitalization in invoicing is not without hurdles, but it is essential to stay up-to-date with modern business processes.

For companies, this means they need to adjust their internal processes and systems in time to comply with the new regulations. Switching to digital invoicing could become a competitive factor, so it’s advisable to find a solution early to meet legal requirements and reap the benefits of digital transformation.

Conclusion: The new regulations on e-invoicing and shorter retention periods are a step in the right direction to reduce the bureaucratic burden on businesses. For smaller businesses, the exemption from the e-invoicing mandate provides relief, although this may bring additional complexity when working with larger companies. The digitalization of invoicing remains a challenge that all businesses will need to overcome to stay competitive in the long run.