In a letter dated October 15, 2026, Germany’s Federal Ministry of Finance (MoF) amended the VAT Application Decree to clarify e-invoicing rules and define specific terms. These technical and formal updates provide clear guidance to help businesses implement and comply with the new requirements.

Key VAT Application Decree Provisions

Down payment, advance payment, and partial payment invoices must be issued as e-invoices only when the issuer becomes subject to the mandatory e-invoicing rules. This generally applies from January 1, 2027, or January 1, 2028, for companies whose turnover in the previous year did not exceed EUR 800,000. The obligation applies even if the related service and payment take place after the relevant deadline.

For final invoices, businesses have greater flexibility in reporting previously invoiced partial payments. They can report the total amount already paid in field BT-113, and provide details of the previously invoiced net and VAT amounts in field BT-22. Alternatively, they can include an appendix showing the net and VAT amounts deducted, provided the structured invoice data explicitly refers to that appendix. Both methods will remain acceptable until June 30, 2030, extending the previous transition deadline of December 31, 2027.

For services subject to German VAT, an e-invoice is generally required when the recipient receives the service for business purposes, and both the supplier and the customer are established in Germany. According to the MoF, suppliers may rely on information the customer provides to determine whether they qualify as a business, provided they exercise reasonable commercial diligence and have no information suggesting otherwise. 

A VAT identification number can serve as evidence of business status. Suppliers will not be considered in violation of the rules if they could not reasonably have known that the service was supplied to a business for business purposes. For businesses with a mixed customer base and ongoing transactions, MoF clarified that checking a customer's business status once at the start of the contract, or when the contract is amended, is sufficient. Suppliers are not required to monitor this status continuously. 

For written agreements involving price reductions, businesses do not need to include extensive details in the e-invoice. A general reference to the agreement is sufficient, provided the supporting documents can be provided promptly and easily verified. If the agreement is subsequently amended, the original invoice does not need to be corrected. 

For gross-price invoices, such as invoices for books subject to fixed retail prices, the XRechnung and ZUGFeRD e-invoicing formats do not yet provide a suitable solution. As a temporary measure, until December 31, 2027, businesses may report totals for each VAT rate in the structured part of the e-invoice to prevent rounding differences.

Key Takeaways

The updated guidance brings clarity and valuable transitional relief, allowing businesses to adapt their systems gradually. Companies operating in Germany should still prepare now for the upcoming mandatory deadlines and make sure their data structures and business validation processes meet the new e-invoicing standards.