Proposal for a COUNCIL IMPLEMENTING DECISION authorising Germany to introduce a special measure derogating from Articles 218 and 232 of Directive 2006/112/EC on the common system of value added tax
Date: 2023-06-23
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Germany, VAT, derogation from EU law, e-invoicing, establishment, tax collection, taxpayer

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.6.2023  COM(2023) 340 final 2023/0193 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising Germany to introduce a special measure derogating from Articles 218 and 232 of Directive 2006/112/EC on the common system of value added tax  
 
EXPLANATORY MEMORANDUM 

Pursuant to Article 395(1) of Directive 2006/112/EC of 28 November 2006 on the common 
system of value added tax1 (hereafter 'the VAT Directive'), the Council, acting unanimously 
on  a  proposal  from  the  Commission,  may  authorise  any  Member  State  to  apply  special 
measures  for  derogation  from  the  provisions  of  that  Directive  in  order  to  simplify  the 
procedure for collecting VAT or to prevent certain forms of tax evasion or avoidance. 

By  letter  registered  with  the  Commission  on  10  November  2022,  the  Federal  Republic  of 
Germany requested authorisation to derogate from Articles 218 and 232 of the VAT Directive 
to be able to impose mandatory electronic invoicing for transactions between taxable persons 
established in Germany (B2B transactions).  

Further, by letter registered with the Commission on 8 February 2023, the Federal Republic of 
Germany specified the requested date of entry into force of the special measure, which would 
be 1 January 2025. 

In accordance with Article 395(2) of the VAT Directive, the Commission informed the other 
Member States by letter dated 22 February 2023 of the request made by Germany. By letter 
dated  23  February  2023,  the  Commission  notified  Germany  that  it  had  all  the  information 
necessary to consider the request.  

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Germany submitted a request for derogation, based on Article 395 of the VAT Directive, to be 
authorised  to  implement  an  obligation  to  issue  electronic  invoices  for  transactions  between 
taxable  persons  established  in  Germany.  This  obligation  would  be  the  first  step  to  the 
introduction of an  electronic reporting system for  the transmission of transaction-based data 
on  domestic  B2B  transactions  from  taxable  persons  to  the  tax  authorities.  According  to 
Germany,  such  a  reporting  system  would  be  an  important  tool  to  combat  tax  fraud  and 
evasion and improve the collection of VAT. 

Reporting systems that transfer transaction-based turnover data to the tax administration allow 
for a more effective fight against VAT fraud. Germany considers that the implementation of 
such a system will allow the earlier identification of fraudulent chains of transactions and the 
participants in such chains. In addition, the transaction data submitted can be used for cross-
checking  with  the  information  in  VAT  returns  and,  in  case  of  discrepancies,  they  can  be 
detected  and  checked  more  timely.  Overall,  Germany  expects  that  timely  access  to  invoice 
data will avoid the need for a more bureaucratic request for invoices by the tax administration, 
speeding up and facilitating the fight against fraud.  

Germany has adopted other measures in recent years to combat VAT fraud. As of 1 January 
2019, Germany introduced rules on the liability  of operators of electronic marketplaces  and 
on specific record-keeping obligations for these operators. The entry into force of these rules 
led to a significant  increase in  the number of tax registrations of  companies supplying such 
transactions via marketplaces.  

Further,  since  1  January  2020,  the  right  to  deduct  input  tax  and  the  exemption  for  intra-
Community  supplies  are  refused  when  the  trader  knew  or  should  have  known  that  was 
participating  in  a  VAT  fraud  or  evasion  chain,  in  line  with  the  existing  case-law  of  the 
European Court of Justice in the field.  In addition, since 1 January 2021, the validity of  the 

1 

OJ L 347, 11.12.2006, p. 1. 

EN 

1 

  EN 

                                                 
VAT  identification  number  for  intra-Community  supplies  of  goods  and  services  can  be 
limited when there are indications that it is being used for fraudulent purposes. This measure 
is also applied if the abuse results in damage to VAT revenues in another EU Member State. 

Germany has made use of the possibilities offered by Article 199a(1) of the VAT Directive to 
apply the reverse charge mechanism to combat VAT fraud, most recently for transfers of gas 
and  electricity  certificates  and  certain  telecommunications  services.  For  the  transfer  of 
emission allowances under the Fuel Emissions Trading Act, as of 1 January 2023, the reverse 
charge  mechanism  is  introduced  on  the  basis  of  Council  Implementing  Decision  (EU) 
2021/17782. 

Germany has also introduced national checklists to verify the information provided by traders 
during  the  process  of  tax  registration.  Tax  registrations  carried  out  solely  for  fraudulent 
purposes can thus be prevented. Moreover, it is possible to carry out further checks to verify 
the  reliability  of  traders  on  a  case-by-case  basis  and,  if  necessary,  further  checks  can  be 
initiated. 

Germany considers that the opportunities offered by digitalisation to combat tax evasion and 
avoidance can only be fully exploited if the processing of data is done with continuity. They 
consider  that  the  mandatory  use  of  electronic  invoices  in  structured  format  is  a  logical  and 
necessary step towards a transaction-based reporting system that will  allow to  combat fraud 
more effectively through the analysis and use of the data collected. 

According to Germany, the use of e-invoices is already common practice in many sectors of 
the economy.  In the field of public procurement,  Germany  has transposed into national  law 
Directive 2014/55/EU  of  the  European Parliament  and  of  the  Council  of  16 April  2014  on 
electronic  invoicing  in  public  procurement3,  which  introduced  an  obligation  for  public 
authorities  to  accept  electronic  invoices  sent  by  their  suppliers.  The  issuance  of  electronic 
invoices  in  the  area  of  public  procurement  in  Germany  has  been  mandatory  in  the  area  of 
public procurement since November 2020.  

Therefore, Germany claims that the introduction of mandatory electronic invoicing for VAT 
purposes  will  not  require  a  significant  financial  burden  for  many  businesses.  There  will  be 
long-term  savings  from  the  elimination  of  paper  invoices,  derived  in  particular  from  the 
elimination of the costs of drawing up, sending and storing paper invoices. On the recipient 
side,  the  cost  of  processing  paper  invoices  is  also  avoided.  E-invoicing  will  allow  the 
optimisation  of  accounting  processes  for  both  the  supplier  and  recipient  of  the  invoice.  In 
order  to  ensure  the  interoperability  of  electronic  invoicing  systems  used  in  the  European 
Union, Germany shall allow the issuance of invoices that comply with the European standard 
on  electronic  invoicing  and  the  list  of  its  syntaxes  pursuant  to  Directive  2014/55/EU  of  the 
European Parliament and of the Council4. 

Article 218 of the VAT Directive provides for an obligation for Member States to accept all 
documents  or  messages  both  in  paper  or  electronic  form  as  invoices.  Germany  would 
therefore like to obtain a derogation from the above-mentioned Article of the VAT Directive 
so that only documents in electronic form can be considered as invoices by the  German tax 
administration. 

Article 232 of the VAT Directive requires that the use of an electronic invoice shall be subject 
to  acceptance  by  the  recipient.  Therefore,  the  introduction  of  an  electronic  invoicing 

2 
3 
4 

OJ L 360, 11.10.2021, p. 117. 
OJ L 133, 6.5.2014, p. 1. 
Directive  2014/55/EU  of  the  European  Parliament  and  of  the  Council  of  16  April  2014 on  electronic 
invoicing in public procurement (OJ L 133, 6.5.2014, p. 1). 

EN 

2 

  EN 

                                                 
obligation in Germany requires a derogation from this Article so that the issuer no longer has 
to obtain the consent of the recipient to send an invoice in a paperless format. 

Derogations  are  in  general  granted  for  a  limited  period  of  time  as  to  allow  an  assessment 
whether the special measure is appropriate and effective and in order to grant Member States 
time  to  introduce  other  conventional  measures  to  tackle  the  respective  problem  until  the 
expiry of the derogating measure.  

Once  this  measure  has  been  introduced,  and  given  the  broad  scope  of  the  derogation,  it  is 
important  to  assess  its  impact  on  taxable  persons  and,  more  specifically,  whether  it  has 
contributed  to  combat  VAT  fraud  and  evasion.  Should  Germany  wish  to  prolong  the 
derogating  measure,  it  is  requested  to  provide  a  report  on  the  functioning  of  the  measure 
together  with  the  prolongation  request.  This  report  should  provide  the  assessment  of  the 
measure  on  its  effectiveness  in  fighting  VAT  fraud  and  evasion  and  in  simplifying  tax 
collection. The report should also include an evaluation of the measure on taxable persons and 
in particular what concerns the increase of their administrative burdens and compliance costs.  

It is proposed to authorise the derogation as from 1 January 2025 until 31 December 2027 or 
until  the  date  Member  States  are  to  apply  any  national  provisions  that  they  are  required  to 
adopt  in  the  event  that  a  directive  is  adopted  amending  Directive  2006/112/EC  as  regards 
VAT rules for the digital age, in particular Articles 218 and 232 of that Directive, whichever 
is the earlier.  

• 

Consistency with existing policy provisions in the policy area 

Article  218  of  the  VAT  Directive  puts  paper  and  electronic  invoices  on  equal  footing  by 
providing that Member States shall accept documents or messages on paper or in electronic 
form as invoices. Following Article 232 of the VAT Directive, the use of an electronic invoice 
shall  be  subject  to  acceptance  by  the  recipient.  The  obligatory  electronic  invoicing  as 
envisaged by Germany would indeed derogate from these two provisions.  

The  derogation  can  be  authorised  based  on  Article  395  of  the  VAT  Directive  in  order  to 
simplify  the  procedure  for  collecting  VAT  or  to  prevent  certain  forms  of  tax  evasion  or 
avoidance. The introduction of mandatory electronic invoicing for B2B transactions will serve 
as  a  first  step  for  the  implementation  of  a  transaction-based  reporting  system  in  Germany, 
which would allow for a more effective fight  against VAT fraud and evasion.  Based on the 
elements  provided  by  Germany,  the  derogation  is  consistent  with  the  existing  policy 
provisions. 

Similar  authorisations  allowing  Italy,  France  and  Poland  to  derogate  from  Articles  218  and 
232  of  the  VAT  Directive,  in  order  to  implement  mandatory  electronic  invoicing,  were 
granted by Council Implementing Decision (EU) 2021/22515, Council Implementing Decision 
(EU) 2022/1336 and Council Implementing Decision (EU) 2022/10037. 

The Commission adopted in 2020 the “Communication from the Commission to the European 
Parliament  and  the  Council:  an  Action  Plan  for  fair  and  simple  taxation  supporting  the 
recovery  strategy”8.  One  of  the  actions  envisaged  in  this  action  plan  is  the  adoption  by  the 
Commission  of  a  legislative  proposal  aimed  at  modernising  VAT  reporting  obligations.  As 
indicated  in  the  Action  Plan,  this  proposal  should,  amongst  others,  help  streamline  the 

5 
6 
7 
8 

OJ L 454, 17.12.2021, p. 1. 
OJ L 20, 31.1.2022, p. 272. 
OJ L 168, 27.6.2022, p. 81. 
 https://taxation-customs.ec.europa.eu/system/files/2020-07/2020_tax_package_tax_action_plan_en.pdf  

EN 

3 

  EN 

                                                 
reporting  mechanisms  that  can  be  applied  for  domestic  transactions.  The  need  to  further 
expand e-invoicing is also examined in this context.  

As a result of this Action Plan, the Commission adopted on 8 December 2022 a Proposal for a 
Council Directive amending Directive 2006/112/EC as regards VAT rules for the digital age9 
(VAT in the digital age proposal), which is being discussed in the Council. This Directive will 
amend  Article  218  and  will  delete  Article  232  of  the  VAT  Directive.  This  reform,  once 
adopted, will allow Member States to implement mandatory e-invoicing, eliminating the need 
to  request  further  derogations  from  the  VAT  Directive  in  order  to  implement  such  systems. 
For that  reason,  once this proposal  for  a Directive is  transposed by the  Member States, this 
Council Decision would no longer have any useful effect.  

In its request, Germany states that the Federal Government considers that the aims pursued by 
the  special  measure  are  in  line  with  the  European  Commission’s  plans  for  a  European 
reporting  system.  Further,  in  order  to  avoid  duplication  of  efforts  in  the  introduction  and 
subsequent  administration  of  a  reporting  system,  both  on  the  part  of  business  operators  and 
the tax authorities, Germany will take into account the VAT in the digital age proposal in the 
works  toward  the  implementation  of  the  national  reporting  system.  The  aim  pursued  by 
Germany is to synchronise the structures of both systems as much as possible. 

Therefore,  the  derogation  asked  by  the  Federal  Republic  of  Germany  is  aligned  with  the 
objectives pursued by the Commission as laid down in the Action Plan and in the Proposal for 
a  Council  Directive  amending  Directive  2006/112/EC  as  regards  VAT  rules  for  the  digital 
age. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 395 of the VAT Directive.  

• 

Subsidiarity (for non-exclusive competence)  

Considering the provision of the VAT Directive on which the proposal is based, subsidiarity 
principle does not apply.  

• 

Proportionality 

The proposal complies with the proportionality principle for the following reasons.  

The Decision concerns an authorisation granted to a Member State upon its own request and 
does not constitute any obligation.  

In  order  to  reduce  the  burden  on  businesses  and  tax  administration,  Germany  will  proceed 
gradually, by introducing as a first step the obligation to issue e-invoices, in order to build on 
it  later  a  reporting  system.  To  avoid  duplication  of  costs  and  unnecessary  efforts,  Germany 
will  take  into  account  the  VAT  in  the  digital  age  proposal  when  designing  its  national 
reporting system, aligning its system to that on the abovementioned proposal.  In this regard, 
the  future  requirements  of  EU  law  for  the  reporting  of  cross-border  transactions  will  be 
coordinated with the system for the reporting of national transactions, in order to ensure that 
both  categories  of  transactions  are  handled  as  uniformly  as  possible  by  taxable  persons, 
limiting the administrative burden for businesses. 

9 

COM/2022/701 final. 

EN 

4 

  EN 

                                                 
It should be noted that in Germany it is already obligatory to use electronic invoicing in the 
the 
B2G relationships 
European Parliament  and  of  the  Council  of  16 April  2014  on  electronic  invoicing  in  public 
procurement. 

implementation  of  Directive 2014/55/EU  of 

following 

the 

The key elements of the planned national system include the timely transmission of invoice 
data, initially limited to the B2B area, to a central reporting system. Germany will accept the 
transmission of data on structured invoices corresponding to a format based on CEN standard 
EN 16931, to facilitate the interoperability of systems. The transmission of complete invoices 
is not foreseen, as taxable persons will only have to report the data necessary for tax purposes. 
Furthermore, the exchange of invoices between taxable persons will not be managed via the 
servers of the tax administration neither will the invoices be subject to a clearance procedure 
by the administration. 

The  obligation  to  use  electronic  invoices  will  only  apply  for  transactions  between  taxable 
persons established in Germany. There is no derogation from the harmonised rules on invoice 
data.  The  measure  will  not  impact  companies  not  established  in  Germany,  and  the  right  to 
receive a paper invoice in case of intra-Community transactions is not affected.  

The derogation is also limited in time and a report on the functioning and the effectiveness of 
the measure is to be prepared in case Germany wishes to prolong the derogating measure.  

Therefore, the special measure is proportionate to the aim pursued, to combat tax  fraud and 
evasion. 

• 

Choice of the instrument 

Proposed instrument: Council Implementing Decision.  

Under  Article  395  of  the  VAT  Directive,  derogation  from  the  common  VAT  rules  is  only 
possible  upon  authorisation  of  the  Council  acting  unanimously  on  a  proposal  from  the 
Commission. A Council Implementing Decision is the most suitable instrument since it can be 
addressed to an individual Member State.  

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Impact assessment 

The  mandatory  electronic  invoicing  will  impact  both  the  tax  administration  and  taxable 
persons. 

The  implementation  of  a  reporting  system  based  on  e-invoicing  will  complement  the 
abovementioned measures that Germany has recently implemented to combat VAT fraud and 
evasion,  such  as  the  improvement  of  the  registration  processes.  According  to  Germany,  the 
effectiveness of those measures in fighting VAT fraud and ensuring tax collection  is shown 
by the annual figures on the German VAT gap. 

The implementation of mandatory e-invoicing will not be very burdensome for businesses as 
it is already common practice in many sectors of the economy and mandatory in the field of 
public  procurement.  Furthermore,  businesses  will  obtain  benefits  from  the  automation  of 
processes,  such  as  accounting,  as  well  as  long-term  savings  from  the  elimination  of  paper 
invoices,  due  to  the  elimination  of  the  costs  from  issuing,  sending,  processing  and  storing 
paper invoices. 

EN 

5 

  EN 

In addition, the system  will follow to the extent possible the features  of the one included in 
the VAT in the digital age proposal, aligning the reporting of domestic transactions with the 
future system for the reporting of intra-Community transactions. This will avoid duplication 
of  costs  for  taxable  persons  and  tax  administration,  making  possible  to  comply  with  the 
reporting of both types of transactions in the same way. 

The  specific  needs  of  small  businesses  will  be  taken  into  account  in  the  design  of  national 
provisions. This  can be  done, for example, by setting company sizes or a minimum  invoice 
amount  below  which  the  use  of  electronic  invoices  remains  optional  for  a  period  to  be 
determined. 

4. 

BUDGETARY IMPLICATIONS 

The measure will have no adverse impact on the Union's own resources accruing from VAT. 

EN 

6 

  EN 

2023/0193 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising Germany to introduce a special measure derogating from Articles 218 and 
232 of Directive 2006/112/EC on the common system of value added tax 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Directive  2006/112/EC  of  28  November  2006  on  the  common 
system of valued added tax1, and in particular Article 395(1)thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

By letter registered with the Commission on 10 November 2022, Germany requested 
authorisation to introduce a special measure derogating from Articles 218 and 232 of 
Directive  2006/112/EC  (‘the  special  measure’)  in  order  to  introduce  mandatory 
electronic  invoicing  for  all  transactions  carried  out  between  taxable  persons 
established in the territory of Germany.  

By letter registered with the Commission on 8 February 2023, Germany specified that 
the requested date of entry into force of the special measure is 1 January 2025. 

Pursuant to Article 395(2), second subparagraph, of Directive 2006/112/EC, by letters 
dated 22 February 2023, the Commission transmitted the request made by Germany to 
the  other  Member  States  and,  by  letter  dated  23  February  2023,  it  notified  Germany 
that it had all the information necessary for the appraisal of the request.  

Germany  intends  to  put  in  place  the  mandatory  electronic  invoicing  for  transactions 
between taxable persons established in Germany as a first step in the implementation 
of a transaction-based reporting system. Such reporting system would provide benefits 
in  combatting  value  added  tax  (VAT)  fraud  and  evasion.  It  would  allow  an  earlier 
identification of VAT fraud chains by the tax administration and would also enable the 
tax  administration  to  carry  out  timely  and  automatic  verifications  of  the  consistency 
between the VAT declared and the VAT due. In the case of discrepancies, the system 
would  allow  for  their  early  detection  and  checking.  Furthermore,  Germany  expects 
that the timely access to invoice data would obviate the need for a more bureaucratic 
request  for  invoices  by  the  tax  administration,  speeding  up  and  facilitating  the  fight 
against VAT fraud. 

Germany considers that the introduction of mandatory electronic invoicing would not 
be very burdensome for businesses as, in Germany, mandatory electronic invoicing is 
already common practice in many sectors of the economy and is mandatory in the field 
of public procurement. Furthermore, it would benefit economic operators through the 
digitalisation of processes and the reduction of their administrative burden. The use of 
electronic  invoices  would  provide  long-term  savings  due  to  the  elimination  of  paper 

1 

OJ L 347, 11.12.2006, p. 1. 

EN 

7 

  EN 

                                                 
invoices,  thereby  reducing  the  costs  of  issuing,  sending,  processing  and  storing 
invoices. 

On  8  December  2022,  the  Commission  adopted  a  proposal  for  a  Council  Directive 
amending  Directive  2006/112/EC  as  regards  VAT  rules  for  the  digital  age2.  The 
proposed amendments set out in the Directive amending Directive 2006/112/EC would 
amend Article 218 and delete Article 232 of Directive 2006/112/EC, allowing Member 
States  to  implement  mandatory  electronic  invoicing,  and  eliminating  the  need  to 
request  further  derogations  from  Directive  2006/112/EC  in  order  to  implement  such 
systems. Therefore, from the date Member States are to apply any national provisions 
that they are required to adopt in the event that that directive is adopted, this Decision 
would no longer have any useful effect.  

Given  the  broad  scope  and  the  novelty  of  the  special  measure,  it  is  important  to 
evaluate  its  impact  on  combatting  VAT  fraud  and  evasion  and  on  taxable  persons. 
Therefore, if Germany considers that an extension of the special measure is necessary, 
it should submit to the Commission, together with the request for extension, a report 
including an assessment of the special measure concerning its effectiveness in fighting 
VAT fraud and evasion and in simplifying VAT collection. 

The  special  measure  should  not  affect  the  right  of  the  customer  to  receive  paper 
invoices in case of intra-Community transactions. 

The special measure should be limited in time to allow for an appraisal to be carried 
out of whether it is appropriate and effective in light of its objectives. 

(6) 

(7) 

(8) 

(9) 

(10)  The  special  measure  is  proportionate  to  the  objectives  pursued  since  it  is  limited  in 
time and scope. In addition, the special measure does not give rise to the risk that fraud 
would shift to other sectors or to other Member States. 

(11)  The  special  measure  will  not  negatively  affect  the  overall  amount  of  tax  revenue 
collected  at  the  stage  of  final  consumption  and  will  have  no  adverse  impact  on  the 
Union’s own resources accruing from VAT, 

HAS ADOPTED THIS DECISION:  

Article 1 

By way of derogation from Article 218 of Directive 2006/112/EC, Germany is authorised to 
accept  invoices  which  have  been  issued  by  taxable  persons  established  in  the  territory  of 
Germany  in  the  form  of  documents  or  messages  only  if  those  documents  or  messages  are 
transferred in electronic format. 

Article 2 

By way of derogation from Article 232 of Directive 2006/112/EC, Germany is authorised to 
provide  that  the  use  of  electronic  invoices  issued  by  taxable  persons  established  in  the 
territory of Germany shall not be subject to an acceptance by the recipient established in the 
territory of Germany. 

2 

COM/2022/701 final. 

EN 

8 

  EN 

                                                 
Germany  shall  notify  the  national  measures  implementing  the  special  measure  for  the 
derogations referred to in Articles 1 and 2 to the Commission. 

Article 3 

Article 4 

1. This Decision shall apply from 1 January 2025 until the earlier of the following two dates: 

(a) 

31 December 2027;  

(b) 
the date from which Member States are to apply any national provisions that they are 
required to adopt in the event that a directive is adopted amending Directive 2006/112/EC as 
regards VAT rules for the digital age, in particular Articles 218 and 232 of that Directive. 

2. If Germany considers that an extension of the special measure is necessary, Germany shall 
submit its request for extension to the Commission, together with a report assessing the extent 
to which the national measures referred to in Article 3 have been effective in combatting VAT 
fraud and evasion and in simplifying tax collection. That report shall also evaluate the impact 
of those measures on taxable persons and in particular whether those measures increase their 
administrative burdens and costs. 

This Decision is addressed to the Federal Republic of Germany. 

Done at Brussels, 

Article 5 

For the Council 
The President 

EN 

9 

  EN