Germany Introduces Regulatory Updates Effective 2025

Germany is set to implement significant regulatory updates starting January 1, 2025, following recent legislative updates. These include amendments to the invoice retention periods and adjustments to requirements for small businesses regarding electronic invoicing.

Shortened Retention Periods

Under the Fourth Bureaucracy Reduction Act, published on October 29, 2024, and the Annual Tax Act 2024, approved on November 22, 2024, the mandatory retention period for invoices will be reduced from 10 years to 8 years. This change applies to invoices whose retention obligations extend beyond December 31, 2024.

Notably, the archival duration for other business documents—such as accounting ledgers, stock records, and yearly financial reports—will continue to be 10 years.

Revised Regulations for Small Businesses

Small businesses operating under Germany’s Small Business Scheme (Kleinunternehmerregelung), which exempts them from VAT obligations, will see changes to turnover thresholds. To qualify for VAT exemption, the annual turnover limit has been raised to €25,000 for the previous fiscal year and €100,000 for the current fiscal year, up from €22,000 and €50,000, respectively. These changes align with EU regulations and reflect the provisions of the Annual Tax Act.

Additionally, small businesses below the updated thresholds will not be required to issue EN-compliant electronic invoices. They may continue using alternative formats, such as PDF invoices sent via email or even paper invoices. However, these businesses will still need to have the capability to receive EN-compliant e-invoices.

There’s more you should know about e-invoicing in Germany – learn more about the new and upcoming regulations.