Germany Bundestag e-invoice and TNA proposition

  • Feb 16, 2021 | Richard Asquith

German members of parliament have called for the adoption of an Italian SdI e-invoice regime to fight large-scale VAT fraud. In addition, they call for Germany to join the  Transaction Network Analysis (TNA) tool which enables EU states to share VAT transaction data to identify carousel or missing trader fraud.

This comes as other measures, including the domestic reverse charge, have largely failed as criminal gangs jump between industry sectors and regular businesses are left with cumbersome VAT bureaucracy.

German e-invoice call

The call, following similar views expressed by the Federal Court of Auditors, includes a federal preclearance of sales invoices platform following the success of Italy’s e-invoice regime introduced in 2019. This is estimated to have reduced the large Italian VAT gap by 10%. Such a system would also provide a useful analysis of economic data for the government, and move towards taxation based on cash received. To prevent a unwieldly burden on small businesses, they could be exempted from the regime or provided with free electronic invoice generating software or apps. 

B2G invoices have been mandatory in Germany since 27 November 2020. Any imposition of mandatory B2B or B2C invoices would require permission from the European Commission to deviate from the requirements of the VAT Directive. This obliges suppliers to provide paper invoices unless they can obtain written permission from their customers.

Germany to join TNA?

The Bundestag members also called for German to join TNA. This was developed in Belgium, and has been operating in 10 EU states. It seeks to identify cross-border ‘carousel fraud’, which is estimated to cost EU member states around €50 billion per annum in lost VAT revenues. TNA is based on automated mining of data provided by companies in their VAT returns. It includes building connectors between member states’ tax IT platforms to share transaction data and reporting in near real time. It monitors deviations in purchases and sales between vendors and purchasers, and other discrepancies between disclosures in the return.

The sponsoring members of the German parliament called on 9 February 2021 for:

  • An e-invoice regime following the Italian SdI system
  • An EU-wide e-invoice regime
  • Electronic customs system for Europe to capture import VAT data
  • Adopt the Transaction Network Analysis in Germany

Need help with your German VAT compliance?

Researching German VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara
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