VAT & Invoicing

By the end of January 2026, the change has clearly taken hold in practice: the German tax authorities have significantly eased international invoicing requirements. Certain VAT-relevant mandatory invoice details may now be stated in other official EU languages – in particular in English – provided the wording is clear, unambiguous and compliant with EU VAT law.

This clarification is based on an update of the German VAT Application Decree (UStAE) and reflects the realities of cross-border business, international ERP systems and standardized group-wide invoicing processes.

Background: Previously a de facto “German-only” requirement

Invoices issued in Germany must continue to comply with the formal requirements set out in Section 14 / 14a of the German VAT Act (UStG)and Article 226 of the EU VAT Directive. In practice, however, tax authorities traditionally insisted on the use of precisely defined German terminology for particularly sensitive VAT indications – especially where these directly affected:

• Reverse charge transactions (VAT liability of the recipient)
• Self-billing arrangements
• Margin schemes (e.g. travel agents, second-hand goods, works of art, collectors’ items and antiques)

For internationally operating businesses, this approach repeatedly caused problems: translation inconsistencies, system incompatibilities and, in the worst case, the denial of input VAT deduction during tax audits.

What has changed: EU official languages now explicitly permitted

The German Federal Ministry of Finance has clarified that certain mandatory invoice references may be provided in other official EU languages, where such wording is commonly used for the purposes of Article 226 of the EU VAT Directive and is objectively clear.

Key practical points:

• The clarification applies also to open cases.
• An additional German translation is no longer required, provided the foreign-language term is precise and correctly reflects the applicable VAT treatment.

Examples: Officially accepted English terminology

The following English expressions are now explicitly accepted in German invoicing practice, among others:

• “Self-billing” → credit note procedure
• “Reverse charge” → VAT liability of the recipient
• “Margin scheme – Travel agents” → special scheme for travel agents
• “Margin scheme – Second-hand goods” → second-hand goods scheme
• “Margin scheme – Works of art” → special scheme for works of art
• “Margin scheme – Collectors’ items and antiques” → special scheme for collectors’ items and antiques

Practical impact: Long-awaited modernization of invoicing processes

This clarification represents a major operational relief for internationally active businesses, particularly:

• foreign companies issuing invoices in Germany
• e-commerce platforms and OSS-related business models
• multinational groups using English-language ERP systems
• cross-border B2B service providers and intra-Community supplies
• businesses applying margin schemes or other special VAT procedures

Operational benefits include:

• fewer translation errors in VAT-sensitive invoice elements
• simplified group-wide invoicing standards
• improved compatibility with international ERP and e-invoicing systems
• reduced risk of invoice corrections or denial of input VAT deduction

Caution: Formal risks have not disappeared

Despite the relaxed language requirements, the use of English terminology does not eliminate VAT risks. Issues remain if:

• the term used is imprecise or not part of the accepted terminology
• the VAT treatment itself is incorrect (e.g. reverse charge applied without legal basis)
• other mandatory invoice elements are missing
• supporting documentation is insufficient

In Germany, the principle still applies: an incorrect invoice may result in the denial of input VAT deduction – particularly in VAT audits, where reverse charge and special schemes are subject to close scrutiny.

Recommendation: How companies should implement the change

Practical checklist for finance, accounting and ERP teams:

1. Review invoice templates for reverse charge, self-billing and margin scheme references.
2. Align terminology strictly with the accepted wording under the VAT Application Decree.
3. Harmonize ERP tax codes, logic and text modules consistently.
4. Strengthen master data governance (customers, suppliers, VAT IDs, place of supply).
5. Define clear internal review processes for VAT classification and exceptional cases.