Digitization of invoicing in Germany

In the same way, companies can also use the transition for a freestyle. This is because the requirements enable great simplification, more transparency, and greater efficiency, including for auditors and tax authorities. With e-invoicing already becoming increasingly widespread in recent years, the new standards are changing the way companies interact with each other even more. This should be seen as an opportunity.

• Electronic invoices provide a uniform, reliable database and thus open up the opportunity for companies to optimize central accounting processes, including artificial intelligence.

The transition from the option to mandatory electronic invoicing may extend over the years 2025 and 2028. The legislator knows that some companies may need to make more adjustments and it may take longer. However, the changeover will ultimately be worthwhile for everyone. In the end, all companies will benefit from lower costs, greater transparency, and simplified controls in invoicing and invoice processing.

What is the historical background of the electronic invoicing obligation?

The introduction of mandatory e-invoicing in Germany is linked to the VAT issue within the EU. The EU Commission launched the ViDA (VAT in the Digital Age) initiative in 2020. It aims to simplify the reporting system and make VAT fraud impossible. The introduction was originally planned for 2028, but a postponement to 2030 or 2032 is now being discussed. A key prerequisite for ViDA is the definition of an "electronic invoice" by Article 217 of the VAT System Directive (VAT Directive) to meet modern requirements.

In April 2023, a discussion draft on the obligation of electronic invoicing emerged in Germany. To anticipate the final ViDA measures, Germany received approval for this in July 2023. This meant that the digital invoicing obligation could be incorporated into the Growth Opportunities Act without any problems.

What is the legal basis for mandatory e-billing?

In Section 14 (1) sentence 3 UStG-E, the Growth Opportunities Act defines what is meant by electronic invoices and how they are to be used in business transactions from January 1, 2025. An electronic invoice is therefore an invoice,

• that is issued in a structured electronic format,
• is transmitted and received electronically
• and enables electronic processing.

Furthermore, the structured electronic format of the e-invoice must comply with the European standard for electronic invoicing and the list of corresponding syntaxes by Directive 2014/55/EU. This requirement harmonizes with CEN standard EN 16931, which allows flexible application and individually agreed formats between invoice issuers and recipients, as long as the necessary core information is compatible with the European standard and can be extracted directly. This means that deviations are possible for countries or sectors, for example.

The electronic invoice obligation promotes the use of modern formats such as XRechnung and the hybrid ZUGFeRD format, which have been mandatory for public clients since 2020. The Federal Ministry of Finance (BMF) has explicitly confirmed these formats as compliant with the legal requirements (applies to ZUGFeRD from version 2.0.1). The definition of mandatory minimum standards leaves room for expansion in detail and thus for possible technological advances in data exchange between companies.

What happens to invoices in PDF format?

Hybrid invoice formats with structured and unstructured data are also possible in principle. However, the structured data must contain all relevant information. This innovation represents a departure from previous regulations. It shows that structured data processing is decisive for the future of electronic invoicing.

• From 2025, a PDF invoice sent by email will no longer be considered an electronic invoice within the meaning of the law.

For many companies, this is likely to entail a considerable amount of change. Nevertheless, the legal changes should be seen as a step towards greater efficiency in document traffic between companies. Companies can use the opportunity to rethink their processes and start discovering the opportunities offered by the e-invoicing obligation now.

For whom are electronic invoice requirements mandatory from 2025?

The obligation to issue invoices electronically applies to the B2B sector. Accordingly, from January 1, 2025, companies that provide supplies or other services to other entrepreneurs must comply with the electronic invoicing obligation by Section 14 para. 2 sentence 2 no. 1 UStG-E. The e-invoicing obligation should not apply to tax-free deliveries and services, small-value invoices under 250 euros, and tickets.

What about invoices to end consumers?

The obligation to issue an electronic invoice only applies to business relationships between entrepreneurs. Transactions in the B2C sector (business-to-consumer) are therefore not affected. An entrepreneur on a business trip can still accept a receipt from a cab driver without any problems.

Are there geographical restrictions for the German scheme from 2025?

Electronic invoicing is only mandatory if the companies involved are both based in Germany. Residency is determined by the registered office of the company, the management, or a permanent establishment involved. Registration for VAT purposes only in Germany, without physical business operations, does not result in an obligation to issue electronic invoices.

What special areas of application need to be considered?

The digital invoicing obligation potentially also extends to special business models such as the letting of buildings. Taxable landlords who rent out their properties to other entrepreneurs and opt for taxation (option under Section 9 UStG) could be obliged to issue electronic invoices. Unlike in the past, a fixed rental agreement is then no longer considered an invoice.

What needs to be done to implement the requirements of e-billing?

In short: The e-invoice by the European standard must be digital throughout - from creation, dispatch, and receipt of the invoice to processing by the recipient, a paperless, standard-compliant digital process should be possible. The regulation also ensures that the e-invoice not only complies with national but also European directives. This gives e-invoicing a uniform framework throughout the EU.

Who needs to adapt their business processes?

The obligation to e-invoice requires both invoice issuers and invoice recipients to adapt their processes. Simply sending invoices electronically, for example as a PDF by e-mail, is not enough. Companies must therefore invest in technologies and systems that enable invoices to be created, transmitted, and processed in a defined, structured data format. The companies themselves benefit from this. With the changeover, they achieve greater efficiency, transparency, security, and traceability for receivables and financial transactions.

Implementation in practice

Various solutions are available for the practical implementation of the electronic invoicing obligation, such as XRechnung and ZUGFeRD, which are already used by many companies and in the public sector. These formats support compliance with legal requirements and enable invoice data to be processed and exchanged efficiently.

The introduction of mandatory electronic invoicing requires timely action. At the same time, thanks to our expertise in the automation of payment processes, we see good opportunities to automate processes even further.

What is the timetable and are there any transitional arrangements for mandatory e-invoicing?

The official start date for mandatory electronic invoicing in Germany is January 1, 2025, although there are pragmatic transitional arrangements. They are intended to allow businesses to gradually adapt to the new requirements.

The transition phase to e-billing until the end of 2028

In the first two years after the e-invoicing obligation comes into force, companies will be granted a certain degree of flexibility. During this period, B2B services that are provided until 2028 may continue to be invoiced conventionally. Electronic invoices that do not meet all requirements are also still permitted. However, the invoice recipient must agree to this. This leeway is intended to facilitate the transition to the complete digitalization of invoicing. Companies therefore have a certain time buffer to fully adapt their internal processes.

But as early as January 2028, your room for maneuver will narrow

Tighter transitional regulations will apply from the beginning of 2028. From then on, only very small companies will be allowed to use paper invoices and non-compliant electronic invoices. Please note that the limit is low, namely a maximum turnover of EUR 800,000 in the previous year. This regulation benefits companies such as stores, restaurants, and tradespeople whose resources are limited.

What will apply from 2028 for all companies with a turnover of more than EUR 800,000?

Except for the very small companies mentioned above, things will get serious from January 2028. From then on, compliance with the new requirements for electronic invoicing will be mandatory. This means for you:

• You must use one of the permitted electronic formats.
• Your invoices must contain at least the prescribed core information as fully structured data.
• Fully automated processing must be possible.

Can the EDI procedure still be used after 2025?

Yes, in principle there is no reason not to. You may continue to use Electronic Data Interchange (EDI) beyond 2027. Condition: The information exchanged must meet the requirements of CEN standard EN 16931 or be compatible with it. Sticking to the tried-and-tested EDI process therefore fits into the new legal framework. This can often make the changeover easier.

The transitional provisions of the Growth Opportunities Act for electronic invoicing should not tempt anyone to let the time until then pass unused. It is better to take the necessary steps as early as possible. In this way, you can spread any costs for the mandatory changeover to e-invoicing over a longer period.

Requirements for invoice recipients and transitional provisions

The obligation to issue invoices electronically from January 1, 2025, also means that invoice recipients need to be prepared for the changes. As a specialist in automated invoice receipt processing, we recommend seeing the changeover as an opportunity to analyze your electronic invoice receipt and automated invoice processing in detail. The occasion is ideal for sustainably optimizing processes with the help of our AI.

What does the e-invoicing obligation mean for invoice recipients?

Business invoice recipients with a German invoice address must be able to receive and process electronic invoices digitally. All legally required data must be able to be processed seamlessly by your systems. Your consent to receive the new electronic invoices is no longer required. There is therefore an obligation to prepare for the receipt of e-invoices in good time. This is intended to accelerate the spread of electronic invoices in Germany.

Does this also apply to entrepreneurs who invoice their services VAT-free?

Yes, even entrepreneurs who only provide tax-free services, such as landlords or doctors, must be able to receive and archive electronic invoices in the prescribed format. In principle, assume that the scope of the new e-invoices is very broad and that the exceptions relate almost exclusively to the consumer sector or mini invoices that are paid directly.

Credits and exceptions

Following the introduction of e-invoices, it will still be possible to issue invoices by credit note, provided of course that this has been agreed. Nevertheless, not every transaction that a company carries out requires the receipt of a compliant electronic invoice. Small-value invoices or travel tickets, for example, may continue to be documented with receipts as before.

This is particularly important for many companies: Invoicing by third parties remains permissible, meaning factoring or invoicing via platforms is covered by the switch to e-invoicing.

Do you need support in preparing for the new e-bill?

The changes are not always trivial. We recommend that companies get to grips with the matter in good time and analyze the individual conversion effort.

If you want to get more out of implementing suitable systems and processes than simply complying with the law, be sure to contact us at an early stage. We can help you in particular if you want to increase the level of automation in your incoming goods accounting in parallel with the adjustments. In this way, you can complete two important projects in a single project - firstly, the timely adaptation to the new e-invoice, and secondly, the increase in your automated processing and the associated gain in detailed transparency and controllability.