White paperThe introduction of electronic invoicing (e-invoicing) is based on the Growth Opportunities Act, which is one of the most significant legal innovations in VAT law. As of January 1, 2025, German entrepreneurs who supply services or goods to other German entrepreneurs will be obliged to issue invoices exclusively in a structured electronic format. This legislative change aims to promote digitalization and efficiency in business transactions while modernizing tax processes. Exempt from this obligation are invoices that are exempt from tax according to § 4 nos. 8 to 29 UStG, as well as invoices for small amounts up to EUR 250 and tickets.
What You Should Know About E-Invoicing
1. Executive summary: e-invoicing
E-invoicing – digital invoicing – is gaining importance worldwide. Digitalized invoicing processes promise huge cost savings of between 60 and 80 percent compared to paper-based invoicing processes. The benefits of switching to e-invoicing include reduced entry errors, shortened processing times and an increase in cash discounts. Increasingly, e-invoicing is also becoming a legal obligation (e.g. European Directive 2014/55/EU). Furthermore, companies face various challenges when introducing e-invoicing.
But what exactly is an electronic invoice, what are the challenges in e-invoicing, what components should an e-invoicing solution have and what is Peppol? Find out more in our comprehensive guide to e-invoicing and reap the benefits of digitised invoicing processes for your company!
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2. What is an electronic invoice?
While e-invoicing covers the entire digital invoicing process from creation to processing, the term e-invoice refers to a structured invoice format that complies with legal requirements and is transmitted electronically. An electronic invoice is therefore created, transmitted and received entirely digitally. A distinction is made between:
- structured data (e.g. EDI, XML),
- unstructured data (e.g. invoices in PDF, TIF, JPEG, Word format or e-mail text)
- hybrid data (e.g. ZUGFeRD or Factur-X).
The available transmission/reception channels include e-mail, DE-Mail, computer fax, fax server, web download, Peppol or web service. Invoices received in paper form and converted to electronic formats do not fall under the definition of electronic invoices under the VAT Act.
It is not very efficient to print, envelope, stamp and send a digital invoice on paper only to have it manually captured and digitized again by the recipient before it can finally be paid. Such an invoice process is complex, expensive and not environmentally friendly due to the use of paper and transportation resources. Due to this, German legislation has placed the electronic invoice on an equal footing with the paper invoice (July 01, 2011). Since then, electronic invoices have been sent without an electronic signature and, for example, by e-mail.
In response to the European Directive 2014/55/EU the legislator defines an electronic invoice in the Act to promote electronic government (E-Government Act - EgovG) as follows:
An invoice is electronic if:
- it is issued, transmitted and received in a structured electronic format and
- the format enables the invoice to be processed automatically and electronically.
Source (translated): §4a Para.2 German EGovG
Sending invoices as PDF files does not meet these requirements, because the recipients cannot automatically process PDF files. Businesses expect to receive electronic invoices in a structured format that can be understood automatically.
Structured and hybrid invoice formats
Structured invoice formats, such as EDI (Electronic Data Interchange) data, consist of purely machine-readable data that has been specially developed for electronic transmission and machine processing. These formats are not readable by humans and must be converted into a visually understandable form for internal checking, approval and archiving.
Hybrid invoice formats combine the advantages of structured machine-readable formats with a human-readable representation. A well-known example is the ZUGFeRD format (Central User Guide of the German Electronic Invoice Forum) or its European counterpart Factur-X. Technically, this is achieved by embedding a structured XML data set in a PDF file. This allows the recipient to process the invoice automatically as well as check it manually.
3. Digitalization through e-invoicing – future-proof into the digital age
‘The only constant in life is change.’ This quote from the Greek philosopher Heraclitus also applies to e-invoicing. The question is not “if” but ‘when’ electronic invoicing will finally replace paper invoices.
The trend is clear: the European Commission has already done everything necessary to encourage the move away from paper invoices by gradually making e-invoicing mandatory. In Germany, 72 percent of companies already issue at least half of their invoices digitally – a significant increase compared to 65 percent in 2020 and only 41 percent six years ago. In addition to using unstructured PDF invoices, which are difficult to integrate into digital processes, more and more companies are turning to structured formats. The proportion of companies using e-invoices based on standards such as EDI, ZUGFeRD or XRechnung is now 45 percent. By comparison, two years ago the figure was 30 percent and in 2018 only 19 percent.1
Germany is not among the pioneers in electronic invoicing. In fact, southern European countries such as Italy, Spain and Croatia, as well as Hungary and Scandinavia, are further ahead in implementing European Directive 2014/55/EU. Nevertheless, electronic invoicing in public administration has become increasingly established in Germany since 2020 and 2021. From 1 January 2025, the obligation to use electronic invoicing will also be extended to the B2B sector, representing a further step towards digitalisation for the German economy.
Despite everything, it is clear that analogue invoicing processes are a thing of the past. E-invoicing in the legally required format of an e-invoice ensures greater transparency, speed and efficiency.
1 Bitkom-Studie 2022: Rechnungen werden digitaler, aber Belege kommen oft noch auf Papier | Presseinformation | Bitkom e. V.
4. The biggest driver of e-invoicing is the government
More and more countries are requiring e-invoicing: The main reason for the growing number of invoicing and e-invoicing regulations is trivial:
Governments are increasingly looking for new ways to enforce their tax laws and collect more of the expected value added tax. In this context, e-invoicing is increasingly becoming mandatory, as it enables structured and automated processing.
The 2023 report analyses the VAT gaps (VAT Gap Report) in the 27 EU Member States for the year 2021. In total, the 27 Member States lost around 61 billion euros in VAT, which represents a significant decrease compared to the 99 billion euros in 2020. The report shows a positive trend with a continuous reduction in the VAT gap. In 2017, the gap amounted to 146 billion euros in 28 member states, which corresponds to 11.9 per cent. In 2018, the amount fell to 143 billion euros for 28 member states, which corresponds to 11.2 per cent. In 2019, the loss amounted to 140 billion euros for 28 Member States, corresponding to 10.7%. In 2020, the loss amounted to 99 billion euros for 27 Member States, corresponding to 9.6%. Finally, in 2021, the loss amounted to 61 billion euros for 27 Member States, corresponding to 5.3%.
Given the tight budgetary situations and slowing economic growth in EU member states, there will be a growing incentive to secure tax revenues more efficiently. An effective way to achieve this is to require all companies operating in the country to use electronic invoicing. Many countries have already established systems whereby either the entire invoice or at least the relevant VAT information is transmitted to the tax authorities in real time.
5. What are the advantages of e-invoicing?
E-invoicing offers numerous advantages that benefit companies both in the short and long term. The biggest advantage is the significant savings potential: printing and postage costs are eliminated, invoices are delivered faster, and errors in incoming invoice processing are significantly reduced. The issuance of e-invoices contributes to this, as they use standardised formats that enable seamless integration into existing systems. If there is an existing purchase order reference, invoices can be posted fully automatically. In addition, e-invoicing shortens the time from invoicing to payment, which increases liquidity.
Lower costs and faster ROI:
More efficient processes and higher compliance:
More security
Better cash flow
Complete transparency & fast booking
Compliance with legal requirements
Sustainability and environmental friendliness
Improved data analysis and reporting
Increased scalability
Faster integration and customization
6. E-invoicing for outgoing invoices
Creating and sending paper invoices are highly manual and inefficient business processes. These cause high costs and lead to errors and late payments.
When it comes to outgoing invoices, companies benefit from accelerated approval processes, automated workflows and complete transparency. The legally compliant creation of e-invoices can be integrated directly into existing processes.
In concrete terms, this means that digitised outgoing invoicing through e-invoicing optimises these internal processes, saves costs, increases the transparency of internal processes and improves the ecological balance. This enables companies to improve customer loyalty and secure market opportunities and competitive advantages.
The digital outgoing invoice process can be simplified into four steps: receipt, conversation, portal and export.
After the invoices have been created with an ERP system, the outgoing invoices are automatically transferred via an interface to the e-invoicing solution for digital outgoing invoices.
Depending on the e-invoicing standard (e.g. ZUGFeRD or XRechnung), the invoice data received is converted into the desired target format.
In a portal application, the outgoing invoice book can optionally be viewed centrally and an audit-proof archive can be connected.
In the final step, the electronic invoice is sent to the invoice recipient, for example by email as an attachment or as a secure download link. Connecting invoice recipients via EDI (EDIFACT) is also a common approach.
The use of an e-invoicing solution for outgoing invoices eliminates manual invoice issuance processes and significantly reduces the receivables cycle time through immediate delivery.
7. E-invoicing in invoice receipts
E-invoicing is the processing of incoming invoices in a continuous, automated process: from the recording of incoming invoices to the final posting.
The digital invoice receipt process can be categorized into three steps: receipt, preparation and processing.
Invoices are received automatically via various input channels. These are:
- EDI invoices
- Hybrid invoices, such as ZUGFeRD
- PDF invoices
- Scanned paper invoices
After invoice receipt, the invoice contents are converted into an internal standard. Electronic invoices, which already contain structured data, are converted. Scanned paper invoices and PDF invoices are identified and extracted using OCR/text recognition software.
The processed invoice data is enriched with vendor master, purchase order and goods receipt data from the ERP system and automatically checked for purchase order references, quantity and price deviations or country-specific rules. At best, invoices can be automatically transferred for posting. All other invoices must be routed to an integrated clarification or approval process.
All steps that an invoice goes through in the verification process are logged to meet legal requirements (GoBD). The invoice content required for booking is transferred to the customer's ERP system. The invoice, attachments in the editing process, conversion and processing logs must be archived in an audit-proof manner in accordance with applicable country requirements.
8. Global e-invoicing
Internationally active companies are increasingly facing legal requirements to create and send their invoices electronically. However, as different legal regulations apply in each country, implementation varies. Currently, there are already specific e-invoicing regulations in over 70 countries worldwide, and this number is growing steadily. As a rule, this refers to the use of structured e-invoices that meet specific format and transmission standards.
In many countries, the heterogeneity of regulations and local characteristics relating to electronic invoicing, in terms of accurate and up-to-date data, security requirements, system integration, status monitoring, documentation, etc., leads to a high degree of complexity.
There are basically two types of audit models for electronic invoicing, commonly known as clearance and post-audit models.
Post-audit and continuous transaction controls
Many countries have legal requirements that specify the retention period for electronic invoices for possible automated audits. In the EU, the post-audit procedure, in which invoices are checked retrospectively, is currently the most widely used method. However, there is a growing trend away from this time-delayed post-audit approach.
Instead, a centrally regulated e-invoicing model is gaining ground, enabling transaction-based tax reporting and controls in near real time. These so-called Continuous Transaction Controls (CTC) offer a more effective method of monitoring and controlling invoices.
Continuous transaction controls to reduce the tax gap
In order to combat tax fraud and tax evasion while addressing the challenges of stagnant economic growth, rising government spending and inflation, the implementation of continuous transaction controls in the EU is being pushed forward with increasing urgency. These measures help to reduce the tax gap and improve the efficiency of tax collection.
Real-time e-invoicing and e-reporting are expected to reduce the €134 billion tax gap in 2019 (European Commission VAT Gap Report of 2021) in the future.
EU-wide standardization and harmonization of CTCs – current status
In a plenary session on March 10, 2022, the EU Parliament called on the EU Commission to immediately implement an EU-wide, harmonized e-invoicing standard by 2022. E-invoicing is to play a defined role in real-time e-reporting and an e-invoicing obligation is to be successively introduced by 2023 in order to significantly reduce the compliance costs of companies through state-operated or certified systems.1
This effort towards EU-wide standardization and harmonization of CTCs in e-invoicing and e-reporting is very welcome.
Lack of cross-country CTC standards in practice
To the chagrin of many multinationals, the clearance procedures have so far varied greatly from country to country. This is because the focus of existing CTC models is mostly on the domestic market, and serves first and foremost the state interest of tax optimization. Subordinately, existing CTCs take into account the following aspects, for example:
- User friendliness
- Support of indirect tax controls for cross-border and transnational operations
- Harmonization for reusability for other countries by applying existing format standards, exchange and interoperability
- Business acceleration and supply chain optimization through efficient end-to-end integration of electronic invoice data as it is created, exchanged, received and processed across all sizes of organizations
Trend towards the introduction of CTC systems
The trend toward CTC requirements is gaining momentum. With CTCs, countries require business entities to report invoice data directly from their transaction processes to tax authority systems and portals to supplement or even replace regular VAT returns. E-invoicing and electronic reporting requirements, the so-called "e-reporting" of invoice data in (near) real time to the tax administration for reporting purposes, are often referred to as continuous transaction controls (CTC) and transaction-based tax reporting. These real-time controls on transaction-based reporting often include digital signatures, unique document reference numbers and QR codes. CTC requirements for economic operators exist in Mexico, Brazil, Italy, Turkey, Portugal, Spain and Hungary, for example.
In Europe and Asia, the CTC trend, which originated in Latin America, has only just begun.
Existing e-invoicing and CTC models
Existing e-invoicing and CTC models can be categorized as follows, as outlined by a group of experts in the document “A Next Generation Model for Electronic Tax Reporting and Invoicing":
- Interoperability Model
- Real-time Invoice Reporting Model
- Clearance Model
- Centralised Exchange Model
- Decentralised CTC and Exchange
The following examples illustrate the process of reporting VAT data and exchanging e-invoices.
Lack of cross-border CTC standards in practice
Currently, clearance procedures (CTCs) vary considerably between different countries, which poses a particular challenge for multinational companies. Existing CTC models often focus on national interests and tax optimisation, with cross-border aspects often being neglected. Typical restrictions include:
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User-friendliness: User-friendliness is often not given sufficient consideration.
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Support for indirect tax controls: Cross-border and multi-country operations are not always effectively supported.
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Harmonisation: The reusability of CTC systems for other countries is often limited, as existing standards for formats, exchange and interoperability are only partially adopted.
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Business acceleration: The efficiency of end-to-end integration of electronic invoice data could be improved to ensure faster processing and optimisation of the supply chain.
Trend towards the introduction of CTC systems
The trend towards introducing CTC systems is growing. More and more countries are requiring companies to transmit invoice data directly from their transaction processes to the tax authorities. This data transmission often supplements or replaces regular VAT returns. CTC requirements, also known as continuous transaction controls (CTC) or transaction-based tax reporting, often include real-time reporting, digital signatures, unique document reference numbers and QR codes. Examples of countries with CTC requirements include Mexico, Brazil, Italy, Turkey, Portugal, Spain and Hungary.
In Europe and Asia, the trend towards CTC systems is still in its infancy, although it originated in Latin America.
Existing e-invoicing and CTC models
According to the document ‘A Next Generation Model for Electronic Tax Reporting and Invoicing’, existing e-invoicing and CTC models can be categorised as follows:
- Interoperability Model
- Real-time Invoice Reporting Model
- Clearance Model
- Centralised Exchange Model
- Decentralised CTC and Exchange
Interoperability Model
The exchange of invoices between trading partners is standardized in terms of formats, content, subscriber directories, exchange protocols and interoperability criteria between certified providers. Unlike the traditional Peppol 4-corner model, for example, there is no involvement of the tax authorities or their platform.
Real-time Invoice Reporting Model
The taxable entity reports the invoice or a subset thereof to a government agency shortly after the invoice is issued and exchanged between trading parties. The exchange of invoices between trading parties is not regulated.
Clearance Model
The invoice is checked and cleared via the tax authority's central platform. If applicable, only certified providers are allowed to perform the communication with the platform. The exchange of invoices between trading partners is not regulated.
Centralised Exchange Model
Verification, clearance and exchange of the invoice are carried out via the central platform of the tax authority.
Decentralised CTC and Exchange Model: “DCTCE”
As with the Interoperability Model, the DCTCE model relies on a decentralized network of certified providers that provides for user-friendliness, investment protection, interoperability, reusability of solutions in other countries and connectivity to tax administrations' platforms that may already exist or be under development, ensured by the certified providers. An example of a DCTCE model is the new Peppol Continuous Transaction Controls Reference Model. This is a Peppol-based 5-corner model, which combines interoperability (known from the classic Peppol 4-corner model with the four corners: 1. supplier, 2. access point from the supplier, 3. access point from the customer, 4. customer) with the connection of the control platforms (corner no. 5) in one model.
International regulations are changing at a rapid pace. The number of countries that require some form of e-invoicing is constantly increasing, and the numerous regulatory details of individual countries that need to be taken into account increase the complexity of e-invoicing for internationally active companies.
One of the biggest challenges for international companies is keeping up with constant regulatory changes. Our blogs provide up-to-date information on regulations in different countries and help you stay on top of things.
| Austria | All B2G suppliers based in Austria are legally obliged to submit their invoices in electronic form in accordance with the Austrian ICT Consolidation Act (IKTKonG). The national XML invoicing standard for Austria is ebInterface. |
| Belgium | The Belgian mandate will come into effect on 1 January 2026. The Ministry of Finance has provided additional information to inform taxpayers about requirements and compliance. |
| Brazil | On 31 July 2024, the NFS-e Management Committee published DFe Technical Note 2024.001 IBS/CBS Version 1.00 with updates to the layouts of electronic tax documents for the introduction of new taxes in accordance with Constitutional Amendment No. 132/2023. The changes include new information groups, fields and totals for tax reporting and affect several types of electronic invoices. |
| Europe | On March 10, 2022, the European Parliament (EP) adopted in plenary a resolution on the European Commission's (EC) Action Plan for Fair and Straightforward Taxation in Support of Economic Recovery Strategy (2020/2254(INL)). In 2022, the Commission presented the first draft on ViDA. |
| Finland | In Finland, there is no legal obligation for electronic invoicing in the B2B sector, but since 2020, companies with a turnover of more than €10,000 must provide structured electronic invoices upon request. The Finnish government supports electronic invoicing because of its efficiency and role in preventing VAT fraud. |
| France | On 27 March 2024, a decree was published setting out transitional arrangements and the timetable for the CTC mandate. The mandate will start on 1 September 2026 for large and medium-sized taxpayers and on 1 September 2027 for smaller businesses. |
| Germany | On 13 June 2024, the Federal Ministry of Finance published a draft bill in preparation for the Growth Opportunities Act mandate. From 1 January 2025, companies in Germany must receive electronic invoices, with the obligation to issue them following in 2028. The final draft will be published in the fourth quarter of 2024. |
| Greece | In Greece, all electronic VAT returns and B2G/B2B e-invoices must be submitted to the MyData platform, which validates the documents and assigns unique identifiers. The pre-validation process in MyData prior to invoicing is a CTC form. |
| Hungary | In Hungary, electronic VAT reporting of outgoing invoices to the Hungarian tax system NAV (National Tax and Customs Administration, NTCA) has been mandatory under certain conditions since 2018. The Hungarian National Tax and Customs Administration (Nav Nemzeti Adoes Vamhivatai, or NAV for short) offers the Hungarian tax authority's IT system/procedure known as the Online szamla system for these returns. |
| India | On 21 February 2024, the GSTN introduced a new master information portal for electronic invoices, which offers automatic exception lists, PAN-based search options and daily IRN statistics. It supports electronic invoicing via six IRP portals, APIs and a mobile app. |
| Italy | Since 2019, all domestic invoices in Italy must be issued in a defined electronic format (FatturaPA) and exchanged via a state-run invoice portal (SdI). Italy went one step further in 2022 and introduced the ‘cross-border invoice’. Invoices sent from Italy to another EU country or received in Italy from another EU country are subject to VAT reporting requirements to the invoice portal (SdI). In 2020, Italy created the e-order mandate via the NSO platform, which is mandatory for suppliers to the national health system. |
| Japan | E-invoicing remains voluntary. The Japanese invoice standard, which is based on the international Peppol model (PINT) and uses the BIS Billing 3.0 format, is recommended here. |
| Luxembourg | Since 2023, B2G e-invoicing has been mandatory for companies of all sizes. The PEPPOL BIS Billing 3.0 standard is used to create a uniform basis for the exchange of invoice data. |
| Mexico | The Mexican government has extended the obligation to use CFDI Version 4.0 for payroll accounting until 1 July 2023. Since 1 April 2023, only Version 4.0 has been valid. Those who are already using it do not need to do anything, while others have until the new deadline. |
| Poland | On 18 July 2024, the Ministry of Finance and the Tax Administration discussed the KSeF system with companies. New features such as sending attachments and restructuring e-invoices are planned. The implementation schedule remains February and April 2026, with further steps in September. |
| Portugal | On 29 November 2023, the Portuguese State Budget Law for 2024 was passed, further postponing the regulations for electronic invoices in B2G and qualified electronic signatures (QES) for PDFs. From 1 January 2025, QES for PDFs will be mandatory for B2B and B2C transactions. From 2025, small businesses will also have to send electronic invoices in CIUS-PT format to public authorities. |
| Romania | Romania introduced voluntary electronic invoicing for B2G transactions in November 2021 and for B2B transactions in April 2022 via the RO E-Factura platform. Electronic invoicing became mandatory for high-tax-risk products in July 2022 and will become mandatory for all other products in 2024. Law No. 296/2023 sets out requirements for electronic reporting in addition to electronic invoicing. |
| Saudi Arabia | Phase 2 of electronic invoicing in Saudi Arabia began in January 2023 and will be implemented in waves based on taxable income. Wave 1 covers companies with a turnover of 3 billion riyals or more, while Wave 12 ends in December 2024 for companies with a turnover of 10 million riyals or more. ZATCA announces each wave and notifies taxpayers six months in advance. |
| Switzerland | Electronic invoicing has existed in Switzerland for more than two decades. Switzerland officially recommends the use of a hybrid invoice format based on the German/French standard ZUGFeRD/Factur-X. |
| Serbia | Since 2022, electronic invoicing has been mandatory in Serbia for B2G and B2B. ‘Sistem E-Faktura’ (SEF) is an IT solution provided by the Serbian Ministry of Finance based on the Clearance E-Invoicing model for sending, receiving, recording, processing and storing electronic invoices. |
| Slovakia | The national rollout of the eFaktúra electronic invoicing system will continue in line with the EU's ViDA initiative, without specifying a new timeline. The draft includes improvements such as QR codes on invoices and pre-filled tax returns. A final date is expected in 2025. |
| Spain | Mandatory electronic invoicing in the B2B sector is to be implemented within 12 and 24 months of the law being published for larger companies (turnover greater than €8 million) and smaller companies respectively. A public platform will facilitate the exchange of electronic invoices, which must be in PDF format in the first year for reasons of readability. Recipients must report the status of invoices within four days. The introduction is not expected before the beginning of 2026. |
| United Kingdom | The United Kingdom has introduced legislation requiring the public sector to receive and process supplier invoices electronically. |
E-Invoicing requirements in Germany
Following the previous chapter, which explored e-invoicing on a global level, this section focuses on the legal obligations for electronic invoicing in Germany.
As of January 1, 2025, Germany has introduced a legal requirement mandating the use of electronic invoices for domestic business-to-business (B2B) transactions. The aim of this measure is to drive digitalization, simplify administrative processes, and enhance tax transparency. Since then, invoice recipients have been required to be capable of receiving and processing e-invoices.
At present, this obligation applies only to domestic transactions. However, as part of the European Commission’s “VAT in the Digital Age” (ViDA) initiative, mandatory e-invoicing and digital reporting are also being planned for cross-border trade within the EU.
Changes introduced by Germany’s e-invoicing mandate
With the introduction of mandatory electronic invoicing for B2B transactions in Germany, paper invoices and simple PDF invoices sent by email are no longer sufficient. While a PDF may be considered a digital document, e-invoicing requires at minimum a structured XML data format to ensure standardization and promote harmonization. More specifically, the new legal requirements call for electronic invoices that comply with the EN16931 standard and are submitted in a machine-readable format. Two formats currently meet this European standard: ZUGFeRD (version 2.2 or later) and XRechnung 3.0.
As previously outlined in the definition of an electronic invoice, ZUGFeRD is a hybrid format that offers greater flexibility by combining structured XML data with the visual advantages of a PDF. This means that while the invoice can be read like a standard PDF by humans, the embedded XML file can be processed automatically by machines.
Electronic invoicing using the XRechnung format is already mandatory for invoices submitted to public authorities. Unlike ZUGFeRD, XRechnung contains only structured data and does not include a visual human-readable representation.
Both formats offer the advantage of automated processing by IT systems, such as ERP or accounting software, thanks to their structured data. This enables end-to-end automation, from data extraction and validation to posting, without any manual intervention. As a result, organizations can benefit from significant time and cost savings, reduced errors, improved efficiency, and greater transparency and control throughout the invoicing process.
Benefits of the e-invoicing mandate
In addition to the efficiency gains already discussed, the introduction of mandatory e-invoicing in Germany brings further advantages for the various stakeholders involved.
Benefits for tax authorities
E-invoices in a structured format enable straightforward digital traceability and are easy to audit. Real-time processing facilitates the verification of tax and financial data by public authorities and ultimately supports efforts to combat tax fraud.
Benefits for the EU
The harmonization of standards helps preserve the international competitiveness of businesses, especially small and medium-sized enterprises (SMEs), by allowing them to benefit from shared technological advancements without having to develop their own solutions. This shift also drives digital transformation by replacing paper-based workflows with digital processes. In turn, it supports the achievement of sustainability goals at the European level and strengthens the internal market.
Benefits for businesses
Automated processing and electronic documentation reduce errors in invoice capture and handling. This not only improves efficiency but also enhances compliance with tax and accounting regulations, strengthens auditability, and increases transparency across financial processes.
9. International standards for e-invoicing: Peppol
Peppol is an open, cross-border network that enables the exchange of electronic procurement documents via a uniform interface. It covers not only e-invoicing, but also the entire procurement process, including tenders and orders (e-procurement). Peppol also meets the requirements of EU Directive 2014/55/EU for electronic invoicing in public procurement. This directive defines requirements for e-invoicing to ensure uniform and interoperable exchange of invoice data within the EU.
To become part of the Peppol network, you need a connection to a Peppol Access Point. A Peppol Access Point acts as both a sending and receiving access point and enables the electronic exchange of documents such as catalogs, orders, shipping notifications and invoices.
Learn more about Peppol in our guide: What is Peppol?
10. Which operating model is optimal for your e-invoicing?
When introducing an e-invoicing solution, three key questions regarding the operating mode should be clarified:
Hosting:
Should the e-invoicing solution be located in your own data center or should the operation be outsourced to a data center operator?
Operating mode:
Should the solution be operated as a licensed product on-premises or as a cloud service on a pay-per-use basis?
Standards and formats:
Which e-invoicing standards and formats are currently needed and may be needed in the future?
If maximum control over your invoicing and settlement processes is your top priority, an on-premises solution based on licences is the right choice. However, for maximum flexibility and faster implementation, we recommend a cloud solution. This also offers advantages such as easy integration and high operational reliability.
In contrast to flexible and cost-efficient cloud operations, on-premises operations can involve high acquisition costs for hardware and software, as well as extensive implementation and maintenance costs. The ongoing costs for personnel and maintenance are additional factors that should be taken into account when making a decision.
11. Summary
This guide has provided you with a comprehensive overview of electronic invoices and the importance of e-invoicing. The trend towards e-invoicing is being driven primarily by legal requirements and international regulations. E-invoicing plays a central role in this, as it increases efficiency and meets legal requirements. However, the numerous advantages, in particular the significant cost savings, are also making e-invoicing increasingly attractive for companies.
The digitisation of outgoing invoice processes eliminates manual steps, which significantly reduces receivables collection times, as invoices are delivered immediately.
The digitisation of invoice receipt also improves processing quality by reducing manual errors. Our data shows that with an annual volume of 12,000 invoices, the use of e-invoicing can reduce costs by up to 85% compared to conventional manual processing.
Internationally active companies face the challenge of supporting and processing different e-invoicing standards. The Peppol initiative could provide a solution here, provided it gains acceptance. To keep pace with constantly changing regulations, it is advisable to use a cloud-based e-invoicing solution.
Regardless of whether you are currently developing your e-invoicing strategy or need to implement legal requirements for e-invoicing, SEEBURGER can help you do both efficiently and in compliance with the law.
1Source: https://www.europarl.europa.eu/doceo/document/TA-9-2022-0082_DE.html#title1 (Date: 11.08.2022)
12. Frequently Asked Questions
The introduction of electronic invoicing (e-invoicing) in Germany
I. Overview
1. What is the basis of the requirement for electronic invoicing in Germany?
2. What types of invoices will exist from January 1, 2025?
The Growth Opportunities Act differentiates between two main types of accounting:
- Electronic invoice (e-invoice): This corresponds to a structured, machine-readable format that enables the automatic processing of invoice data. Typical formats for this are XML files following the requirements of the European standard EN 16931.
- Other invoices: These include invoices in paper form or non-structured electronic formats such as PDF, image files, or simple emails. However, these invoice formats are only permitted under certain conditions and can no longer meet the legal requirements of a proper invoice if an e-invoice obligation exists.
3. Are there transitional arrangements for the e-invoicing requirement?
Yes, the law provides for a transitional regime until the end of 2026. During this period, invoices between domestic companies may continue to be issued as "other invoices", provided that this is agreed between the issuer and the recipient of the invoice. The purpose of this transitional period is to allow businesses to gradually adapt their systems and processes to the new requirements before the full e-invoicing obligation comes into force.
4. What are the acceptable formats for e-invoices?
To be considered an e-invoice, the invoice format must be in a structured electronic format that meets the requirements of EN 16931 and is machine-readable. The most common formats in Germany are
- XRechnung: A format specifically developed in Germany based on EN 16931. It allows fully automated data processing and is exclusively machine-readable.
- ZUGFeRD: A hybrid format that also meets the requirements of EN 16931 version 2.0.1. The invoice document contains both a structured XML data part and a human-readable PDF document, allowing the format to be used in different contexts.
- Other European formats: The e-invoicing obligation also includes other formats recognized in Europe, such as Factur-X (France) or Peppol-BIS Billing, which are also based on EN 16931
5. Are invoices for small amounts also required to be e-invoiced?
Small invoices with a total value of up to 250 euros are exempt from the e-invoicing requirement. Such invoices can still be issued on paper or as a PDF document without a structured data format. However, the exemption only applies if the amount does not exceed the €250 limit and is not prohibited by other VAT legislation. For invoices that contain a mix of taxable and exempt services, the total amount of the invoice is used to determine the e-invoicing requirement.
6. What is the difference between E-Invoicing and an E-Invoice?
E-Invoicing refers to the entire digital invoicing process from creation to transmission and processing. An E-Invoice, on the other hand, is a specific type of invoice in a structured format (e.g., XRechnung, ZUGFeRD) that complies with the legal requirements of many countries.
II. Invoice sender
1. Who is required to issue an e-invoice?
The obligation to issue an e-invoice applies to all domestic traders who supply services or goods to other domestic traders. This includes all B2B transactions where both parties are established in Germany and the transactions are taxable, unless they are exempt under Section 4 UStG. This regulation is binding and no longer requires the consent of the recipient of the invoice - a decisive innovation that reduces the administrative burden and accelerates the switch to electronic invoice formats.
2. What options are available if an e-invoice needs to be corrected?
If the issued e-invoice contains incorrect information, the biller has the option to correct the invoice. However, the correction must also be made in a structured form, i.e. as an e-invoice. A simple addition or correction in a text document is not sufficient. The corrected invoice must be clearly marked as a correction and refer to the original invoice. The input tax deduction from a corrected e-invoice is generally retroactive to the date of the original issue, making a correction efficient and compliant.
3. Does the invoicing party have to obtain the recipient's consent to receive the e-invoice?
As of January 1, 2025, the recipient's explicit consent to the e-invoice will no longer be required if both parties are domestic businesses. The invoice issuer can assume that the recipient is able to receive and process e-invoices. However, this also means that the recipient must create the technical requirements for receiving e-invoices. The administrative burden on the invoice issuer is significantly reduced, as additional confirmations are no longer required.
4. What is the role of the customer's VAT number?
The use of the recipient's VAT identification number (VAT ID) can serve as an indicator to the invoice issuer that the recipient is acting as a business. For the invoice issuer, this is an essential feature that contributes to the verification of VAT requirements. In the absence of information to the contrary, the issuer can rely on the accuracy of the information provided by the recipient to ensure that the latter is correctly fulfilling its e-invoicing obligations. In addition, the use of the VAT ID number in the invoice can simplify the company's invoice verification processes.
5. What formats can the invoice sender use?
As of January 1, 2025, the issuer of the invoice may only use structured electronic formats that comply with the legal requirements for electronic invoices. The permitted formats are
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- XRechnung: This format fully complies with the requirements of the European standard EN 16931 and is the primary format for e-invoices in Germany. It is based on an XML format and enables direct, automated processing of invoice data.
- ZUGFeRD (from version 2.0.1): This hybrid format combines a human-readable PDF with a structured XML data record. ZUGFeRD in the COMFORT and EXTENDED profiles is EN 16931-compliant and is widely used in Germany. It allows both visual inspection and machine processing of the data.
- Peppol BIS Billing 3.0: This format is commonly used in many European countries and is also based on EN 16931. It enables the secure and standardized exchange of invoice data over the Peppol network.
- Factur-X: A variant of the ZUGFeRD format that is mainly used in France, but is also accepted in Germany. Factur-X also combines PDF and XML to meet the requirements for an e-invoice.
- EDI: The EDI format (e.g. EDIFACT) can be used for invoices until December 31, 2027, as long as all mandatory VAT information is included in a structured form and the recipient has given their consent. After 2027, an e-invoice format such as XRechnung or ZUGFeRD must be used. Under certain conditions, EDI formats that deviate from the EN 16931 standard can also be used, e.g. in accordance with the EU Commission Recommendation 94/820/EC.
6. What special features apply to the issuer when invoicing low-value invoices?
The obligation to issue an e-invoice does not apply to invoices whose total value does not exceed EUR 250. These low value invoices can still be issued on paper or as a PDF document. However, it should be noted that the exemption only applies to invoices with a total value of up to EUR 250. For invoices containing a combination of taxable and exempt services, the total amount of the invoice is relevant. If this amount exceeds the limit, the invoice must be issued as an e-invoice.
7. What if the issuer does not comply with e-invoicing requirements?
If a biller fails to comply with the obligation to issue an e-invoice, it is a violation of VAT regulations. This may result in the denial of input tax deduction, as the "other invoice" issued will not be recognized as a proper invoice. In the worst case, this could lead to tax consequences that could have both financial and legal consequences for the company. Therefore, it is essential for entrepreneurs to strictly comply with the legal requirements for e-invoicing to avoid unnecessary complications.
III. Invoice recipient
1. What are the technical requirements for the invoice recipient to receive an e-invoice?
As of January 1, 2025, invoice recipients will be required to have the technical capability to receive and process e-invoices. The simplest option is to provide an email inbox for receiving e-invoices. However, this does not have to be a dedicated e-invoice inbox; any email address used for business transactions can be used. In addition, companies can use other transmission channels, such as exchange via a central storage portal or electronic interfaces. The key is that the invoice recipient ensures that the e-invoice format can be processed automatically.
2. What happens if the invoice recipient cannot or will not receive an e-invoice?
If the invoice recipient is unable to receive or refuses to accept e-invoices, he/she is not entitled to an alternative invoice. The issuer of the invoice fulfills its tax obligation as soon as it can be proven to have created an e-invoice and initiated the transmission process. Even if the invoice recipient is unable to receive or process the e-invoice for technical reasons, the invoice issuer's obligation remains fulfilled. Proof, such as a transmission log, can document that the transmission attempt was successful, even if the invoice does not reach the recipient.
3. If the invoice recipient is unable to accept the e-invoice, can they request an alternative issue?
No, as of 2025, the invoice recipient will no longer have the right to receive an alternative invoice if an e-invoice is required by law. This means that an invoice recipient who is not technically able to process e-invoices will not be entitled to receive an "other invoice" on paper or as a PDF. It is therefore essential that invoice recipients adapt their systems and internal processes in good time to comply with the new legal requirements and avoid any obstacles to receipt.
4. What are the recipient's retention requirements for e-invoices?
The invoice recipient is obliged to store the e-invoices in their structured electronic format without any changes. The storage must ensure that the data can be analyzed by machine and that the file cannot be modified. This means that all relevant invoice data, as it exists in the structured XML format, must be archived in the original version and according to the legal retention period. If the invoice is a hybrid format (e.g. PDF with embedded XML), both components must be stored. The tax authorities must be able to fully evaluate the data, so the integrity and authenticity of the stored file is particularly important.
5. Can the invoice recipient claim input tax deduction on a corrected e-invoice?
Yes, a correctly issued corrected e-invoice allows the recipient to deduct input tax under the usual conditions. The correction must also be made in the structured form of the e-invoice and have a clear reference to the originally issued invoice. After the correction, the e-invoice is considered correct retroactively to the date of first issue, which means that the invoice recipient can claim the input tax deduction for the original period. However, the corrected record must contain all mandatory VAT information and be formally identical to the original invoice.
6. Are there any requirements for the recipient's consent to e-invoice transmission?
Since the introduction of mandatory e-invoicing no longer requires the recipient's consent, the recipient of the invoice no longer has the right to request a specific invoice format. Both parties can still agree on certain delivery methods and transmission formats under civil law. However, the recipient's consent is still required for invoices that are to be issued as "other invoices" in a non-structured format (e.g. as PDF), for example for small value invoices or during the transitional periods until the end of 2026. In these cases, implied acceptance is sufficient, but does not affect the legal obligation to issue a structured e-invoice if required for the transaction.
7. What are the rights and obligations of the party to be billed when using service providers?
The invoice recipient can also use external service providers to process and archive e-invoices. However, they remain responsible for ensuring that all VAT requirements are met and that invoices are stored in a complete, unaltered and machine-readable form. When selecting a service provider, care must be taken to ensure that the legal requirements for archiving and data security are met to guarantee compliance with the e-invoicing obligation. External service providers must comply with legal requirements and guarantee the technical security and immutability of the stored e-invoices.
8. What steps should the invoice recipient take to ensure that they can properly receive and process e-invoices?
Invoice recipients should ensure that their internal IT systems, processes and people are ready to receive and process e-invoices. Several steps are recommended:
- Check technical infrastructure: The company should assess whether its current email and IT systems can handle the structured format of the e-invoice (e.g. XML).
- Train employees: It is important that the employees concerned are informed and trained on the requirements and handling of e-invoices.
- Coordinate with business partners: Companies should ensure that their suppliers and customers are aware of the preferred formats and delivery channels for electronic invoices.
- Set up interfaces and software: If not available, appropriate interfaces and software solutions should be implemented to import e-invoices directly into accounting systems to support automated processing and reduce manual intervention.
9. What if the invoice recipient is in receipt of an e-invoice that is not compliant?
If the recipient receives an e-invoice that does not comply with the legal requirements (e.g. missing mandatory information, unstructured format), input tax cannot be automatically deducted from this invoice. The recipient can ask the issuer to correct the invoice. If the issuer is unwilling to correct the invoice, the recipient may be able to claim the input tax deduction on the basis of other documents, but must ensure that all relevant information is visible to the tax authorities. The responsibility for correct invoicing lies with the issuer, but the recipient is obliged to check the completeness and formal correctness of the invoices received.
10. What special rules apply to public legal entities receiving invoices?
Legal entities under public law, like private companies, are obliged to receive and process e-invoices for all VATable services purchased for their business activities. In cases where the service is used for both business and non-business purposes, the invoice must be issued as an e-invoice. If the proportion of business use is below a certain threshold (e.g. one to two percent), the obligation to issue an e-invoice remains. This regulation supports the uniform treatment of transactions subject to VAT by public institutions and ensures that all taxable transactions are documented as part of the legally required e-invoices.
11. How long does an e-invoice need to be stored and what needs to be considered?
E-invoices are subject to the general tax retention periods, which require a minimum retention period of ten years. It is essential to store e-invoices in their original format and unaltered to ensure that they can be analyzed by machine. It is not enough to simply store a paper copy or PDF of the invoice. Digital archiving should be designed in such a way that subsequent processing is impossible and the origin of the data can be verified. Companies can use certified archiving solutions or external service providers, but must ensure that legal requirements are met.
12. Can the invoice recipient reject digital formats that are not e-invoice compliant?
Yes, the invoice recipient can reject digital formats that do not meet the legal requirements for an e-invoice, such as unstructured PDF files or image files. The purpose of the e-invoicing mandate is to ensure that invoice data is available in a structured format that can be processed automatically. A recipient may therefore reject formats that do not meet this requirement and require a proper e-invoice instead. In cases where the issuer insists on a non-compliant format, the recipient can take legal action to obtain a proper invoice.
13. How important is machine readability of e-invoices for the invoice recipient?
Machine readability is a key requirement of the e-invoice mandate, as it enables automated processing of invoice data. For the invoice recipient, this means that the structured data can be imported directly into the accounting system and processed automatically, increasing efficiency and reducing errors. Machine readability also facilitates documentation and auditing by tax authorities, as all relevant invoice data is available in a standardized format. Machine readability is therefore an essential prerequisite for taking full advantage of digitization in accounting and reaping the benefits of automated accounting.
14. What to consider when the bill-to party receives hybrid invoices?
Hybrid invoice formats, such as ZUGFeRD, combine both a human-readable document (e.g., PDF) and a structured data format (e.g., XML) in a single file. The structured part of the invoice takes precedence over the human-readable image part. If there are discrepancies between the machine-readable and human-readable parts, the data in the structured part is considered to be authoritative. This gives the invoice recipient the advantage of being able to automatically process the data for accounting purposes, while the PDF can be used for simple visual inspection. Hybrid formats provide flexibility by meeting both e-invoice and user-friendly presentation requirements.
IV. Transitional provisions and special cases
1. Are there any special transition rules that invoice recipients and issuers should be aware of?
Yes, the Growth Opportunities Act provides several transitional provisions to allow businesses to gradually adapt to the new e-invoicing requirements:
- By the end of 2026: Businesses will still be able to issue and transmit domestic invoices as "other invoices" if both parties agree. This allows the use of unstructured formats, such as PDF or paper, which will no longer be allowed from 2027.
- Turnover of small businesses: If a small business had a total turnover of less than 800,000 euros in the previous year, it can issue invoices in paper or other formats until the end of 2027.
- Exemption for established formats: Formats such as EDIFACT can be used as an e-invoice format until the end of 2027, provided they transmit all the information required by VAT law in a structured way and the recipient has given his consent.
2. What applies to invoicing for companies based outside of Germany?
The e-invoicing requirement only applies to invoices between domestic companies (so-called B2B transactions within Germany). For international transactions (e.g. exports), there is no e-invoicing requirement under German tax law. However, companies can voluntarily issue e-invoices if they comply with international standards and are advantageous for both parties. In some cases, however, a German company can also issue an e-invoice to a foreign service recipient if the latter fulfills the necessary technical requirements and a corresponding agreement exists.
3. What are the requirements for correcting an e-invoice?
If an e-invoice contains incorrect or incomplete information, the issuer must correct it in the correct form. Correction is not done by simply adding or annotating, but by issuing a new, complete e-invoice that replaces the original record and contains all required information. For input tax deduction and tax documentation purposes, it is crucial that the corrected e-invoice is clearly marked as a correction and refers to the original invoice. If the correction meets all the requirements, the input tax deduction can be claimed retroactively.
4. What to consider with respect to the e-invoice reporting system?
In parallel with the introduction of mandatory e-invoicing, a reporting system for invoice data is expected in the future. This system is designed to enable rapid and transaction-based reporting of certain invoice information to the tax authorities in order to increase tax transparency and efficiency. Companies should prepare for the fact that invoice data may soon have to be reported in real time or on a regular basis. The specific technical and legal requirements of the reporting system will be published at a later date and should be considered early in order to comply with all legal requirements.
V. Best practices and recommendations
1. When moving to e-invoicing, what best practices should companies follow?
- Early adaptation of IT systems: Companies should adapt their accounting and IT systems in time for the e-invoicing obligation and check whether they can process the XRechnung or ZUGFeRD formats.
- Employee training: Ensure departments are fully informed and trained on e-invoicing requirements and practices to reduce errors and increase efficiency.
- Standardized processes for invoice verification and storage: Define and document internal processes for auditing and archiving e-invoices to ensure compliance with regulatory requirements.
- Regular communication with business partners: Companies should inform their business partners of their preferred invoice formats and transmission channels in order to avoid misunderstandings and facilitate the transition.
- Cooperation with service providers: If external service providers are involved in the creation or processing of invoices, there should be clear agreements regarding compliance with e-invoicing requirements.
VI. Risks and penalties
1. What are the risks of delaying e-invoicing?
Businesses that delay the move to mandatory e-invoicing run the risk that their invoices will not be accepted as correct from 2025 and their business partners will no longer be able to deduct input tax. This can result in financial penalties and potential fines. In addition, non-compliant invoices can result in additional administrative work as corrections or adjustments are required. Moving to e-invoicing early reduces the risk of penalties and ensures that all tax requirements are met without disrupting business.
13. More information
