Mandatory E-Invoicing in Germany: What Businesses Need to Know
Germany is phasing in mandatory electronic invoicing between businesses. As of January 1, 2025, domestic businesses must be able to receive structured e-invoices. Transition periods apply to sending invoices, meaning that not every business is immediately required to send all business invoices electronically.
The German approach differs from that of Belgium and France. There is no mandatory central platform, nor is there a prescribed network through which all invoices must be sent. Businesses may use different transmission channels, as long as the invoice itself meets the requirements for a structured electronic invoice.
What changes as a result of the German requirement?
The new rules are included in the German Umsatzsteuergesetz and apply to taxable transactions between businesses established in Germany. A business is considered domestic if it has its registered office, management, or a permanent establishment involved in the transaction in Germany.
Foreign businesses that are registered solely for German VAT but do not have a permanent establishment in Germany are, in principle, not subject to the domestic B2B requirement. Transactions with private end customers are also excluded.
As of January 1, 2025, every domestic business must be able to receive e-invoices. This also applies to small business owners who are themselves exempt from the obligation to send e-invoices. According to the German Ministry of Finance, an email inbox is sufficient to meet the minimum requirement for receiving e-invoices. In practice, however, additional software is needed if the business wishes to automatically verify, view, post, and archive invoices.
Transitional provisions apply to the sending of invoices. As a result, companies may still use paper invoices or, with the recipient’s consent, PDF invoices in 2025 and 2026. Starting in 2027, this option will no longer be available to businesses with an annual turnover exceeding 800,000 euros. Smaller businesses may continue to use the transitional provision until the end of 2027.
What does Germany consider an e-invoice?
As of January 1, 2025, an invoice is only considered an official German E-Rechnung if it is created, sent, and received in a structured electronic format. The data must be capable of being processed automatically by electronic means.
A standard PDF is therefore not an e-invoice. Legally, a PDF falls under the category of “sonstige Rechnung”: an “other invoice.” The same applies to paper invoices and other unstructured digital files. During the transition period, these invoices may still be used under certain conditions.
In principle, the structured invoice must comply with the European standard EN 16931. This standard specifies which invoice data must be included and how it must be structured. All data required for tax purposes must be included in the structured section. A reference to a separate PDF attachment is not sufficient if essential invoice information appears exclusively in that attachment.
Additional documents, such as timesheets, itemized lists, or detailed service descriptions, may be attached as appendices. The structured invoice must then clearly reference them.
XRechnung and ZUGFeRD
The two best-known German invoice formats are XRechnung and ZUGFeRD. Both comply with the European standard EN 16931 and German tax requirements.
XRechnung is a fully structured XML format. It does not include a standard visual PDF display and is primarily intended for automatic processing by financial software. A viewer is required to view an XRechnung as a traditional invoice.
ZUGFeRD is typically a hybrid invoice. It combines a readable PDF with an embedded XML file that contains the same invoice data in a structured format. This allows an employee to view the invoice as a PDF, while software automatically processes the XML data.
XRechnung and ZUGFeRD, starting with version 2.0.1, generally comply with German tax requirements. For ZUGFeRD, the MINIMUM and BASIC-WL profiles are excluded because they do not contain all the required structured data.
If the data in the XML section and the visible PDF section of a hybrid invoice differ, the structured XML data takes precedence. Organizations must therefore not only check the visual document but also monitor the quality of the underlying data.
Other formats, including certain EDI and EDIFACT messages, may also be used. This is subject to the condition that the legally required data can be correctly and completely extracted from the format and that the sender and recipient have agreed to its use.
How are German e-invoices exchanged?
Germany does not mandate a central exchange channel for B2B invoicing. An e-invoice can be sent via, among other methods:
- email;
- an API or other electronic interface;
- a supplier or customer portal;
- a shared storage environment;
- EDI;
- Peppol.
The format and the transmission channel are therefore separate choices. For example, an XRechnung can be sent as an XML file via email, but also via Peppol or a direct system connection. A PDF sent via email, on the other hand, is not an e-invoice, because the file does not contain structured invoice data.
Peppol is permitted in Germany and is used, among other things, for invoices to public organizations, but it is not the mandatory standard network for all German B2B invoices. Companies can decide for themselves which channels to support and make arrangements with their customers and suppliers regarding this.
For organizations with many trading partners, however, relying exclusively on email can lead to a multitude of different addresses, manual checks, and exceptions. A central exchange platform or network connection can make routing, validation, and tracking more manageable.
The Role of E-Invoicing to the Government
Germany has been using e-invoicing to the government for some time. Since November 27, 2020, suppliers to the German federal government have been required in many cases to send an electronic invoice. XRechnung is typically used for this purpose.
Invoices sent to federal government organizations usually require a Leitweg-ID. This is an electronic address that directs the invoice to the correct public organization or department. A Leitweg-ID is not required for standard B2B invoices between businesses.
The German states largely regulate their own B2G invoicing. As a result, different requirements, platforms, threshold amounts, and transmission channels may apply depending on the state. Suppliers to German public organizations must therefore not only consider federal regulations but also check the requirements of the relevant state and client.
What does ViDA have to do with Germany?
The German B2B requirement aligns with the European initiative known as VAT in the Digital Age(ViDA). This European package will introduce mandatory e-invoicing and digital reporting for relevant cross-border B2B transactions within the European Union, effective July 1, 2030.
Germany is also preparing a national digital reporting system. Under this system, certain invoice details would be electronically transmitted to the tax authorities shortly after a transaction. The current e-invoicing requirement lays the technical foundation for this, but the final German rules, reporting channels, and implementation date still need to be worked out separately.
By January 1, 2035, at the latest, existing national systems for digital transaction reporting must be aligned with the European ViDA model.
The German Roadmap for E-Invoicing
The key dates are:
November 27, 2020: Suppliers to the German federal government will be required, with a few exceptions, to send electronic invoices.
January 1, 2025: Every domestic company must be able to receive structured e-invoices. XRechnung, ZUGFeRD-compliant invoices, and other compliant formats are considered e-invoices.
Through December 31, 2026: All companies may still use the transitional arrangement for outgoing invoices and, under certain conditions, continue to send paper or PDF invoices.
January 1, 2027: Companies with a prior-year revenue exceeding 800,000 euros must send e-invoices for relevant domestic B2B transactions. Smaller companies may continue to use the transitional arrangement for one more year.
January 1, 2028: The requirement to issue e-invoices applies to virtually all relevant domestic B2B transactions. The temporary exception for existing non-compliant EDI processes also ends.
July 1, 2030: ViDA introduces European digital reporting based on mandatory e-invoicing for relevant cross-border B2B transactions.
What does this mean for organizations?
The first step is to verify whether the organization has actually been able to receive and store XRechnung, ZUGFeRD, and other structured invoices since January 1, 2025. Simply setting up a general email address is formally sufficient for receipt, but does not yet constitute a controlled invoicing process.
Organizations must also determine the effective date from which their own outgoing invoices must be sent in a structured format. Factors such as the sending entity’s revenue, the location of both parties, the type of transaction, and any exceptions will determine this.
The technical setup also requires attention. Invoice data must be fully and accurately converted, validated, sent, and archived from the ERP or invoicing system. On the incoming side, invoices must be viewable, verifiable, and processable in the financial accounting system without unnecessary manual steps.
The German requirement is therefore more than just a switch from PDF to XML. It forms the basis for standardized document exchange, automated invoice processing, and future digital VAT reporting.