What is the E-Invoice?

An e-invoice is not simply a PDF invoice sent by email. Under German law, an e-invoice must be issued, transmitted, and received in a structured electronic format that enables automated processing.

The legal basis is aligned with the European standard EN 16931, which ensures interoperability across the EU. In Germany, the most common compliant formats are:

• XRechnung (primarily for public authorities)

• ZUGFeRD (hybrid format with structured XML data)

Legal Framework in Germany

The introduction of the e-invoice is based on:

• EU Directive 2014/55/EU on electronic invoicing in public procurement

• National implementation through German e-invoicing regulations

• The Growth Opportunities Act (Wachstumschancengesetz), introducing mandatory B2B e-invoicing

Public-sector contracting authorities at federal level have been required to receive electronic invoices since 27 November 2020.

The Rollout Plan in Germany

The implementation is taking place in stages:

1. B2G (Business-to-Government)

• Since November 27, 2020, federal authorities must be able to receive and process e-invoices.

• Suppliers to federal authorities are required to submit invoices electronically.

• Many federal states (Bundesländer) and municipalities have introduced similar obligations.

2. B2B (Business-to-Business) – Mandatory from 2025

A major change is coming for businesses:

• From January 1, 2025, all domestic B2B transactions in Germany must be capable of receiving e-invoices.

• Paper invoices and simple PDF invoices will no longer meet the legal definition of an e-invoice for VAT purposes in domestic B2B transactions.

• Transitional rules will apply for issuing invoices until 2027/2028, depending on company size and turnover.

This marks a significant shift in German VAT compliance.

Key Requirements of an E-Invoice

To qualify as a compliant e-invoice in Germany, the invoice must:

• Be issued in a structured electronic format (XML-based)

• Comply with EN 16931

• Contain all mandatory VAT information under the German VAT Act (UStG)

• Enable automated electronic processing

A simple PDF, Word document, or scanned paper invoice does not qualify as an e-invoice under the new rules.

Benefits for Businesses

The transition to e-invoicing offers substantial advantages:

• Reduced Costs

  • No printing, postage, or manual data entry. Administrative expenses decrease significantly.

• Increased Efficiency

  • Automated processing accelerates accounting workflows and reduces administrative workload.

• Improved Accuracy

  • Structured data reduces manual errors and improves data quality.

• Faster Payments

  • Invoices can be processed more quickly, improving liquidity and cash flow.

• Greater Transparency & Compliance

  • Standardized formats facilitate VAT compliance and prepare businesses for future digital reporting requirements.

• Environmental Sustainability

  • Less paper consumption contributes to more sustainable business practices.

Looking Ahead

The mandatory introduction of e-invoicing in B2B transactions from 2025 represents one of the most important VAT reforms in Germany in recent years. It also prepares the ground for a future real-time VAT reporting system at national and EU level.

Businesses should act early by:

• Reviewing their invoicing software

• Ensuring they can receive structured e-invoices

• Adjusting internal accounting processes

• Consulting their tax advisor or IT provider

By proactively adapting to the new requirements, German companies can ensure compliance while benefiting from greater efficiency and digital competitiveness.