E-Invoicing in Germany: What You Need to Know

E-Invoicing in Germany: What You Need to Know

E-Invoicing in Germany: What You Need to Know

The article provides a comprehensive overview of Germany’s upcoming mandatory e-invoicing system. It explains what is e-invoices, outlines the implementation timeline, and the acceptable formats.

The article provides a comprehensive overview of Germany’s upcoming mandatory e-invoicing system. It explains what is e-invoices, outlines the implementation timeline, and the acceptable formats.

August 16, 2024

August 16, 2024

Germany is making a significant change in its business processes. Starting January 1, 2025, all businesses operating in Germany must use electronic invoicing (e-invoicing) for their transactions. This shift represents a significant step towards digitalization and aims to streamline business processes, reduce fraud, and close the VAT gap. In this article, we'll explore what e-invoicing means, what changes businesses need to prepare for, and the timeline for implementation.

What is an e-invoice?

An e-invoice is a structured digital invoice that the recipient’s system can automatically process without manual intervention. It's not just a digital version of a paper invoice (like a PDF) but a standardized data format that allows for direct integration with accounting systems.

It means that it’s a type of file with data (like client, amount, VAT applied) saved and transmitted in a specific format. 

What invoices will be unacceptable? 

  • Paper invoices

  • Standard PDF invoices

  • Invoices created in Word, Excel, or tools like Canva

  • Scanned images of invoices

These will not be compliant because they do not contain structured, machine-readable data and cannot be automatically processed.

What e-invoicing standards exist?

Acceptable Formats:

  1. XRechnung: The German standard format

  2. ZUGFeRD: A hybrid format that combines PDF with embedded XML data

  3. Other EU-compliant formats like Peppol BIS

When do e-invoices become mandatory?

Germany will implement the B2B e-invoicing mandate in phases, with the first phase set to begin in January 2025. This is the final schedule:

  • January 2025: all German taxpayers must be able to receive e-invoices from their suppliers. Paper invoices can only be used with the consent of the invoice recipient. 

  • During 2025 and 2026, both the e-invoices and paper invoices will be valid.

  • January 2027: taxpayers with an annual turnover exceeding EUR 800,000 will have to issue e-invoices.

  • January 2028: all German taxpayers will have to issue e-invoices.

What transactions require e-invoices?

The German e-invoicing mandate covers domestic B2B transactions made between established German businesses. Transactions excluded from the mandate are intra-community transactions and simplified invoices.

In principle, the B2B e-invoicing mandate will only impact German established businesses and fixed establishments of foreign companies.

Additionally, mandatory B2G e-invoicing has already been in place for some time in Germany, although the system is decentralized in the German federal states.

Why was e-invoicing introduced?

E-invoicing provides companies with faster and simpler document processing and, consequently, faster payment, higher efficiency and automation of internal processes, as well as real-time invoice information for business management.

From the tax authorities’ perspective, mandating the use of electronic invoices has the clear advantage of reducing VAT fraud, particularly if it is combined with a CTC measure. 

A solution for e-invoices

Norman can issue and accept e-invoices in both formats - XRechnung and ZUGFeRD. It’s free to start and to issue invoices without limits. 

© 2024 Norman AI GmbH

© 2024 Norman AI GmbH

© 2024 Norman AI GmbH