Creating an Electronic Invoice: Requirements and a Comprehensive Guide
Published: October 23, 2024
Reading Time: 10 min
Contents
- What is an Electronic Invoice?
- Types of E-Invoice
- Legal Framework for E-Invoicing in Germany
- Digital Solutions for Incoming Invoices
- Requirements and Conditions for Electronic Invoices
- Advantages of Electronic Invoicing
- Create Electronic Invoices: Step By Step
- Conclusion: Why you Should Switch to E-Invoices Now
Inhalt
- What is an Electronic Invoice?
- Types of E-Invoice
- Legal Framework for E-Invoicing in Germany
- Digital Solutions for Incoming Invoices
- Requirements and Conditions for Electronic Invoices
- Advantages of Electronic Invoicing
- Create Electronic Invoices: Step By Step
- Conclusion: Why you Should Switch to E-Invoices Now
With the e-invoicing obligation in the B2B sector from 01.01.2025, the topic is particularly important in Germany at the moment: what are electronic invoices and how can I issue them as a company?
In the following article, we have looked at the upcoming guidelines and requirements in Germany. In the medium term, however, electronic invoicing will be implemented in all European countries, as provided for in EU Regulation EN16931. We therefore also advise companies in Austria to deal with the topic at an early stage and implement appropriate solutions. The step-by-step instructions, advantages and reasons at the end of the article also apply in the Austrian context.
What is an Electronic Invoice?
What exactly is the difference between a paper invoice and an e-invoice? Previously, all electronically issued invoices were considered e-invoices, including PDF invoices or image files, for example. This classification is now changing with EU Directive 2014/55/EU.
From 2025, all e-invoices must be sent in a structured data format and be machine-readable and automatically processable. The decisive factor here is that they must comply with EN16931 or be interoperable with it. If they do not, they will fall into the “other invoices” category in future, together with the unstructured invoice formats (paper, PDF, scan, image file).
The increased use of electronic invoices should simplify accounting processes in the future and help to combat fraud and tax evasion.
Types of E-Invoice
There are various ways to create an e-invoice. In Germany, the ZUGFeRD and X-Rechnung formats in particular have established themselves as the standard.
EDI formats can also be used for the time being. However, not all EDI invoices comply with the EN16931 standard. After the transition period ends in 2028, only EDI formats that comply with the standard may be used – check this in good time!
ZUGFeRD
ZUGFeRD stands for “Zentraler User Guide des Forums elektronische Rechnung Deutschland”. It is a standard for electronic invoices developed in Germany. It combines structured electronic data (XML) with a visual representation in the form of a PDF/A-3 document.
This hybrid form of an e-invoice can be read by humans as well as read by machines and processed automatically. A key advantage of ZUGFeRD is that it can be used internationally, even outside the EU.
Further information on ZUGFeRD can be found here.
XRechnung
XRechnung is a pure XML file that contains all relevant invoice data. Unlike hybrid formats such as ZUGFeRD, it cannot be read by humans without the appropriate software. Without conversion, it can therefore only be processed automatically by invoicing or accounting software.
You can find more information on XRechnung here.
Legal Framework for E-Invoicing in Germany
With the introduction of mandatory e-invoicing in the B2B sector, all domestic companies must be able to create, receive and process electronic invoices. The requirements for issuing e-invoices are set out in the E-Invoicing Ordinance (E-Rech-V). The basis for this is the EU Directive EU Directive 2014/55/EU.
The implementation of an e-invoicing solution is associated with many challenges and costs. Work processes need to be revised, employees need to be trained and software and hardware need to be adapted. To make the changeover easier, there are transitional regulations until 2027. The following applies:
Please note: There are no transitional regulations for the receipt of e-invoices. Companies must be able to receive e-invoices from 01.01.2025. Invoice issuers will also no longer have to obtain consent for sending e-invoices.
As there may be a mixture of different incoming invoice formats during the transition period, but also in the long term for international business activities, it is advisable to use a standard solution for all invoice formats. One such standard solution is our AI-supported, automated invoice processing.
Related Links
Digital Solutions for Incoming Invoices
You can easily automate your invoice receipt with our intuitive solutions
Like paper invoices, e-invoices must also comply with certain requirements and legal principles. These include, above all, the German Value Added Tax Act (UStG) and the principles for the proper management and storage of books, records and documents in electronic form and for data access (GoBD). These contain clear guidelines regarding tax, bookkeeping, archiving and the like.
Failure to comply with the legal requirements can have legal consequences, such as fines or other sanctions. In the next step, we will show you exactly what you need to pay attention to.
The GoBD also stipulates that the invoicing process must be documented. This is particularly important for companies in the event of an audit by the tax office.
A company must therefore have a control procedure in place that provides a clear audit trail for the invoice processes. There are not (yet) any clear legal requirements in this regard, which is why the control procedure can be defined by the business owners. Ideally, the processes and controls that ensure compliance with the GoBD during the e-invoicing process should be described.
Further relevant information can also be found in our article on e-invoicing in Germany.
Requirements and Conditions for Electronic Invoices
If you create an electronic invoice, there are a number of requirements that you must fulfill. These are regulated by law and essentially do not differ much from the current standards for paper invoices.
When creating an electronic invoice, the format is particularly important. As mentioned above, not all digital formats are considered e-invoices. Electronic invoices must be written in a structured data format (e.g. XML) and be machine-readable and processable. This means that previous digital formats such as PDF, JPEG or TIFF are no longer legally valid. A digital signature is also no longer required.
As far as invoice content is concerned, the same requirements apply as for paper invoices. According to § 14 of the UStG, all invoices (paper and electronic) must contain mandatory information such as the full name and address of the service provider and recipient, the tax number, the invoice date, a consecutive invoice number, details of the product or service, the invoice amount, tax rate and tax amount, or a reference to any tax exemption. In accordance with the UStG, the following requirements must also be met:
- The authenticity of the origin
- The integrity of the content
- The readability
Readability is particularly important for e-invoices, as formats such as XML can only be read by humans after they have been converted. Readability must be ensured during the retention period stipulated by tax law (10 years). Appropriate programs must therefore always be available.
The authenticity of the origin, integrity of the content and readability must also be checked for paper invoices. There are therefore no specifications for this process, as internal control procedures may vary from company to company.
Just like paper invoices, e-invoices must be archived unchanged and readable for at least 10 years in accordance with the VAT Act. The exact requirements can be found in Section 14 of the UStG, Sections 146, 147 and 200 of the German Fiscal Code and in the GoBD.
The technical aspect is also important for electronic invoice processing. Make sure that your company’s hardware has the necessary capacity. When it comes to software, you can choose between internal and external software solutions.
- External E-Invoicing Software: Many providers already offer software or online platforms for creating e-invoices. The advantage of an external solution is the low internal effort for the company. The software is connected via a cloud and all technical tasks are handled by the provider. Our software solution supports you in your entry into digital invoice processing.
- Internal E-Invoicing Software: All processes such as assignments, forwarding and ongoing tasks (e.g. troubleshooting) must be set up and managed by internal teams. So before you decide on an internal software solution, you should determine whether your company has the necessary resources and EDI (Electronic Data Interchange) knowledge.
You can find more information in our article on the requirements for e-invoicing.
Advantages of Electronic Invoicing
E-invoices are an important part of the digitization strategy. Switching to an e-invoicing system allows companies to save a large number of resources. We have summarized the most important advantages for you here.
Create Electronic Invoices: Step By Step
- 1
Choice of software/program: Choose the software that meets your needs. Many providers offer both pure XML and hybrid formats. If in-house software is available, the choice is not necessary. Alternatively, you can also create an XML template yourself in a text editor (e.g. Adobe Acrobat, Microsoft Excel, Google Chrome).
- 2
Open and check the template: Once you have selected the appropriate software, open the XML template. Before you start filling in the fields, you should check whether the structure of the file contains all the required mandatory information (names and addresses of the service providers, tax number, invoice date, etc.). This is particularly important if you have created your template yourself.
- 3
Fill in the fields: As soon as you have made sure that all mandatory information is available, you can fill in the corresponding fields.
- 4
Check the data: To avoid possible errors and problems with the tax office, you should check the details again carefully. Invoice and tax amounts in particular should be calculated and entered correctly.
- 5
Validate the XML file: If it is not automatically taken over by the e-invoicing software, you can validate your XML file with a validation tool. This ensures that the file complies with the standards. The file can then be processed quickly and correctly and you do not risk any fines or other sanctions.
- 6
Save the file: You can now save your XML file and then send it (e.g. by e-mail or via an e-billing platform).
Conclusion: Why you Should Switch to E-Invoices Now
If you create an electronic invoice, you should note the following:
- The e-invoice must have been created in a structured data format (e.g. XML) and be able to be processed by machine.
- The e-invoice must contain all mandatory information in accordance with § 14 of the UStG.
- The authenticity of the origin, the integrity of the content and the legibility of the e-invoice must be guaranteed.
- The e-invoice must be processed and archived in accordance with the GoBD.
- Your company needs a control procedure that provides a clear audit trail of the invoice processes.
Every beginning is difficult. Even if the switch to an e-invoicing solution initially involves a lot of effort in terms of training and technical changes, the changeover will pay off in the long term, both for your company and for the environment.
The earlier you start switching to an e-invoicing solution, the more time you have to familiarize yourself with the processes and changes. You will also benefit from the advantages of e-invoicing at an early stage. By increasing efficiency, saving costs and being environmentally friendly, you not only boost your company’s performance, you also promote a sustainable way of working and reduce your ecological footprint.