Electronic Invoicing: Mandatory in Germany in 2025

The Electronic Envoice: Mandatory in Germany From 2025

It has been around for a few years for suppliers to the federal government, but now electronic invoicing is also becoming mandatory in the B2B sector: from 1 January 2025, mandatory e-invoicing will apply to all B2B transactions between companies based in Germany. According to the current status, there will be no exceptions: all taxable amounts will be affected, regardless of the size or turnover of the invoice issuer or recipient. Germany is thus following the EU strategy for the prevention of VAT fraud and the simpler, more sustainable processing of invoices.

German companies now need to get to grips with this change quickly and invest in the necessary infrastructure. It is therefore high important to prepare for the changeover and take the right steps. What exactly does this mean for your company?

What is an E-Invoice?

The definition of an e-invoice will be adapted and specified in the new law: Electronic invoices are defined as those invoices that are created, transmitted and received in a structured electronic format. The data record must be able to be processed automatically. Specifically, the following is required: “The electronic invoice must comply with the European standard for electronic invoicing and the list of corresponding syntaxes in accordance with Directive 2014/55/EU of 16 April 2014.” The European standard EN-16931 standardises the content and format of the data set for e-invoices across Europe. According to the BMF[1], both XStandard and ZUGFeRD format invoices from version 2.0.1 fulfil the requirements.

• XRechnung
  XRechnung is already in use in the B2G sector (Section 4 (1) E-RechV). The structured data format is open, free of charge and machine-readable.
• ZUGFeRD (internationally known as Factur-X)
  The ZUGFeRD format is a hybrid form of machine-readable XML file and human-readable PDF file. In the B2G area, the format is accepted from version 2.1.1 in the XRECHNUNG profile.

XRechnung and ZUGFeRD are the most common e-invoice formats on the German market. Other formats can also fulfil the above requirements as long as the required information can be extracted correctly and completely from the agreed format in such a way that it complies with EN-16931 or is interoperable with it. One example of this could be EDI interfaces. The individual formats can only be better assessed once the law has been passed and all specific requirements have been finalised.

Paper invoices, PDF invoices and other electronic invoices with a different format will be considered “other invoices” under the new definition and may no longer be used.

Digital Approval Processes

The data of the electronic invoice can be processed automatically. Instead of sending physical receipts through the departments and submitting them for signature, all steps are carried out digitally. This provides the opportunity for a location-independent, clear and fast approval workflow.

The advantages of this include:

• Integrated compliance and validity checks
• Automatic account assignment proposals
• Simple splitting of invoices and inline calculations
• Fulfilment of documentation obligations through automatically generated audit reports

This can look like this, for example:

Avoid Mixed Solutions: Different Invoice Formats

The upcoming e-invoicing obligation applies to domestic B2B transactions, but other invoice formats may still be received from abroad. It therefore makes sense to identify all of a company’s current and future sales markets and plan the changeover with these different requirements in mind. Otherwise, there is a risk of throwing together various individual solutions and scattering the process.

Solutions that can handle both electronic invoice formats and conventional unstructured data in PDF format or on paper can be used universally for all use cases. This standardised processing provides transparency, reduces effort and optimises the workflow in the long term. In addition, these bridging technologies can be used over a longer period of time, they amortise comparatively quickly and are also interesting for SMEs, as they can be used efficiently with a smaller total number of documents.

You can read about the entire process of such incoming invoice processing here. As experts in this field, we will be happy to advise you personally.

Advantages of E-Invoicing

In order to fulfil the e-invoicing obligation, companies will have to invest in appropriate solutions in the coming months and years. However, this investment will also bring numerous advantages:

• More error-free processing in less time: processing times for receipts are significantly reduced. As a result, deadlines are better met (cash discounts) and transactions are processed more quickly. Direct data transfer means that there are significantly fewer errors in the process.
• Efficient use of resources: The acquisition costs are usually amortised in a short time. However, you not only save costs and effort (e.g. by eliminating manual processing steps, printing, paper, postage, etc.): Your employees can focus better on their more complex and important tasks.
• Sustainability: The electronic invoice makes paper, printing and physical dispatch obsolete. Approval processes can be carried out directly digitally, for example with our intuitive workflow, regardless of location and flexibly adapted to your existing process. With the right solution, you can also archive your electronic invoices digitally. You then have an optimised business process without media discontinuity.