The electronic invoicing system, which is mandatory in Germany, will be introduced gradually, with the first phase starting on January 1, 2025. In this first phase, companies carrying out domestic business-to-business (B2B) transactions must be able to receive structured electronic invoices that comply with the EU standard for electronic invoices EN 16931. Although this requirement may seem simple like, there are important nuances to take into account. The German approach to electronic invoicing differs significantly from existing mandates in other EU member states such as Romania and Italy, as well as planned implementations in neighboring countries such as France and Poland (planned for 2026).

Several lesser-known aspects of the German e-invoicing requirement are often misunderstood by companies, including:

• A structured electronic invoice according to EN 16931 may still not meet the requirements of German sales tax law.
• Despite their tax exemption, small businesses exempt from sales tax are also subject to the obligation to issue electronic invoices.
• An email address is sufficient to fulfill the obligation to receive structured e-invoices. No special software is required for this.
• Even if you have agreed with your supplier to use XML invoices, you may receive a PDF document in your inbox instead.

These nuances highlight the importance of understanding the specific requirements of the German e-invoicing mandate and preparing accordingly to ensure compliance. This article provides a detailed analysis of German electronic invoicing regulations.

Scope of the German mandate for electronic invoicing

The e-invoicing requirement in Germany applies to invoices for taxable supplies of goods and services that a company based in Germany makes to another company also based in Germany. The mandate does not cover transactions involving tax-free supplies (financial services, healthcare, education, social services), invoices for amounts less than €250 or tickets.

An electronic invoice is also required for shipments of goods outside the EU or to another EU member state if the recipient is a company based in Germany. The obligation to issue electronic invoices also applies to companies that benefit from the small business exception (Small business regulation). While these companies are exempt from collecting VAT and filing monthly or quarterly VAT returns, they are still required to comply with the e-invoicing requirement for relevant transactions.

Companies based outside of Germany are subject to the e-invoicing obligation if they have a permanent branch in Germany that is involved in the transaction. A fixed establishment is defined as a fixed place of business, other than the principal place of business, that has the human and technical resources necessary to provide or receive goods or services on a permanent basis. Examples of a fixed establishment include a warehouse, which is used to store and distribute goods and is supported by local staff, or a branch office, which performs operational functions and is equipped with employees and resources to provide local services.

E-invoice formats

In 2025 and 2026, companies in Germany will be allowed to issue invoices in one of three formats:

• Paper size.
• Structured electronic format that complies with or is compatible with the EN 16931 standard.
• Alternative electronic formats, which mainly include graphic formats such as JPG, PDF or TIFF, as well as structured data formats that do not meet or are not compatible with the EU standard for electronic invoicing. However, the use of these alternative formats requires the consent of the recipient.

The recipient’s consent to use alternative formats is informal and can also be given subsequently. Consent is considered valid if those involved tacitly approve the method of invoicing through consistent application in practice. For example, payment of an invoice issued in an alternative electronic format constitutes implied consent to use that format.

The Ministry of Finance emphasizes that the choice of format is a civil matter and must be agreed between the contracting parties. Simply agreeing that an invoice must be EN 16931 compliant is not enough, as structured electronic invoices compatible with the EN 16931 standard can be in different formats. The most commonly used invoice formats in Germany that are compatible with the EN 16931 standard include ZUGFeRD and XRechnung. However, the scope of EN 16931-compliant electronic invoices under the German e-invoicing mandate is not limited to the formats used in Germany. It also allows the use of foreign e-invoice formats such as the French Factur-X and Peppol-BIS Billing.

XRechnung is a pure XML invoice format developed by the German Coordination Office for IT Standards. It was specifically designed for transactions with German authorities and authorities. XRechnung invoices must use one of two XML syntaxes: Universal Business Language (UBL) or UN/CEFACT Cross Industry Invoice (CII). If parties decide to use XRechnung, they should specify which XML syntax should be applied.

ZUGFeRD is a hybrid invoice format that combines a PDF/A-3 document (human-readable format) with an embedded XML file (machine-readable format). ZUGFeRD was developed by the German Forum for Electronic Invoices and enables companies to send invoices that are both visually readable and easily processed by software systems. Therefore, even if you agree to the use of XML invoices with a supplier who chooses ZUGFeRD, you may still receive a PDF document in your inbox. ZUGFeRD is specifically designed to use CII syntax. Its dual structure is particularly beneficial for companies moving from paper-based invoicing to fully digital processes, as it supports both automated invoice processing and easy manual review.

It is important to note that compatibility with the EN 16931 standard does not guarantee compliance with German VAT laws. According to EN 16931, the only mandatory address element for both the seller and the buyer is the country code, while the city and postal code are optional. However, this approach does not comply with German VAT regulations, which require more detailed information about the address.

E-invoice transmission

Germany does not prescribe a specific procedure for the transmission of e-invoices, so contracting parties have the opportunity to choose the method most suitable for their needs. Acceptable means of transmission include email, electronic interfaces, shared drives and download portals.

The Ministry of Finance has specifically clarified that the requirement to receive electronic invoices can be met by providing an email inbox; There doesn’t have to be a dedicated inbox just for receiving e-invoices. While an email inbox may initially seem like a simple solution to meet e-invoicing requirements, this approach quickly reaches its limits. Email is vulnerable to phishing, spam and other security risks.

There is currently no requirement for direct reporting of invoice data to the tax authorities in Germany. However, it is to be expected that such a reporting requirement will be introduced in the future. The circular from the Federal Ministry of Finance states that the technically possible and legally permissible transmission channels will be redefined as part of the future reporting system. This suggests that the introduction of a domestic invoice reporting system will limit the current flexibility in domestic invoice submission methods.

outlook

The nationwide switch to electronic invoices will begin in 2027. Companies with an annual turnover of more than 800,000 euros in the previous year are obliged to issue electronic invoices. From 2028, all companies in Germany will be required to issue electronic invoices. This schedule can be beneficial for companies that have not yet adapted their processes to meet the requirements of electronic invoicing. As the European Committee for Standardization plans to publish a new version of the EN 16931 standard focused on B2B invoicing in the first half of 2025, it may be advisable for companies to wait for this update before proceeding with the implementation z -invoicing systems.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of organizations with which the author is affiliated.