Mandatory E-Invoicing In Germany From 2025

by | Apr 4, 2024 | E-invoicing

Updated on December 16, 2024

The introduction of mandatory e-invoicing in Germany from January 2025 is giving companies the opportunity to streamline and improve their invoicing processes. Already using e-invoicing? Read our B2B e-invoicing compliance tips to stay on track.

Mandatory E-Invoicing From 2025

As of April 18, 2020, all public authorities in Germany must be able to receive and process electronic invoices according to a uniform standard, as required by the EU. Germany is now preparing to introduce mandatory e-invoicing for B2B transactions.

On April 17, 2023, the Federal Ministry of Finance (BMF) presented a discussion draft for a new § 14 UStG, which would also introduce mandatory electronic invoicing in the B2B sector. On 31.08.2023, the Federal Cabinet approved this BMF draft for the Growth Opportunities Act. According to the planned schedule, B2B e-invoicing will be mandatory as of 01.01.2025.

From January 1, 2025, German entrepreneurs will be required to be able to receive an e-invoice. The Federal Ministry of Finance has published the issuing of invoices in accordance with Section 14 UStG. We have read the document and compiled the most important points for you (this text is available in German).

The Growth Opportunities Act (Das Wachstumschancengesetz)

The Bundestag approved the compromise on the Growth Opportunities Act on February 23 After intensive political disputes between the federal and state governments, the Bundestag passed the Growth Opportunities Act without the climate protection investment premium on Friday, February 23, 2024.

On March 22, 2024, the Bundesrat approved the Growth Opportunities Act. According to the current draft of the Growth Opportunities Act, all domestic companies must be able to receive and archive electronic invoices from January 1, 2025. The e-invoice articles therefore remain unchanged. The purpose of this law is to promote growth, investment and innovation and to implement tax simplifications. The part of the VAT Act (Article 27, Section 14) deals, in particular, with the legal regulations on the mandatory use of electronic invoices in the B2B sector.

The introduction of a legal regulation on the mandatory use of electronic invoices in the B2B sector will promote the digitalization of accounting and increase the efficiency of business processes. In the business world, the concepts of e-invoicing and digitalization are often subject to many prejudices and misunderstandings. However, the law is very clear and defines an electronic invoice as one that is created, transmitted and received in a structured electronic format. This allows it to be processed electronically and complies with Directive 2014/55/EU. If it is sent in any other electronic format or as a paper document, it falls under the new category of “other invoice”.

Use Right E-Invoicing Formats

E-invoicing is becoming completely normal not only in B2G traffic, but also in the B2B environment. Moreover, Germany has already introduced and developed two formats for e-invoices: XRechnung and ZUGFeRD.

XRechnung is a semantic data model that is based on XML format. This XML-based format of the current XRechnung standard allows two XML syntaxes for electronic invoicing: UBL or UN/CEFACT Cross Industry Invoice (CII). With its uniform structure and standardized design, XRechnung facilitates the smooth and efficient exchange of invoice data. It enables you to send and receive documents electronically and assists in further processing that is free of media discontinuity, can be automated and is electronic. These principles will become extremely important with the switch to B2B e-invoicing in Germany from 2025.

ZUGFeRD offers a hybrid invoice format , which includes both machine- and human-readable data. Although XRechnung is preferred by the German government, ZUGFeRD can also be used, as ZUGFeRD also complies with the European standard. It consists of two components: a PDF file and an embedded XML file. At present, it is not yet clear which of the two formats will be designated as the standard for electronic invoices. However, we assume that it will be XRechnung. One reason for this is that ZUGFeRD cannot be transmitted via the PEPPOL network because it is partly in PDF format.

Invoices in PDF (Portable Document Format) have been widely used in business transactions for several years. They are usually created by an accounting system and sent by e-mail or other electronic means. However, PDF invoices are not electronic invoices.

Format vs. Version

Technology is constantly evolving, so do e-invoicing standards. Having the latest version of the e-invoicing format ensures that your business stays compliant and benefits from the latest enhancements and security features. Staying current may seem like an extra step, but it’s a step toward efficiency and security. For example, KoSIT (the German PEPPOL authority responsible for the XRechnung format) releases a new version of the XRechnung specification twice a year on July 31 (summer release) and January 31 (winter release).

What happens if you use the old version of XRechnung? You will still be able to issue electronic invoices, but there is no guarantee that the invoice recipient will be able to accept and process your invoice. We asked the KoSIT department in Bremen if the German authorities still support the older versions of XRechnung.  The answer was clear and unambiguous, the authorities are not obliged to receive the documents in older format versions.

Your best bet is to make sure you are using the latest or penultimate version of the format (depending on your solution). For example, at SPS Commerce, we support the last two versions of the e-invoicing format.

E-Invoicing Directly From Your ERP System

Hopefully, you are now ready to assess how well your current invoicing process is suited for the upcoming transition. E-invoicing is not only compliant and mandatory, but it’s also a perfect solution for optimizing costs. It is also very convenient, especially if your e-invoicing solution is seamlessly integrated with your ERP system.

SPS Commerce, is an active member of EESPA (European Association of E-Invoicing Service Providers), VeR (Electronic Invoice Association), PEPPOL and other organizations committed to a secure and compliant e-invoicing process. We guarantee a fully compliant and secure e-invoicing solution that seamlessly integrates with your ERP or other systems through pre-built connectors and standardized API integrations.

Aleksandra Vovchenko
Latest posts by Aleksandra Vovchenko (see all)

RELATED POSTS