The shift from paper documents to exclusively digital documents is a constant feature of the European business world. Sending a simple PDF file via email has simplified many processes. Electronic Data Interchange (EDI) is gaining increasing importance in European businesses and is being implemented using standardized procedures. Over time, electronic invoices are expected to reduce administrative effort and paper consumption. Ultimately, invoice data will no longer need to be manually entered by the recipient. By this point, issuing invoices electronically, for example in PDF format, had become established for many companies as a time-, cost-, and effort-saving method.

Ab dem 1. Januar 2025 wird der Begriff der elektronischen Rechnung neu definiert. Nun liegt eine elektronische Rechnung nur dann vor, wenn die elektronische Rechnung in einem strukturieren Format vorliegt, elektronisch übergeben werden kann und eine automatische Verarbeitung der Strukturdaten möglich ist. Ein wesentlicher Faktor zur Digitalisierung des Geschäftsverkehrs. Grundlage ist der § 14 Abs. 1 UStG und die Richtlinie 2014/55/EU des europäischen Parlaments und Rates. Eine Übergangsfrist bis mindestens Dezember 2026 soll genügend Freiheit gewährleisten. Auch eine Rechnung in Papierform ist bis dahin möglich. Allerdings müssen inländische Unternehmer die Notwendigkeit akzeptieren, eine E-Rechnung empfangen und (aus)lesen zu können.

From January 1, 2025, the definition of an electronic invoice will be redefined in Germany, among other countries. An invoice will now only be considered electronic if it is in a structured format, can be transmitted electronically, and allows for the automatic processing of its structured data. This is a key factor in the digitalization of business transactions. The legal basis for this is Section 14 Paragraph 1 of the German VAT Act (UStG) and Directive 2014/55/EU of the European Parliament and of the Council. A transitional period until at least December 2026 is intended to ensure sufficient flexibility. Paper invoices will still be possible until then. However, domestic businesses must accept the requirement to be able to receive and read e-invoices.

Free sample program: Quba-Viewer (E-invoices) | Open Source

Variants of e-invoicing

The foundation of modern e-invoicing is Extensible Markup Language (XML). This extensible markup language is used to represent hierarchically structured data in text file format. The meta-language XML was originally developed as a platform-independent language for exchanging data between computers and has also found use on the World Wide Web. The XML standards CII (Cross Industry Invoice) and UBL (Universal Business Language), recognized in Europe, play a central role in e-invoicing. They are subject to the EN16931 standard.

• The "Zentraler User Guide des Forums elektronische Rechnung Deutschland" (ZUGFeRD) is a German specification that combines a Portable Document Format (PDF) and CII in a single file. This enables the creation of hybrid invoices in machine-readable (XML) and human-readable (PDF) formats. This type of invoice therefore meets the requirements of EN 16931. ZUGFeRD is widely used in Germany and France.

• X-Rechnung is the standard for the public sector in Germany. Its directive is 2014/55/EU. The most commonly used data format is UBL, the Universal Business Language. UBL is not limited to invoicing but offers a wide range of other business applications, such as electronic order or payment documents.

More information on the guideline for electronic invoicing in public procurement: DIRECTIVE 2014/55/EU on electronic invoicing in public procurement

According to Section 14 Paragraph 1 Sentence 3 of the German VAT Act (UStG), an invoice that is transmitted in a different electronic format or on paper is considered an "other invoice." Even individuals and organizations not entitled to deduct input tax must prepare for handling e-invoices, if only to be able to read them. Under current legislation, landlords of apartments and freelancers, such as doctors, are also considered businesses.

From January 2025, invoices in simple PDF format will not be considered e-invoices unless they meet the requirements of EN16931, i.e., they are in hybrid format.

Obligation to issue an e-invoice

For transactions between domestic businesses, an electronic invoice must be issued within six months of the service being rendered. These transactions must be services that are not exempt from VAT (Section 14, Paragraph 2 of the German VAT Act). Accordingly, transactions between businesses exist if the supplier and the recipient have their registered office, a VAT-relevant permanent establishment, or their habitual residence in Germany or its territory.

In these cases, issuing an electronic invoice no longer requires the recipient's consent. The invoice issuer can verify the business status of their contractual partner using the VAT identification number (VAT ID) or business identification number (W ID). If a business is not based in Germany, there is no obligation to issue an electronic invoice. In these cases, an invoice can be provided in paper form or in another format (e.g., PDF document or hybrid with ZUGFeRD). An electronic invoice can also be issued by prior agreement (§ 14 para. 2 no. 1 German VAT Act).

Similarly, Non Profit Organisations (NPO's) that engage in commercial activities are required to use e-invoicing. However, this only applies to the NPO's commercial sector.

Here is no obligation to issue an e-invoice

For private individuals as recipients of services. Services provided by small businesses (§ 34a German UStDV), small amounts (up to 250 euros gross amount, § 33 German UStDV), travel tickets that are considered invoices (§ 34 German UStDV), services to legal entities that are not businesses (e.g., registered associations, government institutions) and certain services to end consumers in connection with real estate.

Excerpt on how to handle e-invoices

• There is no prescribed format for submitting e-invoices. They can be sent via email, USB drive, or data storage device.

• E-invoices also allow for the unambiguous assignment of the service month. They also enable the creation of consolidated invoices.

• Invoice recipients are not obligated to perform any further electronic processing. The retention period for e-invoices is eight years in duplicate. This means that incoming and outgoing invoices must be stored for at least this period.

• A frequently occurring issue or question arises in connection with the routing ID. This ID is issued by the federal and state governments and must be entered in field BT-10 of an e-invoice. However, this is only required in business transactions with public sector clients, in the so-called B2G (Business to Government) sector. Federal and some state e-invoicing regulations mandate the use of the routing ID as a compulsory component. A placeholder may be used for other sectors (B2B).

• For the tax year, an e-invoice can also be submitted to the tax office via the Elster portal when filing the tax return.

---

Sources

German Federal Ministry of Finance in the online article: "Fragen und Antworten zur Einführung der obligatorischen (verpflichtenden) E-Rechnung zum 1. Januar 2025".

German Value Added Tax Act (UStG) | German Value Added Tax Implementing Regulation (UStDV)