From 1 January 2025, all domestic businesses are required to be able to receive electronic invoices in a structured format. The obligation to issue e-invoices will be phased in. This article explains the new requirements under § 14 UStG, the common formats XRechnung and ZUGFeRD, and practical implementation.
Mandatory e-Invoicing from 2025 -- Obligations, Formats and Implementation
The electronic invoice (e-invoice) will become compulsory in German B2B transactions from 2025. The Growth Opportunities Act (Wachstumschancengesetz) fundamentally amended the VAT invoicing rules in § 14 UStG and established a binding timetable for the rollout of e-invoicing. Businesses of all sizes need to act -- from IT infrastructure and accounting processes to contractual relationships with trading partners.
What Is an e-Invoice?
The New Invoicing Concept
From 2025, the law distinguishes between the electronic invoice and the other invoice:
Electronic invoice (e-invoice): An invoice issued, transmitted and received in a structured electronic format that enables electronic processing. The format must comply with or be interoperable with the European standard EN 16931.
Other invoice: All invoices that do not meet the requirements of an e-invoice -- including the familiar PDF invoice and paper invoices.
Important: A simple PDF sent by email does not qualify as an e-invoice under the new law. It lacks the structured data format that enables automated machine processing.
Common Formats
XRechnung
XRechnung is the German standard for electronic invoicing to public-sector contracting authorities. It is a pure XML format containing only structured data and is not designed for human readability.
Features:
- Pure XML format (no visual document)
- Fully EN 16931-compliant
- Standard for federal invoices since 2020 and for most federal states and municipalities since 2023
- Requires a separate viewer for visualisation
- Particularly suited for fully automated processing in ERP systems
ZUGFeRD (from version 2.0)
ZUGFeRD is a hybrid format that embeds a machine-readable XML file within a human-readable PDF document. From version 2.0, ZUGFeRD is compatible with EN 16931.
Features:
- PDF/A-3 document with embedded XML file
- Both machine- and human-readable
- Profiles with varying levels of detail: Minimum, Basic, Comfort, Extended, XRechnung
- Particularly suited for businesses requiring both automated and manual processing
Note: Only ZUGFeRD profiles conforming to EN 16931 (in particular the Comfort, Extended and XRechnung profiles) meet the e-invoice requirements.
The Timetable: Phased Introduction
From 1 January 2025: Obligation to Receive
From 1 January 2025, all domestic B2B businesses must be able to receive e-invoices in a structured format. This obligation applies regardless of company size and also covers small businesses.
Transitional Provisions for the Obligation to Issue
Until 31 December 2026: Other invoices (paper, PDF) may continue to be issued.
1 January 2027 to 31 December 2027: Businesses with prior-year turnover exceeding EUR 800,000 must issue e-invoices. Smaller businesses may continue to use other invoices.
From 1 January 2028: All domestic businesses must issue e-invoices in B2B transactions.
Exemptions
The e-invoicing obligation does not apply to:
- Small-value invoices up to EUR 250
- Transport tickets
- Invoices to end consumers (B2C transactions)
- VAT-exempt supplies under § 4 nos. 8 to 29 UStG
Technical Implementation
Receiving e-Invoices
To receive e-invoices you need at a minimum:
- An email inbox capable of receiving XML files and ZUGFeRD PDFs
- A means of visualising XRechnung files (e.g. an XRechnung viewer or compatible accounting software)
- A GoBD-compliant archiving system for audit-proof retention
Creating e-Invoices
For creating e-invoices you have several options:
- ERP system with integrated e-invoicing: Most common ERP systems (SAP, DATEV, Lexware, sevDesk, Sage) now offer XRechnung or ZUGFeRD creation
- Dedicated invoicing software: Tools such as Billomat, FastBill or easybill
- Free online tools: For smaller businesses, free solutions offer a low-threshold entry point
- Tax advisor software: If your tax advisor handles invoicing, creation can be done through their software
GoBD-Compliant Archiving
The retention obligations under the GoBD principles also apply to e-invoices:
- Retention period: 10 years
- Immutability: The invoice must not be altered after receipt
- Completeness: All received and issued e-invoices must be retained
- Traceability: It must be possible at all times to trace from invoice to booking entry
- Machine-readability: The structured data must remain machine-readable throughout the retention period
VAT Implications
Input Tax Deduction
For the input tax deduction under § 15 UStG, all mandatory particulars under § 14(4) UStG must still be included. The tax authorities are expected to scrutinise the completeness of structured data more closely, as automated checking becomes technically simpler.
Reporting System and Future Outlook
The e-invoicing obligation is a key building block for the planned reporting system (E-Reporting), under which invoice data would be transmitted to the tax authorities in real time or near real time. At European level, the EU Commission's ViDA (VAT in the Digital Age) initiative is working on harmonised standards.
Recommendations for Businesses
Immediate (by end of 2025)
- Ensure reception capability: Confirm you can receive and read e-invoices in XRechnung and ZUGFeRD format
- Review your archiving system: Ensure GoBD-compliant retention of electronic invoices
- Train employees: Inform your accounting team about the new formats and processes
Medium-term (2026)
- Build creation capability: Select and implement a solution for creating e-invoices
- Adapt processes: Integrate e-invoicing into your incoming and outgoing invoice workflows
- Inform business partners: Coordinate with suppliers and customers on future invoice transmission
Long-term (from 2027/2028)
- Complete switchover: Convert all B2B outgoing invoices to e-invoices
- Expand automation: Leverage structured data for end-to-end automation from invoicing to bookkeeping
- Prepare for the reporting system: Monitor the development of the planned real-time reporting system
Special Challenges for Smaller Businesses
For smaller businesses and freelancers, e-invoicing presents a particular challenge, as existing IT infrastructure is often not designed to process structured data formats.
Pragmatic solutions:
- Cloud-based accounting software: Modern cloud solutions support e-invoicing and offer a low-threshold entry point
- Collaboration with your tax advisor: Many tax advisors offer e-invoice creation and processing as a service
- Industry-specific solutions: Specialised software with integrated e-invoicing is available for specific sectors
Conclusion
The introduction of mandatory e-invoicing is one of the most significant changes in German VAT law in recent years. It affects all businesses in the B2B sector and requires adjustments to technology, processes and organisation. The reception obligation from 2025 and the phased issuance obligation up to 2028 provide a clear timeline.
Businesses that act early benefit from more efficient processes, lower error rates and a future-proof accounting infrastructure. At compleneo, we support you in implementing the e-invoicing obligation -- from selecting the right software and adapting your accounting processes to GoBD-compliant archiving. Get in touch with us.
