E-invoicing (E-Rechnung) is coming!
From January 2025, receiving them will be mandatory!
The e-invoicing obligation coming into force on 1 January 2025 is already known to many business owners. However, how to comply with this obligation is often still unclear. Below, we answer questions about e-invoicing, the transition periods for its introduction and how you can prepare early so that nothing stands in the way of smooth processing and archiving in January. As your IT partner, we are of course also here to advise and support you in this digitalisation process!
For advice on e-invoicing that complies with tax law, please contact your tax adviser and lawyer. The following article makes no claim to completeness in this respect, as that lies outside our area of expertise. Our intention is merely to give you a rough overview of e-invoicing and to encourage you to take action in good time before the turn of the year!
Table of contents
Why is the e-invoicing obligation being introduced?
In many countries of the European Union, e-invoicing is already used across the board in business transactions. In Germany, this introduction is being driven forward primarily by the public administration, whose suppliers have been obliged to submit e-invoices for several years now. In March 2024, as part of the Growth Opportunities Act (Wachstumschancengesetz), the VAT regulations for the e-invoicing obligation in German companies were also adopted.
This e-invoicing obligation for companies aims to create more transparency and efficiency in tax reporting and to prevent tax fraud. At the same time, it serves as preparation for a Europe-wide uniform reporting system. But companies themselves also benefit from this digitalisation strategy.
What is an e-invoice?
An electronic invoice (e-invoice) must provide the invoice content in a uniformly structured electronic data format that complies with the European CEN standard EN16931. Only in this way are electronic sending, receipt and the audit-proof storage and processing of invoice content possible in compliance with the law.
Important! A PDF file sent by e-mail is NOT an e-invoice within the meaning of the legislation. This is because a PDF file is not a standardised, machine-readable file. In future, however, precisely this machine-readable standard format will become mandatory and must form the leading part of the invoice documents. See the section on XRechnung and the ZUGFeRD format.
Who is affected by the e-invoicing obligation?
In principle, the e-invoicing obligation affects all companies based in Germany (B2B) that create, receive and process invoices. However, there are transition periods for gradual introduction.
From 1 January 2025
All companies based in Germany must ensure the receipt, processing and audit-proof archiving of e-invoices for B2B services provided within Germany.
The acceptance of e-invoices cannot be refused. E-invoices take precedence over other invoices such as PDF or paper invoices.
Exempt are, for example:
• Services for companies abroad
• Services for private individuals (B2C),
they must consent to receiving e-invoices
• Travel tickets
• Invoices up to EUR 250 (small-amount invoices)
• Certain tax-exempt transactions under Section 4 No. 8 – 29 of the German VAT Act (UStG)
From 1 January 2027
All domestic B2B companies with a previous year’s turnover must send e-invoices!
From 1 January 2028
Sending e-invoices becomes mandatory for all domestic B2B companies, from an invoice amount .
Which e-invoice formats comply with EN16931?
There are already invoice formats that comply with the European standard EN16931. For example, public procurement requires its service providers to submit electronic invoices, predominantly in the XRechnung format. But the hybrid ZUGFeRD format also meets the required European standard.
XRechnung
With XRechnung, all invoice information is available in a structured XML format (Extensible Markup Language) and can be captured and processed by machines, but not directly by the human eye. XRechnung invoices have many advantages. For example, error-prone manual invoice processing is eliminated, which saves time and money. In addition, the company’s overall printing and postage costs are reduced. Furthermore, fully automated invoice processes can be created, relieving the burden on accounting staff.
ZUGFeRD
The hybrid ZUGFeRD format (from version 2.0.1, Central User Guide of the Forum for Electronic Invoicing Germany) combines the structured, machine-readable XML file with a PDF document (PDF/A-3). The advantage of the human-readable PDF is of course obvious here. Otherwise, all the advantages of XRechnung apply in the same way. This invoice is used primarily in B2B business transactions to enable digital invoice exchange. It is important to know that the structured XML file of the hybrid format constitutes the authoritative part of the invoice.
How can you prepare for the e-invoicing obligation?
First check whether your accounting and merchandise management system is up to date to ensure that standardised e-invoice formats can be implemented. Take action in good time if you have older systems! Should a new system become relevant for you, then in addition to the ability to integrate e-invoices, pay particular attention to selection criteria such as scalability, audit-proof archiving and user-friendliness.
Consult your respective system provider and, for all tax-related questions, your tax adviser and lawyer. Find out how your suppliers and customers (B2B) are using the e-invoicing transition periods and what requirements they place on invoices. And “last but not least”: adapt your internal processes and responsibilities to the new requirements in good time.
Our experience shows that system providers already have suitable solutions ready for you to transform your invoice content into the prescribed data formats.
If you have any questions, our team is always happy to help!