E-invoicing in Germany

Germany is advancing its e-invoicing system for both public (B2G) and private (B2B) sectors, aligning with the broader European push for digital transformation. The country’s e-invoicing regulations are designed to promote efficiency, transparency, and compliance in financial transactions. Here’s an overview of the current state of e-invoicing in Germany and what businesses need to know.

B2G E-Invoicing: A Mandate in Place Since 2020

As of November 2020, public administrations in Germany are required to accept electronic invoices in formats such as XRechnung, ZUGFeRD, or through the Peppol network. This is a crucial step toward fully digitizing transactions between the public and private sectors.

• Federal-level administrations: E-invoicing is mandatory for all suppliers to federal public entities.

• State-level administrations: E-invoicing is mandatory in Bremen, Hamburg, Baden-Württemberg, Saarland, Mecklenburg-Vorpommern, and Hessen.

• State-level administrations soon to mandate e-invoicing: Rheinland-Pfalz will require e-invoices starting on April 1, 2025.

• Optional e-invoicing: In 9 states including Bayern, Berlin, and Nordrhein-Westfalen, as well as for local-level administrations (municipalities), e-invoicing is available but not yet mandatory.

There are a few exceptions to the mandate, such as for smaller invoice amounts or sensitive, confidential information, but these will eventually be phased out.

Archiving requirements: All e-invoices must be stored for 10 years, ensuring easy access for audits and legal purposes.

B2B E-Invoicing: A Phased Roll-Out From 2025 to 2028

The implementation of e-invoicing in the private sector (B2B) is currently voluntary in Germany. Companies can mutually agree on various formats, ranging from traditional paper or unstructured PDFs to more advanced formats like ZUGFeRD, which includes both PDF and embedded XML data, as well as fully structured EDIFACT and XML formats.

The authenticity of these invoices must be ensured by providing a complete audit trail. This flexibility in formats and transmission methods will continue until the upcoming B2B e-invoicing mandate is fully enforced.

The B2B e-invoicing mandate will be rolled out over three phases:

• January 1, 2025: All companies must be able to receive electronic invoices.

• January 1, 2027: Large and medium-sized companies (with turnover above €800,000) must send e-invoices.

• January 1, 2028: All companies will be required to send e-invoices.

Under this mandate, businesses will need to send and receive invoices in compliance with the European Norm (EN) 16931, using official syntaxes such as UBL and CII XML. Other formats can be used if both parties agree and the necessary data can be extracted for audits.

As with B2G invoicing, all B2B e-invoices must also be archived for 10 years.

Preparing for the Future of E-Invoicing

With the upcoming mandates for both B2G and B2B e-invoicing, businesses in Germany need to prepare for a fully digital invoicing landscape. The flexibility in formats and transmission methods currently available will gradually be replaced by stricter requirements, making it essential for companies to ensure compliance with both national and European regulations.

By adopting these digital invoicing systems, companies will not only meet legal requirements but also streamline their invoicing processes, improve transparency, and reduce costs over time.