Starting from January 1st, 2025, companies in Germany will be required to use electronic invoices (Е-Invoicing) for business transactions. The legal basis for this change was created by the Growth Opportunities Act in March 2024. This article highlights the key aspects of the new mandate: what does this change mean, who is affected, and what steps should companies take to prepare?
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The new accounting requirements starting January 1st, 2025
In the future, a distinction will be made between “electronic invoices” and “other types of invoices”. Only structured formats such as XRechnung or ZUGFeRD will meet the requirements for automated processing. Formats such as PDF or image files will only be considered as other types of invoices and will no longer be accepted for taxable B2B transactions within Germany after 2025.
These structured invoice formats are based on European standards (CEN standard EN 16931). They allow direct digital processing and contain all VAT-relevant information in a machine-readable format.
Personal scope of application of the new regulation
The new requirements apply to all businesses established in Germany that supply taxable services to other businesses. Small VAT-exempt businesses will have to issue e-invoices by 2028 at the latest. Exceptions apply to private customers (B2C) and cross-border transactions, where the rules of the recipient country take precedence.
Transition periods
The transition to the new accounting requirements will take place in stages to give businesses time to adapt. Until the end of 2026, paper invoices and non-compliant electronic formats such as PDFs will be allowed if the recipient agrees. Small businesses with an annual turnover of less than €800,000 can take advantage of this provision until the end of 2027. From 2028, all businesses will be required to issue invoices that comply with the new standards.
The exceptions
The e-invoicing mandate does not apply to small invoices of up to €250 or travel tickets. Invoices for tax-exempt services, e.g. under §4 UStG, can still be issued on paper or as PDFs.
How should invoices be retained in the future?
The basic retention requirements remain the same, but e-invoices must be archived in their original structured format. Even if a readable PDF is generated for internal use, the original file must be retained. In addition, the GoBD requirements continue to apply, particularly in relation to the immutability of stored data.
New requirements for receiving and sending invoices
From 2025, businesses will need to ensure that they can receive and process electronic invoices. Unlike today, the recipient’s consent will no longer be required as long as the invoice complies with the new standards. Businesses that primarily serve private customers should still be able to process e-invoices to remain flexible for potential business developments.
There are several options for transmitting e-invoices, including sending them by e-mail, using interfaces, accessing central data platforms or downloading them via portals. External service providers can also be used, provided they comply with legal requirements. Importantly, companies need to strengthen their IT security to protect against potential cyber-attacks involving manipulated invoices.
Reasons for introducing Е-Invoicing
By mandating e-invoicing, Germany aims to achieve greater efficiency and transparency. The initiative is in line with European efforts to combat tax fraud and promote the digitalisation of economic activities. In addition, e-invoicing forms the basis for a planned electronic VAT reporting system to be implemented across Europe by 2030. The introduction of mandatory e-invoicing is a milestone in the digitalisation of accounting practices in Germany.
Practical tips for successful implementation
- Prepare IT systems: Efficient infrastructure adaptation
The mandatory introduction of e-invoicing requires companies to carefully prepare their IT systems. A thorough analysis of existing accounting and ERP software is essential to determine compatibility with the required structured formats, such as XRechnung or ZUGFeRD. If current software does not meet the requirements, companies should consider upgrading or switching to alternative systems at an early stage. Establishing appropriate interfaces to facilitate digital data exchange with business partners is also critical. Conducting integration testing can help identify potential weaknesses in the process early on. Using specialised service providers can also speed up and streamline the implementation of e-invoicing.
- Communicate with business partners: Coordination brings clarity
In addition to IT preparations, effective communication with business partners is crucial. Companies should inform their partners of the forthcoming changes as soon as possible to enable joint agreements. It is advisable to establish early on the preferred method of sending invoices – whether by email, an online portal or electronic interfaces. Documenting these agreements in writing can help avoid misunderstandings. In complex supply chains, it is particularly important to clearly define roles and responsibilities so that all parties understand their obligations.
- Deliver training: Preparing employees for change
Employee training is another critical component of the transition.To ensure success, companies should educate their teams on the new legal requirements and the processes involved.Training should include not only the basics of e-invoicing, but also practical exercises in using the new software and adapting workflows.Cross-departmental collaboration is key, particularly involving staff from accounting, IT, procurement and sales.Ongoing training opportunities can help ensure that knowledge remains up-to-date and incorporates new technological or regulatory developments.
- Implement security measures: Protect against digital threats
Finally, security should not be overlooked, as the digitization of invoicing processes introduces new risks. Companies should review and improve their cybersecurity strategies to counter potential threats. Updating anti-virus software and spam filters to block malicious attachments is essential. Access controls should be implemented to restrict sensitive invoice data to authorized personnel. Monitoring systems can analyse data exchanges for suspicious activity and detect potential attacks early. In complex supply chains, it is particularly important to clearly define roles and responsibilities so that all parties understand their obligations.
The introduction of mandatory e-invoicing requires comprehensive preparation across multiple areas. By proactively adapting IT systems, fostering open communication with business partners, providing targeted employee training and implementing robust security measures, companies can successfully overcome the challenges of this transition and benefit from more efficient and secure invoicing processes in the long term.