XRechnung and ZUGFeRD are two e-invoicing platforms for German companies. As the country undergoes a systemic digital transformation, businesses that work with the government (and eventually, other businesses) must switch over to electronic invoices, and many are weighing up these two options.
We’re here to help you compare XRechnung and ZUGFeRD, and determine which is the correct option for your organisation. Just remember: both of these platforms need extra help to verify whether the bank account on an invoice actually belongs to the legitimate supplier, which is where Trustpair comes in.
XRechnung vs ZUGFerd: which one should you choose?
- E-invoicing in Germany is strictly regulated in B2G transactions, and will become mandated for business to business (B2B) by 2028
- XRechnung is the technical option, formatted for seamless processing with machine readable XML data. It’s not readable by humans without added software, great for compliance with government agencies
- The ZUGFeRD invoice format is the hybrid option, presented as a PDF for easy readability by humans, but also containing an XML data set code for full automation – great for B2B transactions
- Choosing between the two platforms depends on your organisational constraints
- Companies should ‘top up’ both of these systems with additional controls like bank account verification, particularly to validate supplier bank details and detect anomalies before payments are released
How does e-invoicing work in Germany?
E-invoicing in Germany is a strictly regulated process. It ensures that an invoice can be read and processed by a machine without human intervention, and follows the regulatory compliance requirements of the European e invoicing standards, EN 16931.
Most companies use software for automated invoice processing in these formats. The submission portal can then be integrated into the wider enterprise resource planning (ERP) software. This includes the likes of XRechnung and ZUGFerd, which we’ll be comparing today.
Unlike countries like Italy or France, Germany doesn’t operate with a central government portal. The invoice issuer sends its files directly to the client. For B2B transactions, sending the file via email, Secure File Transaction Protocol (SFTP) or networks like Peppol is common. The latter, Peppol, is preferred for business to government (B2G) invoices due to their regulatory requirements.
What are electronic invoices?
E-invoicing is the issuing of a payment notice completely through a structured electronic format, meaning that it is machine-readable. The ‘problem’ with paper-based invoices like a static PDF format from a regulatory standpoint is that they require human intervention, exposing companies to fraud, errors and manual processing timelines.
But e-invoice formats remove those barriers for the invoice recipient, leading to seamless integration. By setting the ‘rules’ for how the invoicing data must be structured, electronic invoice networks protect companies from many of the vulnerabilities of invoicing and minimise the associated costs.
The timeline to mandatory e-invoicing
In Germany, mandatory e-invoicing is already underway. Rollout has been phased between 2025 and 2028 for the Growth Opportunities Act (Wachstumschacengesetz).
For B2B transactions in Germany, here’s the timeline:
January 1st 2025:
- All German companies, regardless of size, must be able to receive and process incoming electronic invoices as a legal requirement
- No consent is required from suppliers, so they can now send invoices without asking their clients for permission
- Companies can still choose to send paper invoices or PDF invoice data, but only if the client agrees to it
January 1st 2027:
- Some companies come under mandatory e-invoicing, meaning they lose the option to submit invoices by paper or PDF document, even if their client agrees. These companies have a prior-year turnover of €800,000 plus.
January 1st 2028:
- The mandate becomes universal as a standard format, no matter the business size
- The transition period officially ends from the Electronic Data Interchange – all invoicing methods that do not comply with the EU directive must be phased out or updated.
However, there are some key exceptions that are exempt from the strict XML structure requirement. Small amount invoices, under the value of €250, alongside travel tickets and B2C transactions are all examples of these exemptions.
What is XRechnung: XML file format?
XRechnung is the digital invoicing system that was specifically developed for Germany’s public authorities and government invoicing system. It helps firms to automatically process their invoices.
It’s machine-readable only, using embedded XML file processing, meaning that everyday people can’t read and understand the invoices. This can make it more difficult to transition onto, especially for companies that are not currently familiar with e-invoicing or financial automation protocols.
However, because of its mandatory use in public industry, users of XRechnung invoice software can be confident that it meets the required legal conditions for compliance.
It’s the preferred system for vendors that work directly with the public sector in Germany, including:
- State and local councils
- German Rail (Deutsche Bahn)
- Federal authorities
What is ZUGFeRD: hybrid invoice format?
ZUGFeRD is a hybrid format, which means it’s both a human readable PDF and can be read by machines. It’s presented by appearing like a PDF, but with embedded XML data within the file. It’s therefore much more approachable for firms during their transition to e invoicing.
It’s also compliant with the required regulations, however there is a small risk of media disruption if the PDF information and XML code are not perfectly synced. This does make a ZUGFeRD invoice that little bit more corruptible, subject to error and higher risk.
As long as your business does not only service government clients, you can use ZUGFeRD.
XRechnung vs ZUGFeRD: what are the key differences?
Here’s a comparison table between XRechnung and ZUGFeRD so that you can see for yourself:
| Feature | XRechnung | ZUGFeRD |
| File format | Pure XML code | Embedded XML and PDF |
| Human readability | No, requires viewer software | Yes, looks like a PDF |
| Primary use | Public sector (B2G) | Private sector (B2B) |
| Main advantage | Maximum finance automation – processed automatically | User friendliness and ‘old world’ compatibility |
| Compliance | Full | Full, with correct usage |
| Complexity | High – purely technical | Low – hybrid nature |
Which data format should you choose for digital transformation?
Deciding on which e-invoicing format to choose starts by remembering the context: from January 1st 2025 all German companies had to be able to receive structured e-invoices. And by 2028, almost all B2B companies must be able to issue them as part of their accounting process.
Choose ZUGFeRD when…
ZUGFeRD is best for companies with a mix of B2B and B2G clients, and its hybrid nature offers a bridge. Your accounting software can process XML automatically, but your staff can also open the PDF, perform quick checks and oversee the process for errors. It’s easier to implement, generally, because it doesn’t break existing workflows.
However, the file size is larger than a purely XML based format. And due to the doubled set of information, humans might be required to oversee all e-invoicing procedures in order to ensure there are no errors or mistakes, especially in the case of large invoices.
If you want one solution for everything: choose ZUGFeRD. Modern ZUGFeRD versions include a specific profile that meet all of the same requirements as XRechnung, enabling you to send the same file type to both government and private businesses.
Choose XRechnung when…
XRechnung is the official standard for the German public sector, so it’s best if you only serve government agencies and federal authorities. After all, these organisations only accept e-invoices in this format.
It’s therefore perfectly optimised for machine processing, and because there is no ‘visual’ layer, there’s no risk of the data differing between PDF invoices and XML. It’s great for automatic processing. However, it’s hard to read without a specific tool, making the learning curve complex and difficult.
If you are highly automated, and already using an ERP system like SAP or Microsoft Dynamics, you are well set-up to use XRechnung. Via the Peppol network, this is the most efficient and professional-grade choice.
Additional controls are needed
As workflows become fully automated, payment controls increasingly shift from document validation to supplier data verification. This is where companies need additional controls beyond e-invoicing formats, particularly to validate service provider and supplier bank details and monitor third party risks. Trustpair detects anomalies before payments are released, operating upstream of payment execution.
To learn more, book a demo.
Making the choice between German e-invoicing platforms
Germany’s e-invoicing mandate requires all B2B businesses to transition from standard PDFs to structured XML formats like XRechnung or ZUGFeRD. XRechnung serves as the gold standard for maximum automation and public sector compliance. ZUGFeRD offers a user-friendly hybrid approach by embedding the data in a readable PDF. No matter which e-invoicing platform you choose, Trustpair can provide additional controls to keep your payments safe.