Most German businesses are already familiar with e-invoicing mandates, as they have been assigned to receive them since 2025 for B2B transactions, or 2020 in B2G contracts. But the phased rollout of mandated sending for e-invoices is also on its way, and companies should prepare now to avoid business interruptions on deadline day. Learn about all the requirements for German e invoicing, the benefits and a lesser known risk of e-invoicing: payment fraud. At Trustpair, we validate supplier bank account ownership in real-time to prevent this risk from materialising.
E-invoicing requirements in Germany: Key Takeaways
- Government contractors are already mandated to send and receive electronic invoices in Germany
- For business-to-business transactions, firms must be able to receive e-invoices, and some will be required to send them from 2027, with all others following in 2028
- The two German e-invoice formats are XRechnung (purely XML code) and ZUGFeRD (XML and PDF), and suitable for different invoice situations
- E invoices work through a real-time ‘four corner’ processing model for an automated exchange, which can also automate reconciliation, payment processing and archiving
- Electronic invoicing benefits companies by being faster and more cost-efficient
What are the e-invoicing requirements in Germany?
In Germany, mandates require business-to-government, and now business-to-business transactions to be sent by electronic invoice (e-invoice). Large businesses must now be able to accept invoices in structured electronic formats that are machine-readable, and not necessarily machine-readable. And soon, businesses of all sizes that send or accept invoices through B2B or B2G transactions will have to comply.
Here are the key requirements for German procurement processes:
- As an invoice recipient, all businesses dealing with B2G and B2B transactions must be capable of receiving electronic invoices
- In B2G settings, e-invoicing has been mandatory since 2020 for contracts above certain thresholds (typically €1.000)
- In B2B settings, large businesses (with annual turnover of more than €800.000) are the first required to send electronic invoices to partners
- Only structured invoice data (XML formats) are allowed, PDFs or paper-only are not
- E-invoices must be stored and archived for 8-10 years by both the supplier and receiver
- Compliant formats include XRechnung and ZUGFeRD, but there is no mandatory e invoicing system for invoice submission in the digital age
Legal framework and scope
The legal framework for B2G e-invoicing in Germany was introduced first in 2020, and is based on the European Directive 2014/55/EU. This directive dictated that all EU member states, including Germany, must adopt compliant electronic invoicing for public-sector contracts.
The scope covered all vendors providing services or products to the Federal ministry or State authorities, and it required e-invoices to be submitted in a structured, machine-readable format.
For mandatory e invoicing requirements Germany has a legal framework that comes from the Growth Opportunities Act. Passed in 2024, it covers various tax relief incentives, R&D support and e-invoicing mandates designed to boost the economy and reduce bureaucracy, as well as prevent VAT fraud.
Under the regulation, electronic invoices for B2B transactions are being phased in gradually. By January 1st 2025, all businesses must have been able to accept electronic invoices. Then, large businesses turning over more than €800.000 will be required to issue electronic invoices. And by the end of the 3-year transition period, all businesses (regardless of size) must send structured e-invoices, linked to the German tax authority.
All German e-invoices must comply with the European Standard EN 16931. Across all cases, the accepted formats include XRechnung, ZUFeRD and the Peppol network.
Who is affected by German e-invoicing rules?
All businesses that have contracts with the public procurement sector, from local authorities to national government departments, are affected by German e-invoicing rules.
In the private sector, the phased approach means that from 2025, all businesses must be able to accept e-invoices. From 2027, companies turning over more than €800.000 annually will be required to send structured e-invoices, replacing their paper invoices. And from 2028, this electronic invoicing obligation will expand to organisations of all sizes, ceasing the ability to issue paper invoices altogether.
When do e-invoicing requirements apply in Germany?
Here’s a quick breakdown of the timeline for electronic invoice submission in Germany under the Growth Opportunities Act and the European Standard:
- November 2020: suppliers of government authorities in the EU must send and receive structured electronic format e-invoices
- January 2025: all vendors involved in business-to-business transactions must be able to receive e invoices. Paper or PDF invoices may still be sent for outgoing invoices, but only when the recipient gives their consent.
- January 2027: mandatory sending of e-invoices in the B2B sector for ‘large’ businesses turning over more than €800,000 per year
- January 2028: mandatory sending invoices electronically for all other business partners in the B2B sector, regardless of company size for invoices issued past this date
Upcoming e invoicing obligations businesses should anticipate
Rollout has already begun for e invoicing in Germany, but there are two big upcoming events that businesses must anticipate.
For large businesses, sending B2B invoices with a turnover of more than €800.000, the mandatory issuing of e-invoices comes in on January 1st, 2027.
For all other businesses that send B2B invoices, mandatory electronic invoicing will come in on January 1st 2028 ( the date they must become an e-invoice issuer).
What should businesses do in anticipation?
For the seamless integration of digital invoicing into existing systems, businesses should:
- Update IT systems: you should already be able to receive e-invoices, but your ERP or procurement software should also be able to send, process and archive structured XML data format
- Update contracts: review and update your vendor or customer agreements to include new invoice formats and make changes to your data governance policy if required
- Access a compliant archive: because these electronic documents must be stored in their original structured format for up to 10 years
- Transition to e-invoicing: begin testing how you create invoices before the required date to minimise operational and cash flow disruptions, and maintain third party relationships
What are the e-invoice formats in Germany
There are two key invoice formats in Germany:
- XRechnung
- ZUGFeRD
Let’s explore the main differences between XRechnung and ZUGFeRD, so that you can determine which best suits your organisation.
XRechnung: mandatory format for public sector invoicing
XRechnung is the technical option: machine-readable only. Its information is communicated through an embedded XML file and the system was specifically developed for Germany’s public contracting authorities like the Federal administration and government invoicing. Thanks to this investment, it’s the only platform that B2G users can send and receive their invoices on.
In order to read the invoices, users need specific software. This promotes efficiency through financial process automation, and also means that the format is fully compliant to EU standards. However, due to the technical nature of XRechnung, there is a higher learning curve during the user onboarding and testing phase.
ZUGFeRD: hybrid format for B2B invoicing
ZUGFeRD is both machine and human-readable, which is known as a hybrid format. It essentially looks like a PDF, although it still contains the XML code required for e-invoicing compliance.
In B2B e invoicing settings, ZUGFeRD tends to be the preference because it merges old and new world technologies. Since no single format is mandatory in B2B e-invoicing, companies may prefer the user friendliness of this, and thanks to the inclusion of natural language alongside XML, it may even help with auditability of accounting processes.
But due to the nature of ZUGFeRD, users must be trained properly in order to submit, process and archive e-invoices in a compliant manner.
Differences between XRechnung and ZUGFeRD <H3>
There are some key differences between XRechnung and ZUGFeRD:
| Feature | XRechnung | ZUGFeRD |
| Format | Only structured, embedded XML code (universal business language) | Hybrid: both embedded XML code and PDF |
| Readability | Machine readable only, no manual entry | Machine and human readable |
| Primary industry | Business-to-government (B2G) | Business-to-business (B2B) |
| Technicality | Very technical, could be a difficult learning curve | Very user friendly, but users must be well-trained to ensure compliance |
| Compliance | Fully compliant by nature with German tax authority | Fully compliant but room for error |
How e-invoicing works in practice
E-invoices are exchanged directly between supplier and buyer accounting systems. It removes the need for manual intervention, because these systems securely send and receive, ‘read’ and process the invoices to the payment stage, and can be paired with other finance automation like 3-way matching.
- The supplier generates their electronic invoice within their ERP systems or accounting process, which is then converted to XML format (other invoice formats are not allowed)
- The invoice is transmitted through a secure network directly to the buyer’s system
- During the transmission, the e-invoice is assessed for compliance against regulatory standards for tax authorities, legal and formatting requirements
- The buyer’s system receives the invoice, validating for data integrity and recording it through matching, where it is then paid
- Both parties automatically archive the invoices for compliance purposes
Integration with ERP and accounting systems
There are a number of service providers that support XRechnung or ZUGFeRD e-invoice formats. Integrating them with ERP and accounting systems provides automatic compliance and real-time visibility, minimising manual input.
In Germany in particular, one of the major reasons for moving towards e-invoicing was to reduce the ‘tax gap’ – which is the difference between expected and actual VAT collected. With this cleaner and, importantly, validated information stream, companies can integrate their e-invoices for quicker tax credit reconciliation. This should reduce disputes and improve cash flow.
What are the benefits of e-invoicing?
Once over the set-up journey, to issue invoices electronically can be incredibly beneficial:
- Significant efficiency benefits, leading to cost savings
- Scales as the business does
- Enhanced internal controls
- Improved security and compliance
- Better third-party relationships
That being said, e-invoicing does not address certain risks, such as the risk of payment fraud. As invoices are automatically processed and validated within the ERP systems, rather than through an external e-invoice network, these documents are still susceptible to tampering by fraudsters.
In order to achieve the standardisation benefits of e-invoicing, alongside full payment security, implement a platform like Trustpair. By verifying vendor bank details in real-time, and before the payment is made, you can prevent the likes of invoice and payment redirection fraud.
Regulatory compliance and audit readiness
E-invoicing provides ready-made audit trails since all invoices are digitally stored, timestamped and traceable. Most programs also use WORM (write once, read many) compliant storage, too, ensuring that once delivered, they cannot be tampered with.
Thanks to standardised formatting, many companies can also avoid the penalties that they may otherwise get, too. It’s as if the invoices are templated, due to their structured format, which can help teams avoid compliance mistakes.
Finally, thanks to the real-time nature of e-invoicing, auditors can quickly manage the financial data and significantly reduce their preparation time. Since integrated systems enable invoices to be submitted to the authorities instantly, organisations can operate with significantly more transparency than paper or PDF invoice systems.
Process automation and operational efficiency
Because e-invoices go straight into AP systems, rather than sitting in inboxes, the reconciliation and payment processes can get triggered immediately. Industry reporting shows that firms could cut their processing time by around 60%, and achieve a 30% reduction in processing costs.
For businesses concerned with operational efficiency and business continuity planning, the invoice journey is digital and fully documented, helping teams to retrace their steps if disruptions occur. Thanks to this transparency, German organisations can benefit from improved end-to-end supply chain management.
But as mentioned, invoice legitimacy is not 100% guaranteed. In order to maintain payment security across the same supply chain, explore payment verification with Trustpair.
Reviewing e-invoicing requirements in Germany
In Germany, e-invoicing mandates have existed since 2020 for government contractors, and will now extend to B2B transactions. Users must issue e invoices formatted with structured XML code for machine readability. This has significant efficiency and cost benefits, but is not 100% secure against fraudsters – which is where Trustpair can help through bank account ownership verification.