Invoicing in Germany – What Are the New Rules?

E-invoicing has become indispensable in this age of automation and digitalization. By switching to electronic invoices, companies can optimize their processes and save costs. There is enormous potential for SMEs and smaller companies in particular, despite the need to catch up and some uncertainty. More and more companies are now being legally required to switch to electronic invoicing in accordance with EN16931 in CII and UBL. Read on to find out what this is all about, what the timetable is for the changeover in Germany and how SEEBURGER can help you.

Why is e-invoicing important for companies?

The structured data in e-invoices offers a number of advantages, including

• end-to-end processing on one system
• shorter processing times,
• lower paper usage leading to greater sustainability credentials,
• lower costs,
• confidence you are correctly adhering to the statutory e-invoicing obligation in accordance with the Growth Opportunities Act1 and
• simple processing of cross-border, international transactions.

E-invoicing is an indispensable tool for increasing efficiency, cost savings, legal certainty and sustainability – a step towards the future and remaining competitive.

Why is the EU calling for e-invoicing?

In 2021, most EU member states made progress in closing the VAT gap. In its report published in 2023, the European Commission states that member states lost just under €61 billion in VAT in 2021, compared to a whopping €99 billion in 2020.2

The report makes it clear that while there was still an unavoidable loss of revenue, targeted policy strategies have already had an impact in further closing the VAT gap. Measures such as the digitalization of tax systems, real-time transaction reporting and e-invoicing have had a particularly strong impact on reducing the VAT gap.

Where has the VAT gap come from?

The VAT gap is the estimated loss of VAT revenue caused by VAT fraud, evasion and avoidance, miscalculations, financial insolvencies and other factors. The size of the VAT gap is also influenced by economic trends, one-off government aid programs and the accuracy of national statistics.

What does the Growth Opportunities Act stipulate?

The German Federal Government has passed a bill called Growth Opportunities Act. From January 01, 2025, this defines, among other things, the restructuring of invoicing in Germany and the new definition of various invoice types in the Value Added Tax Act (UstG). Terms such as “electronic invoice” and “other invoice” are to be redefined.

Figure 1: Invoice types up to 2025 and following 2025 (image: based on Andreas Pelekies, 2024)

Currently, everything that is not printed out on paper and sent by post counts as an electronic invoice (see left-hand side of Figure 1), including

• EDI invoices,
• PDF invoices sent by email,
• e-invoices in CII and UBL in accordance with EN16931 ,
• IDoc invoices in other in-house formats.

Paper invoices fall under the invoice type other invoice.

This classification will change from 2025 with the Growth Opportunities Act (see right-hand side of Figure 1). The only invoice defined as “electronic” will be the e-invoice in accordance with EN16931 in CII and UBL. All other formats fall under the category of other invoices, which in turn distinguish between paper invoices and invoices with a different electronic format. The last category in turn distinguishes between structured and unstructured invoices.

What are UBL and CII?

In future, an electronic invoice will refer exclusively to an e-invoice according to EN16931 using the CII or UBL syntaxes. The abbreviation CII stands for Cross Industry Invoice, the abbreviation UBL for Universal Business Language. Both are XML-based syntaxes that are used in e-invoices and are used for standardized, electronic data exchange. The CII and UBL syntaxes are already widely used, which led to their selection as part of the EN standardization process.

Two main e-invoice formats are used in Germany are XRechnung and ZUGFeRD. The XRechnung format supports both syntaxes, while ZUGFeRD supports CII, which is embedded in a human-readable PDF/A-3.

Figure 2: Semantic model containing the UBL and CII syntaxes (based on Svante Schubert, 2024)3

DIN provides the EN16931-1 semantics free of charge and defines a core invoice and a syntax binding to UBL 2 and CII. This standard presents a semantic data model for the basic elements of an electronic invoice. The model limits itself to only the most important information, namely that an invoice needs to be legally correct and enable interoperability in cross-border, cross-industry domestic trade.

Different invoice types and the e-invoicing obligation

Which formats can still be used and for how long? Figure 3 shows which invoice types are still permitted and when they will become obsolete.

Figure 3: Phased introduction to e-invoicing (Image: Andreas Pelekies)4

Currently, only paper invoices may be sent without the recipient’s consent, as this format can be read by all recipients. Sending EDI, IDoc or other structured invoices, including those in CII and UBL in accordance with EN16931, currently requires the recipient’s consent, as not every recipient can read every type of electronic invoice.

From January 1, 2025, the suppliers and providers will be able to send CII and UBL invoices in accordance with EN16931 without explicit consent from the recipient. This also means that recipients must accept these invoices. Other formats will still be permitted by agreement.

For all German B2B transactions, it will be manadatory to accept e-invoices in accordance with European standard EN16931, i.e.

• ZUGFeRD from version 2.X (CII-XML embedded in PDF/A-3) and
• XRechnung (CII-XML or UBL-XML )

From July 1, 2027, sending e-invoices will be mandatory for companies with an annual turnover of more than €800,000:

a) in accordance with EN16931 format (ZUGFeRD, XRechnung)

or
b) in another electronic invoice format that is compatible with EN16931.

From January 1, 2028, sending e-invoices will be mandatory for companies of all sizes:
a) in accordance with EN16931 format (ZUGFeRD, XRechnung

or
b) in another electronic invoice format that is compatible with EN16931.

Conditions for the continued use of EDI

The electronic invoice must comply with the EN16931 standard. It is also possible to use alternative electronic invoice formats compatible with EN16931. Concretely, this means that the information required from the invoice can be extracted in a format that complies with or is compatible with the European standard. Under these conditions, it will still be possible to use the EDI procedure after December 31, 2027.

Exceptions to mandatory e-invoicing

According to the current legislation (UstG § 4 Nr 8-29), tax-free transactions are currently not affected by the e-invoicing obligation. Instead, other types of invoices can be used for small amounts up to €250 gross and for travel tickets.

Exceptions to UstG § 4 Nr 8-29 include:

• Loans, deposits and guarantees
• Land acquisition
• Post and parcel services
• Insurance
• Rental of real estate
• Medical and hospital treatment, medical services
• Health transportation
• Care or nursing for people in need of assistance

What are the next steps for your organization?

Analyze your processes and define your future digital processes

To what extent have you digitalized your incoming and outgoing invoice workflows? Can your accounts receivable already handle e-invoices? Can your invoicing software already create e-invoices? The next step is then to make the entire process paperless: from sending or receiving invoices, through to the approval and payment processes, to archiving. You may even wish to add an e-procurement system and integrate the ordering process while optimizing your invoicing capabilities.

Time for a spring clean

Your next step is to clear the obstacles to introducing e-invoicing. This includes tackling outdated software and legacy systems, as well as poor data quality. Break up any data silos and clean your databases of any duplicates. If you want several systems to work together, you will need to consolidate and streamline your infrastructure.

Implement an e-invoicing system

After you have decided on your software or cloud service, prepare your accounts receivable systems to accept e-invoices in order to comply with the obligation to receive invoices from January 1, 2025. This means you must be able to visualize the invoices’ structred data to be able to read, check – and ultimately pay –  the invoices. Then, you will need to turn your attention to your accounts payable, your outgoing invoices. Check the deadlines recommended by the legislator as well as the scope of the changes to transform your invoicing and dispatch to ZUGFeRD, XRechnung or EDI.

SEEBURGER can help you implement e-invoicing and reporting systems

As an experienced provider of e-invoicing integration services, we help you to implement the required e-invoicing and reporting system regulations in a simple and standardized way. In addition to EDI, ZUGFeRD, Factur-X, XRechnung and Peppol for Germany, SEEBURGER also covers global e-invoicing requirements and offers a flexible, ERP-independent solution as well as deep process integration in SAP with a high level of user convenience for processing incoming and outgoing invoices. This includes, for example, the seamless integration of SAP S/4HANA.

SEEBURGER lets you process incoming e-invoices in a continuous, automated process, from receiving incoming invoices to posting in the the correct ledger and and transfering to the ERP system of your choice.

You can offer your customers and business partners secure and legally compliant delivery of outgoing invoices in the EN16931-based ZUGFeRD, Factur-X or XRechnung formats. This is also securely available through Peppol and not tied to a specific ERP system.

Source: https://blog.seeburger.com/invoicing-in-germany-what-are-the-new-rules/