Oct
Germany Introduces Gradual Mandatory E-Invoicing for B2B Transactions Starting January 2025
Germany has joined the ranks of European Union countries transitioning to mandatory e-invoicing for B2B transactions. The phased implementation, which begins on 1st January 2025, will roll out over three years, giving businesses some time to adapt to the new requirements.
This gradual approach reflects Germany’s commitment to streamlining invoicing processes while allowing businesses the flexibility to adapt over time, aligning with the VIDA framework proposed by the EU to modernize and digitalize the existing VAT system.
Many companies in Germany are already using electronic invoices in dealings with government agencies and other businesses, so the government has opted for a gradual transition to ease the process.
Phase 1: Receiving E-Invoices
The first phase of the mandate, starting January 1, 2025, requires businesses to be able to receive structured e-invoices from their German suppliers for domestic B2B transactions. In a September 2024 announcement, the German Ministry of Finance confirmed that businesses can meet this requirement with a simple email inbox for receiving invoices. However, companies are encouraged to explore more robust, long-term solutions to ensure compliance and efficiency.
Next Phases: Issuing E-Invoices
The transition to mandatory e-invoicing will continue with two additional phases:
- January 1, 2027: Businesses with an annual turnover exceeding €800,000 must begin issuing e-invoices for B2B transactions.
- January 1, 2028: E-invoicing will become mandatory for all businesses in Germany, regardless of turnover.
E-Invoicing Standards
During the transition period leading up to January 2028, businesses will have the option to use both EDI (Electronic Data Interchange) and EN 16931 structured e-invoices. After January 1, 2028, only the EN 16931 standard will be accepted. This EU standard defines the fields and values that e-invoices must include, ensuring a consistent, structured format for invoicing across the region.
As an example of the acceptable formats, the XRechnung (core data model) and the ZUGFeRD (from version 2.0.1) formats were mentioned by Germany Ministry of Finance in their latest update. Other national formats that correspond to the EN 16931 format could also meet the requirements of the e-invoicing obligation such as the French format Factur X and Peppol-BIS Billing.
User-Friendly Approach
The German Tax Office has announced that hybrid e-invoices, such as ZUGFeRD and Factur X, will be accepted. This means that as long as the machine-readable part of the invoice complies with the EN 16931 standard, it can also include a human-readable format. This flexibility ensures that invoices can be processed both automatically by software and manually by individuals, offering a user-friendly approach for businesses of all sizes.
Preparing for Compliance
As Germany moves toward full e-invoicing adoption, businesses are advised to begin preparations early to ensure compliance with each phase of the rollout. Those with questions or concerns about the new e-invoicing requirements are encouraged to reach out for further information and guidance.