The introduction of e-invoicing in Germany is an important step towards digitalization and increased efficiency in business transactions and is based on EU Directive 2014/55/EU and the Growth Opportunities Act. From January 1, 2025, the acceptance and electronic processing of e-invoices in the B2B sector will be mandatory for all companies. From 2027, companies with an annual turnover of over €800,000 will also have to create and send e-invoices, smaller companies will follow from 2028; until the end of 2026, paper and PDF invoices will only be permitted with the recipient's consent.

This article provides a comprehensive overview of the topic of e-invoices.

1. What is an e-invoice?
2. Who is affected?
3. The challenges for companies
4. Transition periods for e-invoices
5. E-invoices with Mercoline

An electronic invoice (e-invoice) is an invoice that is created, transmitted and received in a structured electronic format, which enables electronic processing.
Important to note: A simple PDF format does not fulfil these requirements.

The structured electronic format must comply with the European standards for electronic invoicing, specifically the CEN standard EN 16931 and the corresponding syntax lists. Formats such as XRechnung, which is already used in public procurement, or the hybrid ZUGFeRD format, which is a combination of PDF document and XML file, fulfil these requirements. In future, however, only the structured part will be relevant for hybrid formats.

A technical detail for experts: The structured format of the e-invoice must be agreed between the invoice issuer and the invoice recipient. It must then be possible to extract the information required by the VAT Act correctly and completely from the electronic invoice in the agreed format in order to comply with the European standard or be interoperable with it. Under these conditions, invoices created using EDI (Electronic Data Interchange) procedures are currently also permitted, even if their formats do not directly comply with CEN standard EN 16931.

The following are obliged to use e-invoicing:

• Companies with B2B services
  The obligation to issue an e-invoice only applies to services between entrepreneurs (business-to-business, B2B). This applies regardless of whether the company is run as a main or secondary business.
• Small businesses:
  From 2028 at the latest, small entrepreneurs who are liable for VAT must also issue e-invoices in the B2B area.

Further requirement:

The supplying entrepreneur and the service recipient must be domiciled in Germany. This means that

• The registered office or management must be in Germany.
• A permanent establishment in Germany involved in the relevant turnover is also sufficient.
• Alternatively, domicile or habitual residence in Germany is also sufficient.
• VAT registration in Germany without simultaneous residence does not lead to the obligation to issue invoices electronically.

The switch to e-invoices brings with it a number of challenges:

Technical integration:

Companies need to adapt their IT infrastructure to be able to process electronic invoices. This requires investment in suitable software and interfaces.

Training and adaptation of processes:

Employees need to be trained in how to use the new systems. In addition, existing business processes must be adapted to meet the new requirements.

Compliance and data security:

It must be ensured that all legal requirements are met, particularly with regard to data protection and data security.

Costs and resources:

The implementation and operation of e-invoicing solutions require financial and human resources.