Mandatory E-Invoice Reception in Germany – January 2025

Mandatory E-Invoice Reception – January 2025

From January 2025, the compulsory reception of electronic invoices for some B2B transactions will be obligatory in Germany, a radical change in business invoicing data exchange. The reason for the change is the Growth and Opportunities Law, passed by the German Bundesrat on 22 March 2024.

Under the new directive, only formalized electronic invoices—those sent, sent, and received in a computer-readable format that can be processed automatically—will qualify as e-invoices. Therefore, PDFs via email will no longer qualify as an electronic invoice under the law.

To help companies make this transition, German tax authorities published formal e-invoicing guidelines on 15 October 2024. This blog explains the most important implications of the new requirements and how companies should prepare to comply with the changes.

Germany’s E-Invoicing Rollout: Key Dates and Compliance Timeline

Germany is launching its B2B e-invoicing mandate in phases from January 2025. The switch is meant to modernize invoice processing and comply with EU VAT regulations. Below is the implementation roadmap:

• January 2025: All taxpayers should be able to receive structured electronic invoices from their suppliers. Invoices in paper format can continue to be used, but only with the recipient's express agreement. From 2025 and 2026, both e-invoices and paper invoices will be valid formats.
• January 2027: Companies with a turnover of more than EUR 800,000 per annum will be mandated to send structured e-invoices.
• January 2028: All German taxpayers, irrespective of turnover, will be mandated to send out e-invoices.

A major step forward was securing EU authorization to deviate from Articles 218 and 232 of the EU VAT Directive, allowing Germany to enforce this mandate. The legislative foundation was solidified when the Federal Council approved the law on 22 March 2024.

Scope, Format, and Compliance Requirements for Germany’s E-invoice Mandate

Germany's B2B e-invoicing mandate covers domestic transactions among businesses in Germany. The mandate is specifically focused on companies with a registered office or fixed establishment in Germany as well as fixed establishments of foreign companies.

Scope of Application

The mandate covers standard domestic B2B transactions. However, certain transactions are explicitly excluded, including:

• Intra-Community supplies
• Simplified invoices
• Low-value invoices under EUR 250
• Transportation service tickets

E-Invoicing Format Requirements

In order to qualify as compliant, B2B e-invoices have to comply with the European electronic invoicing standard (EN 16931), as specified by Directive 2014/55/EU. Acceptable formats include:

• XRechnung – the German-specific implementation of the EU standard
• ZUGFeRD – version 2.0.1 or higher
• Hybrid formats – structured formats embedded in human-readable layouts (e.g., PDF with XML)

These formats match requirements from the European Commission's ViDA (VAT in the Digital Age) proposal and make Germany an early pioneer for EU-wide digital VAT reform.

Implications for VAT Compliance

After the B2B e-invoicing mandate has been introduced, only standard, structured electronic invoices will be accepted for VAT deduction purposes. Non-standard format invoices—such as PDFs or paper invoices—will no longer be able to claim input VAT recovery except for those exempted under specific transitional provisions.

Notably, with the new regulations, the sending of an e-invoice will become the standard and not need the prior consent of the recipient. This transition is reflective of the already laid policy for B2G e-invoicing in Germany, wherein it has been obligatory for quite some time now through a decentralized model among states.

Key Benefits of E-Invoicing for Businesses and Tax Authorities

The deployment of electronic invoicing offers an extensive range of operational and financial advantages to organizations. With the computerization of the invoicing process, organizations can simplify their procedures and attain maximum overall efficiency. Primary benefits are:

• Enhanced Payment and Processing Speed: E-invoicing allows quicker transmission and processing of invoices, i.e., quicker payment cycles and better cash management.
• Cost Reduction: Businesses can reduce costs associated with paper, printing, postage, and warehousing in physical locations.
• Process Automation: E-invoicing simplifies automating business processes within, less need for manual data entry and potential for human mistakes.
• Increased Visibility to Data: Having access to invoice data in real time provides enhanced decision-making and improved financial planning.

From the Perspective of Tax Authorities

Mandating structured electronic invoices also provides substantial benefits to tax administrations. Chief among these is the reduction of VAT fraud, especially when combined with continuous transaction control (CTC) mechanisms. Real-time or near real-time access to information on invoices adds to audit capability and overall tax compliance.

By enabling the general aims of digital transformation, e-invoicing not only streamlines business processes but also enhances fiscal responsibility and integrity.

How to Submit E-Invoices Under the German Mandate

According to the existing legislation, Germany's B2B e-invoicing mandate does not pose any digital reporting requirements (DRR) or ongoing transaction controls (CTC) in relation to the sending of electronic invoices. All that is addressed at this point is the issuing and receiving of invoices in a structured, machine-readable manner in line with EU standards.

Pending Developments

There are nevertheless some areas of the e-invoicing regime that need clarification. German tax administrations have signalled that they intend to coordinate future evolution with Pillar 1 of the EU's ViDA proposal, which is aimed at e-invoicing and Union-wide digital reporting obligations.

Consequently, companies should keep a close watch on regulatory changes, since further guidance or the implementation of a CTC framework may follow in later stages. In the meantime, the requirement is confined to proper issuing and receiving of structured e-invoices, without real-time reporting to the tax authorities.

Conclusion

Germany's staged rollout of compulsory B2B e-invoicing is an important step in the digitalization of tax and business processes. Whilst today's priority remains in the facilitation of receipt and issue of structured electronic invoices, businesses need to start preparing today to achieve format and system compatibility. As the framework develops in step with the EU's ViDA program, being aware and responsive will be crucial to keeping up with compliance and maximizing the benefits of e-invoicing