Electronic-Bills (E-Bill)


Basis

Under the Growth Opportunities Act, it was decided to introduce mandatory e-invoicing for domestic B2B transactions (transactions between businesses) effective January 1, 2025.

What is an e-bill?

An e-invoice in accordance with the EN 16931 standard is an invoice that can be issued, transmitted, automatically received, and processed electronically in a structured electronic format. An electronic invoice must be created and sent electronically from the outset. Scanned paper invoices are not e-invoices but are treated as paper invoices. This also applies to standard invoices sent via email in PDF format, as the data in these is only contained in an unstructured form and cannot be processed electronically in an automated manner.

E-invoice formats

Among the most well-known e-invoice formats are XRechnung and ZUGFeRD.

XRechnung

XRechnung is a structured, XML-based electronic invoicing standard developed by KoSIT (Coordination Office for IT Standards) for Germany. It complies with the European standard EN 16931 and is mandatory for invoices sent to public sector entities (B2G); starting in 2025, it will also be phased in for the B2B sector.

ZUGFeRD Rechnung

ZUGFeRD (Central User Guide of the German Electronic Invoicing Forum) is a hybrid e-invoice format that combines a human-readable PDF file with machine-readable XML data. It complies with EU Standard 16931, is legally compliant for B2B and government transactions starting with version 2.0.1, and facilitates automated invoice processing.

When does it start, and who is eligible?

  • Mandatory e-invoicing starting in 2025
    Mandatory e-invoicing will be introduced on January 1, 2025, for taxable domestic B2B transactions.
  • invoice in accordance with EN 16931
    The law defines an e-invoice as an invoice that complies with the European standard EN 16931. The ZUGFeRD 2.x and XRechnung formats, which are already in use, comply with this standard.
  • All businesses will be required to
    As of January 1, 2025, domestic businesses will be generally required to issue (send) electronic invoices. In light of the significant implementation costs for businesses, the legislature has granted transitional provisions for invoice issuers for the years 2025 through 2027.
  • Transitional provisions (Applies only to outgoing mail, not to incoming mail!)
    Starting January 1, 2025, the preference for paper invoices will be eliminated, and every company will be able to issue e-invoices. However, paper invoices may continue to be sent until December 31, 2026. Other electronic formats (PDF, etc.) may only be sent with the recipient’s consent. Starting January 1, 2027, companies with prior-year revenue exceeding 800,000 euros in the B2B sector must issue e-invoices. Companies with prior-year revenue of less than 800,000 euros will be permitted to issue other types of invoices (paper, PDF, etc.) until December 31, 2027. Starting January 1, 2028, all businesses in the B2B sector will be required to send e-invoices. As things stand, the EDI (Electronic Data Interchange) process can continue to be used beyond 2028. The prerequisite for this is that, starting January 1, 2028, a reporting data record in accordance with the Value-Added Tax Act can be correctly and completely extracted from the EDI invoice.

Exceptions to the e-invoicing requirement


Even if there is a requirement under sales tax law to issue an invoice, it does not have to be issued as an e-invoice in the following cases:
  • Small amounts (up to 250 euros gross, § 33 UStDV)
  • Tickets that serve as invoices (Section 34 of the VAT Implementation Regulation)
  • Services provided by small businesses (Section 34a of the VAT Implementation Regulation)
  • Services provided to legal entities that are not businesses (e.g., non-profit organizations or government agencies)
  • certain services provided to end consumers in connection with a property.

Penalties

Failure to comply with the e-invoicing requirement may result in various consequences and penalties, such as:

  • Input tax deduction: An invoice that is not properly issued and does not meet the requirements for an e-invoice does not qualify for an input tax deduction. Consequently, the recipient of the invoice cannot claim the sales tax shown on the invoice as input tax.
  • Fines: Fines may be imposed for violations of the requirement to issue an e-invoice. The exact amount and the circumstances under which fines are imposed may vary by state and depending on specific circumstances.
  • Legal claims: The recipient of an improper invoice may assert civil claims to obtain a correct invoice. This may result in additional costs and effort for the issuer of the invoice.
  • Tax Disadvantages: Companies that fail to comply with their obligation to issue e-invoices risk tax disadvantages, as the tax authorities may refuse to accept the invoices.

Take a look at e-billing today

Companies should start addressing the issue of e-invoicing now to avoid being pressed for time during the transition. To this end, they should carefully assess which e-invoicing requirements must be met and which solutions are best suited to their specific needs.