Electronic invoicing (e-invoicing) will become mandatory between businesses in Germany starting in 2025. To help you prepare for this change, we have created a checklist.

Blumatix has been closely monitoring the drafting phase of the amendment to the German VAT Act (UStG) regarding this regulation since April 2023 and has been kept informed of input from associations and interest groups throughout the draft legislation.

This will finally bring about a nearly 30-year transition to electronic document exchange, which has long been standard practice for many companies, into legal compliance, at least for invoicing, in Germany.

Current status

As currently stands, in the version of the law passed in the second and third readings in the Bundestag – this applies to the following explanations – the law, as part of the Growth Opportunities Act, still requires the approval of the Bundesrat. This approval is still pending at the time of writing.

What is an e-invoice (electronic invoice)?

Reading the legal text, a distinction is made between electronic invoices and other invoices in other electronic formats or on paper. While this may sound confusing, it could have very practical implications for businesses.

  • Electronic invoices are defined as those that comply with the syntaxes according to EU Directive 2014/55/EU of April 16, 2014, or in other, differing formats agreed upon between the invoice issuer and recipient.
  • The latter option requires an agreement between the exchanging companies, the correct and complete extraction of the legally required information into a format based on the defined syntaxes, or so-called interoperability with these standards.

Investment protection for EDI processes?

This last provision, in particular, was included very late in the entire process. Investments made by companies in these processes and structures over the past decades (e.g., EDI procedures) were intended to be protected, according to the explanation and justification accompanying the adopted law.

What formats are possible?

The legally permitted formats include, for example, the CEN standard, which underlies the X-Rechnung and also ZUGFeRD from version 2.01 onwards, as well as all other structured document exchange formats that meet the requirements. This means there will likely be many formats, rather than one universal format. All of these will then be considered valid invoices.

Is a PDF considered an e-invoice?

According to this regulation, PDF invoices, which currently make up a large part of exchanged digital invoices, will no longer be considered invoices in Germany, with the exception of exceptions until 2027.

From when and for whom does this apply?

According to the explanatory memorandum*) to the adopted law, the fundamental introduction of mandatory electronic invoicing for transactions between domestic companies on January 1, 2025, remains unchanged. Furthermore, transitional arrangements will be in place until December 31, 2027, for companies with, for example, less than €800,000 in annual revenue.

This could mean that all companies, both issuers and recipients of invoices, that are required to issue and receive invoices for services subject to VAT will be obligated to create and receive invoices electronically. Exceptions would be made for special regulations and companies that are permitted to exchange invoices using traditional methods for a transitional period until December 31, 2027.

*) Source: https://dserver.bundestag.de/btd/20/093/2009396.pdf, November 28, 2023

Checklist: What can companies do now?

Below we provide you with a checklist that can be expanded and further detailed to suit your company’s specific needs.

  • Visualization and Technical Compliance

    Can you already receive, view, read, and technically verify electronic invoices?

    If you use your own accounting system, can it process electronic formats?

  • Customer and Supplier Communication

    • Have you already agreed on the formats and technical communication methods (email, X.400, OFTP, FTP, download, etc.) with your customers and suppliers?
    • What are your customers’ and suppliers’ timelines?
    • Are there already established processes for exchanging electronic invoices in your company?
      • Upon receiving the electronic invoice
      • Upon sending the electronic invoice
      • Who checks the accuracy of the invoices in your company?
      • Who will communicate with customers and suppliers in your company in the future (department, IT department, etc.)?/li>
      • Who are the contact persons for this at your customers and suppliers?

  • Define Project

    • Which departments need to be involved in the introduction of electronic invoicing?
    • How do you organize the invoicing process in sales, purchasing, IT, etc.?
    • What tasks are involved in this project?
    • Who will be responsible for project management (internal or external)?

  • Determine the scope of requirements

    • Which companies are affected? (in the case of groups, holding companies, etc.)
    • Which branches are affected, if any?
    • Are there any accounting departments abroad that need to be included?
    • Which processes are affected and need to be analyzed or planned?
      • Invoice
      • Credit note
      • Invoice correction
      • Credit note notification
      • Workflows (internal, external)
      • Third-party systems involved

  • E-Invoicing Readiness Analysis

    If solutions are already partially implemented

    • Which detailed processes are affected and are they adequately implemented?
    • How aligned are systems and data structures?
    • What is the current status of digitalization in the area of ​​e-invoicing, purchasing, and sales processes (incoming/outgoing invoices)?
    • Which standards and interfaces (formats) are relevant with which partners?
      • ZUGFeRD, X-Rechnung, UN-EDIFACT, OpenTrans, ANSI X.12, UBL, bilateral formats, JSON, XML, …
    • What is the current status of technical communication?
    • What needs to be considered for a gap analysis?
    • What specific implementation steps still need to be planned?
    • To what extent are internal systems already e-invoicing capable? For which formats?

  • Supplier Search, Solution Evaluation

    If no solutions are yet implemented

    • Make or Buy decision and which solution is the best fit?
      • In-house e-invoicing solution?
      • Purchase an e-invoicing solution from a service provider?

      • Are there already preferred suppliers?
      If solutions exist

      • Are the existing solutions expandable or scalable?
      • Are the existing solutions suitable for the volume of invoices, credit notes, and exchange partners (customers, suppliers)?
      • Are there simpler solutions available than those currently in place?

  • In the Implementation Phase

    If you are already in the implementation phase

    • Which technical and procedural interfaces within the company need to be implemented
    • Who needs to be informed about the flow of information?
    • Are third-party providers and service providers involved, and are the technical interfaces coordinated between all parties involved?
    • Developing the necessary skills
      • Which specialists need to be trained on digital invoices?
      • Which specialists need to be trained in which processes and procedures?
      • Is there already official communication about the introduction of the new processes within the company, with customers and suppliers?
    • Is there a description of the processes?
    • How are electronic archives connected?

  • Monitoring Requirements

    • Are there check routines in the company regarding the receipt and dispatch of invoices?
    • How are the processes monitored within the company?
    • Who is the central contact person for customers and suppliers?
    • How are errors, credit notes, and invoice corrections handled?
    • From when and for whom does this apply?

All information is indicative, non-exhaustive and subject to change at the time of writing, January 24, 2024.

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