FAQ: Mandatory E-Invoice Implementation from January 1, 2025 – Answers to Common Questions

1. Why is mandatory e-invoicing being introduced?

E-invoicing is intended to promote the digitization of the German economy. Processes can be simplified, especially in accounting. In the future, for example, the recipient’s invoice data will not have to be entered again. This avoids duplicate operations and the resulting errors.

For invoice issuers and recipients, there is considerable potential for savings if a large proportion of accounting documents are only available in structured electronic form that can be further processed without media discontinuity.

2. How will the regulations on electronic invoices change?

For a transaction carried out by 31 December 2024, an electronic invoice is an invoice issued and received in an electronic format. This definition also includes, for example, a simple PDF document sent by e-mail.

From 1 January 2025, an e-invoice will only exist if the invoice is issued, transmitted and received in a structured electronic format and allows electronic processing. For example, a simple PDF document no longer falls under this definition because it does not have a structured format.

Invoices that do not meet the requirements for an e-invoice will fall under the designation “other invoice” from 1 January 2025. In particular, invoices on paper or in an unstructured electronic format (e.g. simple PDF document) constitute a miscellaneous invoice.

The decisive factor is the time of turnover. If the transaction was carried out before 1 January 2025, an invoice can still be issued under the old regulations even if it is issued later.

In addition, transitional regulations apply until all companies actually have to issue an e-invoice (see question 11).

To receive an e-invoice, see question 12.

3. What is a “domestic company”?

An entrepreneur is considered to be a person who independently carries out a commercial or professional activity (sec. 2 of the German VAT Act). This includes, for example, freelancers or people who themselves exclusively provide tax-exempt transactions, such as landlords of apartments, small businesses or doctors.

A domestic company is one that has its registered office, its management or a permanent establishment participating in the turnover in the territory of the Federal Republic of Germany. If there is no registered office, the place of residence or habitual residence of the entrepreneur applies.

4. Are there any exceptions to the mandatory e-invoice?

The regulations on mandatory e-invoicing only apply if there is a VAT obligation to issue an invoice at all. Therefore, the regulations do not apply

• for invoices to end consumers (so-called B2C sales) and
• for many tax-exempt transactions (those according to sec. 4 nos. 8 to 29 of the German VAT Act, e.g. tax-exempt financial services, tax-exempt real estate rentals).

In these cases, the issuance of an invoice is usually voluntary from a VAT point of view.

Even if there is a VAT obligation to issue an invoice, it does not have to be issued as an e-invoice in the case of:

• small amounts (up to 250 euros gross amount, § 33 UStDV),
• tickets that are considered invoices (§ 34 UStDV),
• Services provided by small businesses (sec. 34a UStDV)¹,
• Benefits to legal entities that are not entrepreneurs (e.g. many associations – see also question 5 – or state institutions), and
• certain services to end consumers in connection with a property.

In these cases, another invoice may also be issued.

Invoices to the public administration (so-called B2G sales) do not fall under the VAT regulations for mandatory e-invoicing if the administration does not act as a company. However, since 27 November 2020, suppliers and service providers have already been obliged to issue electronic invoices to public contracting authorities on the basis of the E-Invoicing Ordinances. These regulations (e.g. ERechV of the Federal Government) must be observed in addition to VAT obligations. Further information on the topic of e-invoicing to the federal government can be found on the website www.e-rechnung-bund.de, which is provided by the Federal Ministry of the Interior and Community.

5. Are clubs also covered by the regulations on mandatory e-invoicing?

Associations can carry out both a non-entrepreneurial and an entrepreneurial activity. Insofar as the association is active in business, the general regulations for mandatory e-invoicing are to be applied. This means that the association must then be able to receive e-invoices. In addition, the association must issue e-invoices itself, provided that none of the exceptions mentioned in question 4 apply or the transitional periods (see question 11) are used.

If services concern the non-entrepreneurial area of the association, the association does not have to be able to receive e-invoices or issue e-invoices itself. It is true that there is also an obligation to issue an invoice for transactions to a legal person that is not an entrepreneur (e.g. to a non-entrepreneurial association). However, this can also be issued and transmitted as another invoice.

6. Do companies need a Leitweg ID?

For the creation of e-invoices between companies (B2B sector), no so-called Leitweg ID is required.

A Leitweg ID is only required if an e-invoice is to be issued to an authority (so-called B2G area, see also question 4). This enables the e-invoice to be clearly addressed electronically and forwarded to the public contracting authority. Details on the Leitweg ID, in particular on how to apply for it, can also be found under https://www.e-rechnung-bund.de/faq/leitweg-id/.

7. What formats are permissible for an e-invoice?

An e-invoice exists in particular if it meets the requirements of the European standard EN 16931 (see also question 15).

In particular, the XRechnung and ZUGFeRD formats commonly used in Germany from version 2.0.1 onwards (with the exception of the MINIMUM and BASIC-WL profiles) meet the VAT requirements for e-invoices.

Furthermore, the format of an e-invoice can also be agreed between the invoice issuer and the invoice recipient. The prerequisite for such an agreement is that the format used enables the correct and complete extraction of the information required by the VAT Act from the e-invoice. If these conditions are met, this can e.g. EDI procedures such as EDIFACT will continue to be used for e-invoices.

8. How can an e-invoice be transmitted and received?

In order to make the exchange of e-invoices as uncomplicated as possible, the law does not provide for a specific way through which an e-invoice must be transmitted. This achieves the necessary flexibility for different solutions in practice. Therefore, for example, sending by e-mail, making the data available via an electronic interface, shared access to a central storage location within a group of companies, handing it over, e.g. on a USB stick or downloading it via an Internet portal can be considered. The transmission channel of the e-invoice in a specific individual case can only be clarified between the contracting parties under civil law.

However, a company must ensure the receipt of an e-invoice from 1 January 2025. An e-mail account is sufficient for this.

9. To what extent does an e-invoice have to enable electronic processing?

The definition that an e-invoice must enable electronic processing does not give rise to any further obligations. The invoice recipient is not obliged to actually carry out further electronic processing than is already required by the provisions on retention (see question 13). He can take advantage of the opportunities offered by digitization through electronic processing, but is not obliged to do so.

10. Do e-invoices also have to be issued for cash purchases?

No special regulations apply to services that are paid for in cash. Therefore, an e-invoice must also be issued, for example, for a business lunch in a restaurant or for a purchase of materials by an entrepreneur in a DIY store if the invoice amount is more than 250 euros and the issuer of the invoice cannot or does not want to make use of the transitional regulations.

In such cases, it may be advisable to first issue another invoice (e.g. in the form of a cash receipt) on site, which is subsequently corrected by an e-invoice. The e-mail address of the invoice recipient can be requested when the service is provided and an e-invoice can later be sent by e-mail. However, those involved are free to choose the optimal solution for them.

11. What transitional regulations apply to the issuance of an e-invoice?

In the period from 1 January 2025 to 31 December 2026, all invoice issuers can choose to issue another invoice instead of an e-invoice. A paper invoice can always be used. An invoice in an electronic format other than an e-invoice (e.g. e-mail with a PDF file) can only be used – as before – if the recipient agrees to this format. The background to this is that the recipient cannot be expected to accept an electronic format that is completely unknown to him.

If the invoice issuer’s turnover of up to 800,000 euros in the previous year, this period is extended until the end of 2027.

After all, an EDI procedure that does not already meet the requirements for an e-invoice can still be used until the end of 2027.

Only after the expiry of these transitional periods is the use of an e-invoice actually mandatory for transactions between domestic companies.

Even if the decision on the use of the transitional regulations is up to the issuer of the invoice, these regulations also enable an invoice recipient to select a contractual partner who will initially issue paper invoices, for example.

12. Are there any exceptions for receiving e-invoices?

From 1 January 2025, domestic companies (see question 3) will need to be able to receive an e-invoice. The legislative objective (see question 1) can only be achieved if e-invoicing is used as widely as possible. There are no exceptions, as such always lead to delimitation problems and thus to a complication of tax law.

Although small businesses are exempt from issuing an e-invoice (see question 4), they must still be able to receive e-invoices.

An e-mail account is sufficient to receive an electronic invoice (see question 8).

13. How must an e-invoice be stored?

For VAT purposes, according to sec. 14b para. 1 of the German VAT Act, a trader must keep a duplicate of each incoming and outgoing invoice for eight years. In the case of an e-invoice, at least its structured part must be stored in such a way that it is unalterable in its original form.

In addition, reference is made to the Federal Ministry of Finance’s letter of 28 November 2019, Federal Tax Gazette I p. 1269, amended by the Federal Ministry of Finance’s letter of 11 March 2024, Federal Tax Gazette I p. 374, on the principles for the proper management and storage of books, records and documents in electronic form and for data access (GoBD).

14. How can an e-invoice be submitted to the tax office?

From 1 January 2025 at the latest, taxpayers will be able to submit e-invoices to the tax authorities via ELSTER on request (e.g. for the assessment procedure).

15. Who can I contact if I have questions about the EN 16931 standard or report information for its revision?

The format requirements for e-invoices are based on EU law requirements. These were originally developed for invoicing the public administration (B2G sector). Their specifications have been technically implemented by the European Committee for Standardisation (Comité Européen de Normalisation – CEN) with the European series of standards EN 16931. The requirements now also apply to the B2B sector.

The EN 16931 series of standards is already suitable for presenting most business transactions in the B2B sector. It is also constantly being further developed.

Nevertheless, it can happen that special business transactions cannot yet be comprehensively mapped. If information is required for further development of the series of standards, these can be addressed to the DIN Standards Committee for Information Technology and Applications (NIA). This information can be provided by the business associations.