E-invoicing in Germany: What businesses need to know

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  1. Introduction
  2. What is an e-invoice?
    1. XRechnung: The German e-invoicing standard
  3. What is the law on mandatory e-invoicing?
  4. How can businesses comply with e-invoicing regulations?
  5. How are e-invoices created?
    1. Step-by-step guide to creating an e-invoice in XML format
  6. What requirements must businesses meet for e-invoicing?
  7. What impact does the law on mandatory e-invoicing have on businesses?
  8. What are the pros and cons of sending electronic invoices?
    1. Pros
    2. Cons
  9. What are the requirements for valid electronic invoices?
  10. How do businesses comply with laws on archiving electronic invoices?
    1. Key aspects of archiving laws for electronic invoices
  11. How e-invoicing works with Stripe Invoicing and Stripe Billing

In the digital age, entrepreneurs, the self-employed, and founders are continually trying to optimise and digitalise their processes. E-invoicing, a form of electronic invoicing, has proven to be an effective method of saving time and resources while significantly reducing administration. In this article, you’ll find out what an e-invoice is; how to create one; the pros and cons; and the legal requirements that you’ll need to meet.

What’s in this article?

  • What is an e-invoice?
  • What is the law on mandatory e-invoicing?
  • How can businesses comply with e-invoicing regulations?
  • How are e-invoices created?
  • What requirements must businesses meet for e-invoicing?
  • What impact does the law on mandatory e-invoicing have on businesses?
  • What are the pros and cons of sending electronic invoices?
  • What are the requirements for valid electronic invoices?
  • How do businesses comply with laws on archiving electronic invoices?
  • How e-invoicing works with Stripe Invoicing and Stripe Billing

What is an e-invoice?

An electronic invoice – often shortened to e-invoice – is an invoice created, sent and received in a standardised, machine-readable electronic format, in contrast to unstructured formats such as PDF files sent by email or paper invoices. This format replaces traditional paper invoices with digital documents that can be shared online. E-invoices contain the same information as their physical counterparts – such as details of the product or service, prices, taxes, and payment details – but they are easier to process, store, and archive.

In several countries, e-invoicing is being encouraged through legislation because it helps to combat fraud and tax evasion. It also offers many other benefits. To be considered an official request for payment, electronic invoices must meet certain legal requirements.

XRechnung: The German e-invoicing standard

XRechnung is a standard for electronic invoicing in Germany that was developed specifically for the public sector. This is a standardised, digital format for sending invoice data aiming to improve efficiency, reduce errors, and speed up invoice processing. XRechnung is part of the public authorities’ digitalisation efforts and meets the requirements of European Union Directive 2014/55/EU on promoting electronic invoicing in public sector contracting.

The XRechnung standard specifies a set of structured data that must be included in an electronic invoice to enable automated processing without any changes in medium. This includes information such as the invoice issuer, invoice recipient, performance period, invoice amount, and tax information. The standard supports both semantic and syntactic uniformity, which means that the data is sent in a predefined structure, and also in a clear, machine-readable format.

XRechnung is particularly relevant for suppliers and service providers working with German public authorities. As of 27 November 2020, all public contracting authorities in Germany must receive and process invoices in electronic format – for example, via XRechnung. This will increase transparency and efficiency in the public sector, and also contribute to the wider use and acceptance of electronic invoices in business.

What is the law on mandatory e-invoicing?

From 2025, all B2B companies in Germany will be obliged to receive and process invoices in electronic form as e-invoices as part of the Growth Opportunities Act (Wachstumschancengesetzes). After certain transitional periods, issuing an e-invoice will also become mandatory. This should enable end-to-end digital processing, improve process efficiency and reduce invoice processing costs.

The law prescribes strict security and data protection standards in order to guarantee the integrity and confidentiality of the transmitted data. Companies must ensure that their systems meet the legal requirements in order to avoid potential penalties.

To ensure smooth processing, electronic invoices must be created in a standardised format. The use of widespread, common standards such as ZUGFeRD or XRechnung enables better compatibility between different accounting systems.

Companies that do not comply with the requirements of the law can face sanctions. These can range from fines to restrictions on participation in public tenders.

Small and medium-sized enterprises (SMEs) can benefit from longer transition periods and special support measures to facilitate the switch to e-invoicing. These include information campaigns, financial subsidies and technical support.

The Federal Ministry of Finance (BMF) plans to introduce an electronic reporting system for national B2B sales at a later date in order to standardise reporting.

How can businesses comply with e-invoicing regulations?

Starting from 1 January 2025, all domestic B2B businesses will be required to receive and process e-invoices. After the defined transitional periods, issuing a standard e-invoice (rather than a paper or nonstandard electronic invoice) will also become mandatory.

  • In 2025 and 2026, nonstandard electronic invoices and paper invoices will be accepted in addition to e-invoices.
  • In 2027, this will only apply to companies with a total turnover of less than €800,000 in 2026.
  • From 2028, only e-invoices may be issued.

Mandatory e-invoicing means that businesses must create, send, and receive their B2B invoices in a structured, machine-readable format to enable electronic processing. Among the few exceptions are small value invoices under €250, such as fuel receipts or hospitality receipts. In addition, invoices for tax-free transactions and invoices for travel tickets (see §34 UStDV). Nevertheless, these invoice-issuing companies must be able to receive and process e-invoices.

Next, we’ll take a look at the specific information that a new e-invoice must include, and the format it must be created or transmitted in.

How are e-invoices created?

To create an e-invoice, you will need invoicing software or an online service that enables invoices to be created in the specified electronic format.

Important elements of an e-invoice include:

  • Invoice issuer, including tax number, and recipient
  • Unique invoice number
  • Invoice date
  • Description of the goods or services supplied
  • Amounts and taxes

Your invoicing software should be able to generate invoices that meet legal requirements while transmitting them electronically in a secure manner. The XML format has proven itself to be particularly useful for electronic invoicing, as it provides a structured and standardised way to exchange invoice data.

Step-by-step guide to creating an e-invoice in XML format

  • Open your XML template: Start your word processing software of choice and open the e-invoice XML template. This template should already contain the basic structure, such as tags for the invoice header, customer information, product information, and payment details.
  • Complete the required fields: Complete the template by filling in all the required fields with the appropriate information. This typically includes details such as invoice date, invoice number, customer name and address, product descriptions, quantities, unit prices, and total amount.
  • Verify that the information is correct: Once you’ve entered all the information, carefully review the data to make sure it’s accurate. Make sure that all amounts have been calculated correctly and that all relevant details are complete and correct.
  • Validate the XML file: Use an XML validation tool or similar feature in your word processing software to confirm that your XML file meets the required standards. This is key to ensuring that the invoice is processed and accepted properly.
  • Save the XML file: Once you have confirmed that your XML e-invoice is accurate and complete, save the file to your computer or cloud storage. Make sure to use a descriptive file name that clearly identifies the invoice.

What requirements must businesses meet for e-invoicing?

The first question is whether invoice data can be translated into an e-invoice or XML format with your business’s current software. If this can’t be done, it’s best to use other software or an online generator tool.

In addition, a fundamental decision must be made about whether the company wants to send XRechnungen or ZUGFeRD invoices. While ZUGFeRD combines structured data with a visual PDF, XRechnung relies exclusively on structured data.

How you send invoices is also important. If you need to send multiple invoices to organisations, email is not the best option. One option is to use PEPPOL: using PEPPOL (Pan-European Public Procurement Online), developed by the EU, you can set up multiple links with organizations from a single access point.

To integrate this new technology into the accounting process, the technical requirements must be determined and the appropriate training must be provided to the relevant employees. Depending on the size of the company and its accounting systems, the transition can be costly and time-consuming, so companies should begin the process well in advance.

What impact does the law on mandatory e-invoicing have on businesses?

The introduction of mandatory e-invoicing presents both opportunities and challenges, requiring companies to re-evaluate and update their systems and processes to meet the new legal requirements.

Although the transition may involve cost and effort, the long-term benefits of increased efficiency, cost reduction, environmental sustainability and improved compliance are significant. E-invoicing marks a key step in digitisation and promotes sustainable business practices. However, organisations should carefully plan and manage the initial challenges to ensure a seamless transition.

Here are some of the key implications and adjustments that businesses need to consider as a result of mandatory e-invoicing:

  • Compliance requirements: Companies must ensure that their processes and invoicing and accounting systems comply with technical and legal requirements, including compliance with specified formats such as ZUGFeRD or XRechnung in Germany. Given the strict data protection laws in Germany, companies need to ensure that their e-invoice processing complies with the General Data Protection Regulation (GDPR) and other relevant data protection regulations.
  • Digital transformation: Companies may need to invest in new or improved IT systems to create, send and receive electronic invoices. This includes software upgrades and possibly hardware purchases. E-invoicing solutions must be compatible with existing accounting and enterprise resource planning (ERP) systems to ensure seamless processing.
  • Increased efficiency: Electronic invoices can be processed faster than paper invoices, which speeds up the entire accounting process. This leads to faster payment processing and can improve liquidity. By using e-invoices, many processes can be automated, which reduces manual errors and increases efficiency.
  • Sustainability: Switching to e-invoices contributes to the environmental friendliness of companies by reducing paper consumption and thus also reducing the company's ecological footprint.
  • Increasing customer satisfaction: Companies can increase customer satisfaction through more efficient and accurate billing processes. Companies that adapt quickly to digital standards may be able to gain an advantage over less agile competitors.
  • Employee training: Companies may need to invest in training to ensure their employees are familiar with the new systems and processes.

What are the pros and cons of sending electronic invoices?

Sending invoices digitally is becoming increasingly popular. This development has both advantages and disadvantages that are relevant for businesses and public organisations of all sizes.

Pros

  • Payments are received faster: Electronic invoices reach the recipient instantly, speeding up the entire payment process. Many systems also offer a one-click payment option, further reducing payment times.
  • Cost savings: Sending electronic invoices eliminates printing and postage costs. In addition, electronic processing can save on working hours that would otherwise be spent on manual tasks.
  • Increased efficiency: Creating, sending, and processing invoices digitally improves accounting efficiency. Errors caused by manual entry are reduced and the overall process is accelerated.
  • Environmental responsibility: Eliminating paper helps protect the environment and allows companies to reduce their carbon footprint.
  • Improved traceability: Electronic invoices are easier to store, archive, and retrieve when needed. This simplifies accounting and makes it easier to comply with legal archiving requirements.
  • Increased security: Many e-invoicing systems have advanced security features that reduce the risk of fraud and loss. Digital signatures and encryption ensure the authenticity and integrity of invoices.

Cons

  • Technical requirements: Companies might need to invest in software or services.
  • Resistance to change: Customers or suppliers might be reluctant to move away from paper invoices.
  • Compatibility issues: Multiple standards and formats can create compatibility issues between sender and receiver systems, making it difficult to exchange electronic invoices.
  • Security concerns: Despite high security standards, concerns remain about privacy, data security, and the risk of cyberattacks. Companies need to ensure that their systems have the latest security features.
  • Regulatory requirements: Complying with the legal framework for e-invoicing, which includes requirements for authenticity, integrity, and legibility, can be complex. Additionally, legal requirements vary from country to country.

What are the requirements for valid electronic invoices?

Electronic invoices must meet certain legal and technical requirements to be considered valid. These criteria are key to ensuring that e-invoices are accepted by tax authorities and that the data they contain is considered genuine and unaltered.

  • Authenticity of origin
    Authenticity of origin is the assurance of the invoice supplier’s or issuer’s identity. This can be achieved in a variety of ways, including digital signatures, electronic data interchange (EDI), or through an internal verification process to establish a reliable audit trail between an invoice and the associated delivery of goods or services.

  • Content integrity
    Content integrity means that the content of the invoice has not been altered after it has been sent. Digital signatures or EDI procedures also provide processes to ensure that invoice data cannot be altered.

  • Readability
    An electronic invoice must be easily readable by humans. This means that the invoice must be provided in a format that can be read by the relevant parties, such as a PDF document. Legibility must be ensured for the entire legal retention period.

  • Compliance with legal requirements
    Electronic invoices must comply with the same legal requirements that apply to paper invoices. This includes information such as the date of issue; the unique invoice number; the service provider’s tax ID number or value-added tax (VAT) ID number; the full name and address of both the service provider and recipient; the quantity and type of goods supplied or scope and type of service provided; remuneration; amount of tax due; applicable tax rate; or notice of tax exemption.

  • Storage and archiving
    Both the issuer and the receiver of the electronic invoice must retain it for the legally required period (in many countries, this is 10 years). Invoices must be stored in a manner that ensures they are accessible within a reasonable period of time and that the requirements for authenticity, integrity, and legibility are maintained throughout the storage period.

  • Recipient’s consent
    In many jurisdictions, the recipient’s prior consent is required to send electronic invoices in lieu of paper invoices. This consent may be expressed or implied, but it must meet legal requirements.

How do businesses comply with laws on archiving electronic invoices?

Archiving electronic invoices must comply with legal requirements, including compliance with maintaining retention periods and ensuring readability throughout the retention period. Organisations must ensure that e-invoices are stored in a manner that allows them to be retrieved at any time and, if necessary, presented in a format that corresponds to the original documents.

These regulations are designed to ensure the authenticity, integrity, and readability of electronic documents over a specified period of time. Specific requirements might vary from country to country, but certain basic principles are generally standardised.

Key aspects of archiving laws for electronic invoices

  • Authenticity and integrity
    Archiving must ensure that the authenticity (true origin) and integrity (unaltered content) of electronic invoices are maintained throughout their retention period. This means that it must be possible to prove that the invoices came from the intended sender and have not changed since they were issued. Technologies such as digital signatures or specialised archiving systems that ensure tamper-free storage are key.

  • Readability and accessibility
    Electronic invoices must be archived in a human-readable format for the entire retention period. In addition, invoices must be made available for review and audit within a reasonable period of time. This often requires specialised software solutions to ensure that documents remain legible and easily retrievable over time.

  • Retention periods
    The legal retention period for electronic invoices varies by country, but in Germany, it is 10 years. During this period, companies must be able to provide all archived invoices to the tax authorities upon request. For exact deadlines and requirements, contact your local tax authority or tax advisor.

  • Data protection
    It’s important to comply with data protection regulations when archiving electronic invoices. Personally identifiable information contained in invoices must be protected in accordance with relevant data protection laws, such as the GDPR in the European Union. This includes data security measures and restrictions on the accessibility and processing of this data.

  • Technical and organisational measures
    Organisations must take technical and organisational measures to comply with archiving regulations. This includes selecting appropriate archiving systems, monitoring data security, and protecting against data loss. Implementing a robust document management system is often an important step in meeting these requirements.

How e-invoicing works with Stripe Invoicing and Stripe Billing

Stripe Billing and Stripe Invoicing cannot create or send electronic invoices without the additional integration of e-invoicing apps. Instead, Stripe supports the creation and forwarding of e-invoices via app partners of Stripe Invoicing and Stripe Billing, which do not require any code and are very easy to set up, for example with Billit.

After installing an e-invoicing app, you can configure it to send e-invoices to your customers either automatically via the API or manually via the Stripe dashboard. In addition, the apps also offer support for similar requirements in many other regions.

Learn more about how the e-invoicing apps integrate and work, as well as the Billit app on the Stripe App Marketplace that can help with these requirements.

The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accuracy, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent lawyer or accountant licensed to practise in your jurisdiction for advice on your particular situation.

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