In Germany, e-invoicing is becoming increasingly important, especially for business-to-business (B2B) transactions. An e-invoice or electronic invoice is an invoice that is created, sent, and received digitally.

By 2025, the use of e-invoices will be mandatory in the B2B sector through the introduction of the Growth Opportunities Act, which will make e-invoicing mandatory for business-to-business transactions in Germany starting next year. As a business owner, it’s wise to prepare early for this new standard and integrate e-invoicing into your business processes.

What’s in this article?

• What is an e-invoice?
  
• What are the pros and cons of e-invoicing?
  
• What does the law say about mandatory e-invoicing?
  
• What impact does the law on mandatory e-invoicing have for companies?
  
• Who does the law apply to?
  

What is an e-invoice?

An e-invoice (short for electronic invoice) is an invoice that is created, sent, and received digitally. This digital document replaces traditional paper invoices. E-invoices include the same information as paper invoices—such as product or service details, prices, taxes, and payment information.

What are the pros and cons of e-invoicing?

E-invoices reduce your administrative workload, speeds up the invoicing process and improves the accuracy of data processing. They also promote sustainability by reducing paper consumption. In Germany, e-invoicing is being driven by legal requirements to increase efficiency and standardization across the entire corporate accounting system.

However, moving to e-invoicing means that companies must adapt their IT systems and internal processes to ensure the smooth creation, transmission, and processing of electronic documents. Specialized software solutions designed to create and manage electronic invoices are key to helping companies meet regulatory requirements and streamline business processes.

Stripe Invoicing can support you with fast, compliant invoicing. Stripe’s Invoicing also enables the automation of invoicing and accounting workflows, facilitates straightforward payment collection, and simplifies transaction reconciliation. By using Invoicing, your e-invoices will be optimized for mobile devices, tablets, and desktop computers.

What does the law say about mandatory e-invoicing?

Germany has now passed a law that makes the use of e-invoicing mandatory for B2B transactions. Many EU member states have been implementing the EU’s reform proposals for the digitization of e-invoicing for some time. As part of the “VAT in the Digital Age (ViDA)” initiative, the EU Commission published a proposal for a directive in December that includes value-added tax (VAT) reporting obligations and electronic invoicing as measures to combat VAT fraud. The e-invoice is intended to serve as a reliable data source for fulfilling these reporting obligations.

This law is part of a broader initiative, known as the Growth Opportunities Act, aimed at digitizing and enhancing efficiency in both the economy and the public sector. The goal is to accelerate the exchange and processing of invoices, enhance transparency, and reduce the risk of fraud.

Here’s a brief overview of some of this new law’s key points:

Mandatory e-invoicing in the B2B sector

Beginning in 2025, all businesses will be required to issue and receive invoices electronically, known as e-invoicing. This change is designed to improve process efficiency and reduce invoice processing costs.

Standardized formats

For optimized processing, electronic invoices must be created in a standardized format. Using common standards such as ZUGFeRD and XRechnung, which have been widely adopted in Germany, improves compatibility between different accounting systems.

Stripe supports the forwarding of e-invoices in Xrechnung via app partners, which require no code and are very easy to set up. These partners can support billing and subscription workflows through both the application programming interface (API) and Dashboard, and they also provide support for similar needs in many other regions. For example, the Billit app on the Stripe App Marketplace can help with these needs.

Security and data protection regulations

The law mandates strict security and data protection standards to ensure the integrity and confidentiality of transmitted data. Businesses must make sure that their systems meet the legal requirements necessary to avoid potential penalties.

Transition periods and support for SMEs

Small and medium-sized enterprises (SMEs) will benefit from longer transition periods and special support measures to help them switch to e-invoicing. These include information campaigns, financial support, and technical assistance.

Penalties for noncompliance

Companies that fail to comply with the new regulations can expect to face penalties. These penalties can range from fines to restrictions on participating in public tenders.

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

The introduction of mandatory e-invoicing impacts all business sectors in Germany. It presents both opportunities and challenges, meaning companies will need to reassess and update their systems and processes to comply with the new legal requirements. While the initial transition may involve cost and effort, the long-term benefits such as increased efficiency, cost reduction, environmental sustainability, and improved compliance are substantial. This marks a key step in digitization and promotes sustainable business practices. Nevertheless, companies 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 the new law:

Digital transformation

Businesses may need to invest in new or upgraded IT systems to effectively create, send, and receive electronic invoices. This may involve upgrading software and potentially purchasing new hardware. E-invoicing solutions must be compatible with existing accounting and enterprise resource planning (ERP) systems to ensure smooth processing.

Implementation and compliance

Companies must ensure that their processes, invoicing, and accounting systems adhere to both technical and legal requirements—including compliance with specified formats such as ZUGFeRD or XRechnung in Germany. Since Germany has strict data protection laws, businesses must ensure that their handling of e-invoices complies with the General Data Protection Regulation and other applicable data protection regulations.

Operational efficiency

Electronic invoices can be processed quicker than paper invoices, speeding up the entire accounting process. This results in faster payment processing and can improve liquidity. E-invoicing enables automation of many processes, reducing manual errors and increasing efficiency.

Sustainability initiatives

Switching to e-invoicing contributes to the environmental friendliness of businesses by reducing paper consumption, thereby reducing the company’s ecological footprint.

Market and customer relations

Businesses can improve customer satisfaction through more efficient and accurate billing processes. Businesses that adapt quickly to digital standards may gain a competitive edge over less agile competitors.

Training and staff development

Businesses may need to invest in training to make sure that their employees are familiar with the new systems and processes.

Who does the law apply to?

The new law mandating the use of e-invoicing in Germany is primarily aimed at companies in the B2B sector. Here is an overview of the main target groups and their obligations:

Companies in the B2B sector

E-invoicing mandates affect businesses of all sizes that carry out business with other companies, from large enterprises to SMEs. This includes both suppliers and customers. The law does not provide specific exemptions for certain sectors; mandatory e-invoicing applies to all B2B transactions across all sectors.

Public sector

While the law focuses primarily on the B2B sector, similar regulations for the public sector have been in force for some time. E-invoicing is already mandatory for public sector organizations and their suppliers. This applies to federal authorities and increasingly also to municipal agencies.

Exceptions and special regulations

Certain types of transactions may be exempt from this requirement, depending on the nature of the supply or service and specific legal regulations.

Special transition periods have been planned to minimize financial or operational burdens during the transition: