Germany initiated its electronic invoicing for Business-to-Government (B2G) activities in 2020, enforcing the XRechnung standard and ZUGFeRD format to ensure compliance with national legislation. Looking ahead, Germany plans to implement eInvoicing for Business-to-Business (B2B) transactions as stipulated by the Wachstumschancengesetz. This new law will make B2B eInvoicing for outgoing invoices mandatory for companies starting January 2027, while the obligation to receive electronic invoices will become effective from January 2025. The following sections will provide more detailed information about the legal requirements and the solutions offered by SAP.
When must companies in Germany comply with the B2B E-Invoicing regulations?
Germany has established a clear timeline for the mandatory implementation of E-Invoicing for B2B transactions:
- 1 January 2025
- All German businesses (taxpayers) must be equipped to receive and process electronic invoices (eInvoices).
- Sending eInvoices remains voluntary for all German companies.
- During this period, paper invoices can still be sent without the recipient’s consent, while PDFs and other electronic formats are permitted with the recipient’s consent. Processing the paper invoices can still be done the usual way.
- 1 January 2027
- Sending eInvoices becomes mandatory for German companies (taxpayers) with an annual turnover of €800,000 or more.
- For all other German companies, sending eInvoices remains voluntary.
- Again, paper invoices can be sent temporarily without the recipient’s consent, and PDFs or other electronic formats are allowed if the recipient agrees. Processing the paper invoices can still be done the usual way.
- 1 January 2028
- German companies (taxpayers) with an annual turnover of less than €800,000 will be required to send invoices electronically.
Who is required to comply with the B2B E-Invoicing regulations in Germany?
The regulations apply to all businesses that are established in Germany:
- Registered offices
- Places of management
- Domiciles
- Fixed establishments
They also include businesses located in areas identified under the German VAT law. Notably, businesses that are registered for VAT in Germany but lack a physical presence or residency in the country do not fall within the scope of this mandate.
When evaluating the scope of invoices, there are specific criteria to consider. Domestic invoices—those where both the supplier and the recipient are based in Germany—are included in the mandate. However, there are exemptions for small-value invoices, specifically those totaling less than €250, as well as travel tickets. Foreign invoices, which include intra-Community transactions and simplified invoices, are also explicitly excluded from this mandate.
What digital formats and channels will be used for structured electronic invoices?
Overview of Digital Formats for E-Invoices in Germany
In Germany, electronic invoices must adhere to the European standard for electronic invoicing, EN 16931. This requirement promotes uniformity and ensures that eInvoices are aligned with regulatory and legal frameworks.
The XRechnung format, which is based on an XML in UBL 2.1 or CII syntax, is currently employed for business-to-government (B2G) transactions. However, its application will soon extend to business-to-business (B2B) transactions.
The ZUGFeRD 2.0 format (also known as Factur-X) allows for a hybrid approach by combining both human-readable and machine-readable components in a single file. This PDF/A-3 with an embedded XML file in the CII syntax, is commonly transmitted via email. It is currently also used for B2G eInvoicing.
Platforms Facilitating B2B E-Invoicing
When it comes to sending electronic invoices, there are several channels to consider in combination with the previously mentioned formats:
- Peppol
- EDI (if mutually agreed upon by partners and all EN-16931 required invoice information can be extracted)
What role will SAP play for E-Invoicing in Germany?
Current Solutions Available:
- Sending outgoing invoices via email (CII or ZUGFeRD format) and processing outgoing invoices through the Peppol network (X-Rechnung format) for both B2B and B2G transactions.
- Receiving incoming invoices via email (in the CII or ZUGFeRD format) and processing incoming invoices through the Peppol network (X-Rechnung format) for B2B transactions.
Licensing Requirements:
- Access to these solutions requires obtaining the ‘SAP Document and Reporting Compliance, Cloud Edition’ license.
How will the E-Invoicing solution in SAP look like?
What are the advantages of SAP Document and Reporting Compliance (DRC):
- Efficiency and Cost Reduction: E-Invoicing eliminates paper-based invoices, leading to cost savings and increased efficiency.
- Real-Time Tracking: Real-time invoice tracking facilitates faster input tax credit availability.
- Reduced Errors: Automation decreases manual data entry errors.
- Improved Cash Flow: E-Invoicing enables faster invoice delivery, improving cash flow.
- Security: Secure transmission of e-Invoices lowers fraud and data breach risk.
- Transparency: E-Invoicing enhances transaction transparency, aiding invoice management.
Germany’s move towards E-Invoicing marks a vital advancement in digital transformation. While there are challenges to overcome, the benefits are clear, companies adopting eInvoicing can expect improved efficiency, cost reductions, and better compliance. SAP’s solutions provide essential support for this digital shift, enabling businesses to remain compliant to their local legal requirements and to maintain a competitive edge in the ever-evolving digital economy. SAP Document & Reporting Compliance is an overall, integrated and strategic SAP solution which strives for long-term end-to-end compliance with various country-specific legal requirements all over the world.
Why choose PIKON as your partner for your Compliance Project?
At PIKON, we have established a Competence Center for Legal Requirements, where our team of expert consultants stay on top of the latest developments and requirements, e.g. regarding SAP Document Compliance and PEPPOL. We combine our SAP expertise and in-depth knowledge of the legal requirements with experience gained over many projects, to help you with your strategic roadmap to digital transformation and compliance with country-specific legal requirements.
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