Germany issues guidelines for e-invoicing requirements

On October 15, 2024, Germany’s Federal Ministry of Finance (BMF) published guidance for implementing the country’s electronic invoicing (e-invoicing) mandate. The mandate, due to begin in January 2025, was one of various tax measures introduced in The Growth Opportunities Act endorsed by the German Bundesrat in March 2024.

E-invoicing refers to the process where invoices are issued, transmitted, and received in a structured electronic format that allows for electronic processing. However, the German guidelines list a number of different admissible formats companies can choose to use, as long as they comply with the EN 16931 series of standards,  which ensures that the invoice data can be electronically processed:

• XRechnung: A purely structured format based on the EN 16931 standard, designed for machine processing.
• ZUGFeRD: A hybrid format that includes both a structured data part (e.g., XML file) and a human-readable part (e.g., PDF document). From version 2.0.1 onwards, it complies with the EN 16931 standard, except for the MINIMUM and BASIC-WL profiles.
• Factur-X (France): Similar to ZUGFeRD, used in France and compliant with the EN 16931 standard.
• Peppol-BIS Billing: Used within the Peppol network, supporting cross-border electronic invoicing and compliant with the EN 16931 standard.
• Electronic Data Interchange (EDI): Under certain conditions, structured electronic invoice formats that deviate from the EN 16931 standard, such as EDI procedures, can also be used. These formats must ensure the correct and complete extraction of the required information.

The guidelines also allow several methods for transmitting e-invoices:

• Email: E-invoices can be sent via email. The recipient must have an email inbox capable of receiving e-invoices, but it does not need to be a dedicated email address for this purpose.
• Electronic interface: Data can be transmitted through an electronic interface, which allows for direct integration into the recipient’s systems.
• Central storage access: Within corporate groups, e-invoices can be shared by providing access to a central storage location.
• Internet portal: E-invoices can be made available for download through an internet portal.
• External service providers: Businesses can use external service providers to create and/or transmit e-invoices, ensuring compliance with the formal requirements of the German VAT Act.
• EDI: Under certain conditions, structured electronic invoice formats that deviate from the EN 16931 standard, such as EDI procedures, can be used.

According to the previous administrative view, invoices had to be readable by the human eye. With the introduction of the mandatory e-invoice, the file must now be machine-readable.

For hybrid formats (e.g., ZUGFeRD), the structured data part takes precedence over the human-readable part in case of discrepancies.

Germany has taken a unique approach to compulsory electronic invoicing in not obliging companies to use accredited service providers, exchange networks, or a single format  . But while companies are free to choose, this could also complicate the implementation of the reform.

Avalara E-Invoicing and Live Reporting (ELR) can help businesses of all types and sizes adapt to the changing compliance landscape. By integrating with the systems businesses already use, Avalara ELR provides an intuitive e-invoicing solution that users who aren’t tax or tech experts can use to move away from time-consuming and error-prone manual tasks. The cloud-based software updates as more and more mandates and requirements are rolled out and finalised, meaning businesses can scale without disruption and focus on their goals. 

Speak with us today about implementing your e-invoicing solution.