E-invoicing becomes mandatory in Germany – get ready for the change

Heeros and OpenText held a webinar in June 2024, discussing international e-invoicing and upcoming changes in e-invoicing mandates in Europe. This article is based on the content of the webinar presentation and provides a comprehensive overview of the topic. If you wish to watch the webinar recording, which was held in Finnish, you can download it here. 

E-invoicing mandates: why and how?

E-invoicing mandates have become a central means to improve tax control and reduce the shadow economy in Europe. The mandates are largely driven by the needs related to taxation and monitoring of state finances. In 2021, the EU's estimated tax gap was 61 billion euros.

In Finland, the operator model in use is built on cost savings and process automation, and there is no mandatory e-invoicing mandate in place here.

Elsewhere in the world and in Europe, the situation is different. Mandate models vary greatly by country. For example, Italy and Turkey have centralized models where invoicing is done through a state-managed platform. In Germany, the e-invoice mandate is based on the operator model, but includes the possibility for adding reporting requirements in the future.

Germany's e-invoicing mandate

Starting from the beginning of 2025, German companies must be able to receive e-invoices compliant with the EN16931 standard. This standard specifies the information that must be included in an e-invoice and how that information should be presented. The standard ensures that invoices are consistent and compatible across different systems.

Although e-invoicing in Germany does not yet entail e-reporting to a state-managed platform, reporting requirements may be introduced in the future, potentially as part of the EU-wide ViDA initiative (2030-2032)

Who is affected by Germany's e-invoicing mandate

Germany's e-invoicing mandate applies to all companies operating in the country, including German subsidiaries of foreign companies. This means that Finnish companies with subsidiaries in Germany are required to comply with these new requirements.

Although companies operating in Germany without a local entity are not required to take mandatory actions, it is advisable to prepare for receiving and eventually sending electronic invoices. The expectations and practices of German companies are likely to change with the introduction of the mandate.

Germany's e-invoicing mandate and transition periods

• 2025: Companies must be able to receive standard-compliant e-invoices.
• 2027: Companies with a turnover exceeding 800,000 euros are required to send e-invoices.
• 2028: All companies are required to send standard-compliant e-invoices.

E-invoice formats in Germany

Germany's upcoming e-invoicing mandate introduces specific requirements regarding the e-invoicing formats to be used. This section delves into three key formats: XRechnung, ZUGFeRD, and EDI. Understanding and implementing these formats, which support the data content specified by the EN16931 standard, are crucial for complying with Germany's e-invoicing mandate and ensuring the smooth operation of business processes.

XRechnung is a German XML-based e-invoicing format based on the EN16931 standard and is specifically designed for use in the public sector. XRechnung is a continuously evolving format, with new versions introducing updates and improvements to meet changing regulatory requirements and technical needs.

ZUGFeRD (Zentraler User Guide des Forums elektronische Rechnung Deutschland) is a hybrid e-invoicing format that combines a PDF document with embedded XML data. This format is designed to facilitate the transition from paper invoicing to electronic invoicing by providing an easy review of both the invoice and automated data processing. Like XRechnung, ZUGFeRD also complies with the EN16931 standard, ensuring data consistency and compatibility.

EDI (Electronic Data Interchange) is a traditional electronic data transfer standard primarily used by large enterprises, enabling the exchange of business documents such as orders, invoices, and delivery notes between companies. EDI invoices are sent in formats like XML and EDIFACT. Companies using EDI invoicing need to ensure that their EDI systems support the EN16931 standard. This may require system updates and the review and possible adjustment of existing EDI connections to meet the standard's requirements.

Upcoming e-invoicing mandates in Europe

In addition to Germany, several other European countries will introduce e-invoicing mandates in the coming years. Romania and Greece will make B2B e-invoicing mandatory, and Portugal and Romania will implement e-reporting requirements in 2024. Spain will join this group in 2025, with mandates in Poland and France coming into effect in 2026.

The EU-wide ViDA initiative aims to harmonize e-invoicing practices across member states. Originally planned for 2028, the project has been delayed to 2030 or beyond, and its scope may change.

How can Heeros and OpenText help?

Heeros and OpenText offer solutions to help businesses comply with e-invoicing mandates. Heeros' services, such as Purchase and Sales Invoices, provide extensive support for the e-invoicing formats used in Germany.

 This data is sent to OpenText, which generates the format desired by the recipient and delivers the invoices through the agreed channel.

For Purchase Invoices, Heeros, in collaboration with OpenText, enables you to receive, archive, and process e-invoicing formats used in Germany. As for Sales Invoices, Heeros' service enriches invoice data to meet Germany's data content requirements. This data is then sent to OpenText, which generates the format preferred by the recipient and delivers the invoices through the agreed channel.

Three tips for preparing for e-invoicing mandates

1. Assessment of the current situation. Evaluate your company's existing capabilities, processes, and tools. Identify the key personnel and select a partner who can help build the necessary support.

2. Automation as an opportunity. Use e-invoicing as an opportunity to streamline your financial management processes. Avoid merely meeting minimum requirements and instead aim to maximize the benefits of automation.

3. Preparing for sending. While the ability to receive e-invoices is the primary requirement in Germany, also prepare to send invoices as soon as possible after the initial phase.

E-invoicing mandates are significantly transforming the operating environment for companies in Europe. The introduction of Germany's mandate in 2025 will impose new requirements on all companies operating in Germany, but it also presents opportunities for process optimization. Heeros and OpenText offer solutions that help businesses meet these requirements and leverage the benefits of digitalization.

If you want more information or need help building your capabilities, don't hesitate to contact us.