Fiscal subject related
Germany has decided that electronic invoicing will become mandatory for all domestic B2B transactions. This means that companies will no longer be able to rely on traditional paper or simple PDF invoices.
Instead, invoices must be issued in structured, machine-readable formats such as XRechnung (XML) or ZUGFeRD 2.1+ (PDF with embedded XML). These formats follow the EU standard EN 16931 and are designed to allow automated processing.
The rollout started on 1 January 2025, when every business must at least be able to receive structured e-invoices. From 2027, companies with annual turnover above €800,000 must also issue them. By 2028, the requirement will extend to all businesses, regardless of size.
The system is decentralized. Invoices do not go through a government portal but are exchanged directly between businesses, for example by email, Peppol, EDI, or e-invoicing platforms, as long as the format is compliant. The tax authorities do not validate or store these invoices in real time, but they can request them later during an audit.
Some transactions are outside the scope of the mandate. These include B2C sales, cross-border invoices, small invoices under €250, passenger tickets, and VAT-exempt transactions. Foreign companies that are only VAT-registered in Germany but do not have a fixed establishment are also excluded.
All e-invoices must contain the usual invoice details such as buyer, seller, VAT numbers, and transaction information. They must also be archived in their original electronic form for ten years to guarantee authenticity and compliance.
In short, Germany’s approach prioritises automation, flexibility, and interoperability. Businesses should prepare now by ensuring their accounting systems can handle XRechnung or ZUGFeRD, testing exchange channels with trading partners, and putting in place long-term archiving procedures
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