Germany Clarifies E-Invoicing Rules for Small Businesses Ahead of 2028 Mandate

Germany has clarified that small businesses under Section 19 UStG are exempt from issuing e-invoices even after the 2028 mandate, allowing continued use of paper or PDF invoices. However, they must still be able to receive, process, and store structured e-invoices from January 1, 2025, as part of the phased transition to full digital B2B invoicing.

Germany has confirmed how new e-Invoicing obligations will apply to small businesses, providing partial relief while still imposing key compliance requirements.

Under the updated framework, small businesses defined under Section 19 of the German VAT Act (UStG) are not required to issue e-Invoices, even after the full mandate takes effect in 2028. They may continue using paper or PDF invoices for their outgoing transactions.

However, the rules introduce an important obligation: all businesses, including small ones, must be able to receive and process structured e-invoices from January 1, 2025. This includes handling XML-based formats such as XRechnung or ZUGFeRD and storing them electronically for up to eight years in line with GoBD requirements.

The broader rollout of e-invoicing will take place in phases. Larger companies must begin issuing e-invoices for B2B transactions in 2027, while full mandatory e-Invoicing for all businesses will apply from 2028, effectively eliminating paper and PDF invoices for B2B transactions.

Although small businesses are exempt from issuing e-Invoices, authorities and market trends suggest that voluntary adoption is beneficial, as many companies are already automating invoice processing and may prefer structured formats.

In summary: small businesses avoid the burden of issuing e-invoices but must still adapt their systems to receive and manage them, marking a significant shift toward full digital invoicing across Germany.