Germany E-invoicing & Digital Reporting

What is electronic invoicing in Germany?

Germany is implementing new laws that include mandatory e-invoicing. According to Germany’s definition, an e-invoice is invoice information that is transmitted electronically and automatically received and processed. The electronic document provides invoice content in a structured, machine-readable data set instead of on paper or in an image file such as a PDF.

Not only are electronic invoices highly regulated digital documents, they must also comply with specific technology that is provided by the government and by private vendors. Germany has two technology platforms available, the Central Invoice Submission Portal (ZRE) and the OZG-compliant Invoice Submission Platform (OZG-RE). However these two portals will be consolidated into one – so only the OZG-RE will be available after 2025!

Some of the goals of e-invoicing in Germany are to:

• Streamline and automate financial reporting
• Make payments more punctual and efficient
• Increase the government recoup of VAT revenue

These goals and the plan for electronic invoicing in Germany stem from the European Unions’ plan, which wants to see e-invoicing and digital reporting spread across Europe.

In fact, electronic invoicing is rolling out in most countries around the world, including other EU member states. For example, Spain e-invoicing rules, Portugal e-invoicing rule, and France e-invoicing rules are all in the works.

Timeline for German B2B e-invoicing

E-invoicing in Germany started to roll out to B2B businesses in 2025, and the rest will be staged over a few years. The stages of the e-invoicing rollout are based on business turnover, with higher earning companies first. The exact timeline is still pending some revisions and clarifications, but here is the plan for now.

January 2025: B2B e-invoicing begins! German businesses must be able to *receive *e-invoices for B2B transactions. Invoices under €250 and tickets for passenger transport are exempt.

January 2027: Businesses with a turnover of €800,000 or more in 2026 must be ready to issue e-invoices for B2B transactions. Businesses with a turnover below this threshold can still issue paper and/or PDF invoices.

January 2028: All German businesses must send e-invoices for their transactions. Paper and PDF invoices are no longer valid.

Background: Mandatory B2G e-invoicing in Germany

Business-to-government (B2G) e-invoicing became mandatory in Germany for federal level transactions on November 27, 2020. This requirement stemmed from the European Directive on electronic invoicing in public procurement, which aimed to standardize electronic invoicing across EU member states.

As Germany is a federal state, the 16 individual states have some autonomy in setting B2G e-invoicing regulations, so the rules can vary across states. B2G e-invoicing is currently required in seven states: Bremen, Hamburg, Baden-Württemberg, Saarland, Rheinland-Pfalz, Mecklenburg-Vorpommern, and Hessen. In the other nine states, it remains optional.

For B2G e-invoicing, Germany utilizes the Peppol network, which enables businesses to exchange e-invoices with specific public authorities. Additionally, businesses can use Germany’s federal government portals: the ZRE and the OZG-RE.

Which transactions require electronic invoices in Germany?

Eventually, all businesses that are based in Germany will be required to issue and receive electronic invoices. But which transactions must comply?

The e-invoicing rules apply to most taxable B2B transactions that take place within Germany. Transactions that are exempt from VAT are also exempt from e-invoicing rules. If you’d like to learn more about which transactions are taxable, check out this guide to Germany VAT.

In the following cases, an electronic invoice is not required:

• Invoices for low amounts (invoices of less than €250)
• Tickets issued for the transport of passengers
• Transactions to a legal person that is not an entrepreneur
• Certain taxable sales of goods and services in connection with immovable property

How does German e-invoicing work?

There are a few different actors involved in the German e-invoicing process, and each one has a specific role:

1. The German Procurement Office of the Federal Ministry of the Interior is the governmental body responsible for overseeing the e-invoicing project.
2. The OZG-RE is the government’s chosen technology for invoice transmission.
3. Private software companies for electronic invoicing, which must comply with the technology criteria and be registered with Germany’s tax authorities.
4. The businesses that send the electronic invoices.
5. The customers and businesses that receive the electronic invoices.

How will I issue and receive my invoices?

You can send your e-invoices through the federally provided platform, OZG-RE. The German government has even created some guidance on how to use the OZG-RE portal.

However, if you have a large number of invoices to submit, the German government recommends using the PEPPOL transmission method. With PEPPOL (Pan-European Public Procurement Online), developed by the EU, you can set up multiple links with organizations from a single access point. Transmission via Peppol is also efficient and inexpensive, but integrating this new technology into your accounting processes and training your employees can be costly.

A third option is to use a third-party software that provides e-invoicing services to comply with German regulations.

3 steps to sending an electronic invoice in Germany

1. You can use the OZG-RE portal. In order to use an invoice submission portal, you must first register with it. Registration is free of charge and is necessary no matter which method you choose for transmitting invoices.
2. For invoices created using third-party electronic invoicing software, the following transmission methods are available: Peppol, email, and manual upload. Alternatively, you can create and send your invoice manually via your web browser (web submission). You should select your preferred transmission method before sending your invoice.
3. Once the invoice has been sent, you can track its submission status up to the point when it is “collected” by the customer. The portal checks that each submitted invoice conforms to the XRechnung specification or other EU-approved standard in terms of syntax and semantics, such as ZUGFeRD 2.2.0. Once the invoice has passed this conformity check (validation), it is automatically forwarded to the recipient. You can opt to receive an email notification whenever the status of your invoice changes.

Common errors in submitting a German e-invoice

If an e-invoice is rejected, it could be due to an error in submission. The German government says these are common errors in practice:

1. Content relevant for the invoice is placed in the subject line or the body of the email. Content from the subject line and body of an email is not forwarded to the invoice recipient. Instead, this content must be entered in the proper data fields.
2. Multiple invoices are sent in a single email. According to the terms of use, only one invoice may be sent with a single email.
3. The invoice is sent from an email address that is different from the one saved in the invoice submission portal.

What is a third-party e-invoicing software?

A third-party software provides e-invoicing and e-reporting services to help you comply with Germany’s laws. So these online platforms serve several purposes:

• Issue, send and receive the electronic invoice from the supplier to the customer. If you and the other business use different invoice formats, then the platform will convert the other’s invoice into a format that suits you, and vice versa. The technology must ensure the integrity, authenticity, readability and completeness of the data.
• Extract certain invoice data and send it to the tax authorities via Chorus Pro. This relates to digital reporting requirements for VAT (more on that later!), and the extracted data could include the identification of the supplier and customer, transaction amount excluding VAT, amount of VAT due, VAT rate applied, etc.
• Forward other transaction data that isn’t subject to an electronic invoice to the tax authorities.
• Transmit payment data for all transactions.
• Store e-invoices in a secure archive.

So, in this scenario, you would contract the services of a PDP that would handle not only issuance, exchange (interoperability) and receipt of e-invoices but also handle the real-time reporting obligation. In this scenario, only the VAT-related subset of the e-invoice will be reported to OZG-RE.

Aside from the basic steps of the process, there are a number of obligations on both the companies that send and receive invoices and the providers that offer electronic invoicing services.

Rules for complying with German e-invoicing

The law outlines numerous obligations, and we can’t list them all here. But this list contains many of the rules that are important for online businesses:

• Businesses and public entities are obliged to issue, send, and receive electronic invoices through private platforms, PEPPOL, or the OZG-RE.
• Electronic invoices should contain all relevant transaction data, found in this explanation of types of invoices.
• Private e-invoicing providers will have to ensure free interconnection and interoperability between technology solutions or platforms.
• E-invoices must be stored in a secure archive by both the issuer and recipient for 10 years.

Penalties for not complying with electronic invoicing in Germany

Germany has not released any official penalty structures for noncompliance, like we’ve seen in France or Spain. But since the country does issue fines for missed VAT filings and payments, it is safe to assume that e-invoicing penalties are coming down the pipeline as well.

So, make sure you are tracking deadlines, using a compliant invoicing software, and following the appropriate accounting practices! If you’re located in Germany, you should probably be following the accounting rules of the International Financial Reporting Standards (IFRS).

How to create an electronic invoice in Germany

The Germany e-invoicing decree lays out several technical specifications that all businesses must adhere to, in order for an e-invoice to function, travel through the system, and be registered as legitimate.

The German e-invoicing mandate specifies that compliant e-invoices must be in structured formats, which are electronically issued, transmitted, and received, enabling automatic processing. These formats must adhere to the European standard EN 16931. Standard PDF invoices are not machine-readable and no longer considered to be e-invoices in Germany.

E-invoice formats in Germany

• ZUGFeRD. Hybrid format: Human-readable PDF/A-3 with an embedded XML file in the syntax "Cross-Industry Invoice" (CII)
• XRechnung. XML file in the syntax "Cross-Industry Invoice" (CII)
• XRechnung. XML file in the "Universal Business Language" (UBL) syntax
• PEPPOL BIS Billing. A structured, machine-readable UBL 2.1 XML format that can be delivered via PEPPOL. Compatible throughout the EU and in other foreign countries.

Other electronic formats can be used if both parties agree to it and if the information can be extracted to work with the CEN 16931 format.

For specific transactions, you can still use other types of invoices, such as standard PDFs sent by email or paper invoices for B2C sales. See the section above on e-invoice exceptions.

What are the digital reporting requirements for e-invoices in Germany?

Digital reporting is an important part of the European Union’s VAT in the Digital Age (ViDA) e-invoicing requirements. We've documented the rise of digital reporting requirements in the EU.

Eventually, all taxpayers will have to report electronic invoices in real time. But for now, the German government has not issued any digital reporting mandates like we’ve seen in France and Spain.

ViDA’s digital reporting guidelines include July 2030 plans to introduce near-real time digital reporting and e-invoicing on intra-community goods and services supplies. Member states will then have to harmonise any domestic e-invoicing or digital transaction reporting with the new regime by 2035.

At Quaderno we are already working to support the future law in Germany, so we can serve our customers with German e-invoices as soon as it’s required. For now, our automatic invoices and VAT compliance help business owners save time and have peace of mind. See the benefits with Quaderno’s free trial.