How Electronic Invoicing Works in Germany

With the gradual introduction of mandatory electronic invoicing for transactions between private entities, the German market is moving away from traditional paper-based standards and PDF invoices in favor of structured formats compliant with European regulations.

However, the German invoicing system differs significantly from the Italian one, as it follows a decentralized model. To comply with EU directives, Germany has also adopted specific e-invoicing formats that every supplier, including foreign businesses, should be familiar with.

Mandatory Electronic Invoicing in Germany: Key Stages of the Transition

On March 22, 2024, the Bundesrat, Germany's Federal Council with legislative powers, approved the Wachstumschancengesetz (Growth Opportunities Act), which introduces mandatory B2B electronic invoicing in Germany.

The gradual adoption of e-invoicing began in 2025: since last year, German companies have been required to be able to receive electronic invoices and may also issue them.

The first major milestone will take effect on January 1, 2027, when electronic invoicing will become mandatory for all companies with an annual turnover exceeding €800,000. From that date, traditional paper invoices will only be permitted under special conditions, as will formats other than XRechnung and ZUGFeRD, Germany's national standards.

From January 1, 2028 onward, B2B electronic invoicing will become mandatory for all businesses, and formats that are not compliant with the European EN 16931 standard will no longer be accepted.

How Does Electronic Invoicing Work in Germany?

The electronic invoicing system in Germany follows a model that is very different from the Italian one: there are neither specific transmission methods nor a centralized system comparable to Italy's Sistema di Interscambio (SDI) operated by the Revenue Agency.

Therefore, electronic invoices can be transmitted through various channels. As stated in the BMF-Schreiben issued by the German Federal Ministry of Finance, invoices may be sent:

• Via PEPPOL (Pan-European Public Procurement On-Line);
• Through shared-access electronic portals and interfaces;
• By email.

As can easily be understood, sending invoices via ordinary email is the least advisable option in terms of security and ease of document processing. Although German legislation does not impose a specific transmission method, electronic invoices must be issued in a structured format (XML) compliant with the European standard. In practice, sending an email is only compliant if the attachment is a valid structured file and not simply a PDF document.

How to Send an Electronic Invoice to a German Customer

Italian-based companies issuing invoices to Germany must submit their documents through the SDI system, which validates the invoice for tax purposes in Italy. The invoice must therefore be completed as usual, entering the code XXXXXXX (which identifies a foreign customer) in the Recipient Code field.

However, the Italian Revenue Agency's system does not handle routing the e-invoice through the PEPPOL network or delivering the invoice. For transmission to the German customer, the most common method currently consists of directly delivering a copy of the invoice, via email or shared platforms, in PDF format or in the hybrid ZUGFeRD format.

If requested by the customer (this mainly occurs in B2G transactions, i.e., with Public Administration entities), the invoice must be sent through the PEPPOL network, relying on a qualified Access Point (the list of providers is available on the OpenPeppol portal and on the AgID website, the Italian authority that certifies their status). The Access Point will convert the data into the standard European PEPPOL BIS 3 format and transmit it to the German recipient's Access Point.

ZUGFeRD and XRechnung: Germany's Standards for Electronic Invoices

The German Federal Ministry of Finance defines electronic invoices in the strict sense (E-Rechnung) as structured documents compliant with the European standard EN 16931. All other documents, such as paper invoices and PDFs sent via email, fall under the category of "other invoices" (Sonstige Rechnung).

The compatible formats used on the market are mainly divided into two categories:

• Pure XML formats, such as XRechnung, which is Germany's official implementation of EN 16931. It is a format designed for automation and does not include a visual component (the traditional PDF intended for human reading);
• Hybrid formats such as ZUGFeRD, equivalent to the French Factur-X format, consisting of a standard PDF/A-3 file containing an embedded (invisible) XML attachment. It is important to note that ZUGFeRD includes different levels of detail, and only some of them comply with the EN 16931 standard (specifically, the COMFORT and EXTENDED profiles).

As a general rule, invoices intended for German public administrations must be issued in the XRechnung format. B2B invoices, on the other hand, may also be issued and transmitted in the hybrid format, which facilitates the transition from traditional PDF invoices to structured electronic invoices. Even in the B2B context, however, XRechnung is increasingly being adopted and, as the German Core national format, can be considered the reference standard for future electronic invoicing processes.