Send Invoice in Germany

Navigating the landscape of invoicing in Germany requires a clear understanding of its evolving regulations, especially with the ongoing shift towards electronic invoicing. This guide provides essential insights into the practices, workflows, and standards necessary for compliance.

Invoicing in Germany is governed by strict regulations, primarily outlined in the German Value Added Tax Act (UStG), specifically Section 14. To ensure an invoice is legally valid, it must contain a set of mandatory details, regardless of whether it's a traditional paper invoice or an electronic one.

Key legal requirements for invoices include:

• The full name and address of both the supplier and the recipient.
• A unique, sequential invoice number.
• The date the invoice was issued.
• The date of delivery or service, if different from the issue date.
• The supplier's tax number or VAT identification number (VAT ID).
• A clear description of the quantity and type of goods delivered or the scope and nature of the service provided.
• The net price, the applicable VAT rate (standard rate is 19%, reduced rate is 7% for specific items), the corresponding VAT amount, and the total gross amount. source domain
• Any agreed bonuses, rebates, or discounts, if not already included in the stated amount.
• A reference to any tax exemption if applicable.

For invoices totaling no more than €250, simplified requirements apply, limiting the mandatory information to the supplier's full name and address, issue date, quantity and type of goods/services, net amount, applicable tax rate/amount, and gross amount. Generally, invoices for B2B transactions must be issued within six months of the supply of goods or services.

Germany is progressively transitioning to mandatory electronic invoicing (e-invoicing) for B2B transactions, building on the existing mandate for Business-to-Government (B2G) transactions since November 27, 2020. An e-invoice, as defined by German regulations, must be issued, transmitted, and received in a structured electronic format that allows for automatic electronic processing, meaning simple PDFs sent via email are generally not considered compliant e-invoices.

The primary acceptable formats for electronic invoices in Germany are:

• XRechnung: This is a purely XML-based format, mandated for B2G transactions and fully compliant with the European standard EN 16931. It supports Universal Business Language (UBL) and UN/CEFACT Cross Industry Invoice (CII) syntaxes.
• ZUGFeRD: Standing for "Zentraler User Guide des Forums elektronische Rechnung Deutschland," ZUGFeRD is a hybrid format that combines a human-readable PDF/A-3 document with an embedded machine-readable XML file. Versions 2.0.1 and higher are compliant with EN 16931 and are widely accepted for B2B transactions.

The timeline for mandatory electronic invoicing in Germany is phased:

1. January 1, 2025: All German-based businesses must be able to receive e-invoices in compliance with EN 16931. During 2025 and 2026, paper invoices or non-compliant electronic invoices (like PDFs) can still be issued with the recipient's consent.
2. January 1, 2027: Businesses with an annual turnover exceeding €800,000 will be required to issue e-invoices for domestic B2B transactions.
3. January 1, 2028: The mandate to issue e-invoices will extend to all German taxpayers for domestic B2B transactions, making structured electronic invoicing the default.

Compliance tips include ensuring your IT infrastructure can handle receiving and processing structured e-invoices, updating internal policies, and communicating with suppliers and customers about preferred formats.

Proper archiving and record-keeping are critical for compliance in Germany, governed by the Principles for the Proper Keeping and Retention of Books, Records and Documents in Electronic Form (GoBD). These principles define how businesses must record, manage, and retain tax-relevant files.

Key requirements for invoice archiving include:

• Duration: Invoices, whether paper or electronic, must generally be archived for a period of 10 years. This period ensures that documents are available for potential tax audits.
• Original Format Preservation: Electronic invoices must be stored in their original electronic format. For instance, an XML file must remain an XML file, and a ZUGFeRD invoice (a hybrid format) must retain both its PDF/A-3 and embedded XML components. Converting an e-invoice to a different format, such as printing an XML invoice to paper or converting it to a simple PDF, is generally not sufficient for archiving purposes.
• Integrity and Authenticity: The archived invoices must maintain their integrity and authenticity, meaning they should be protected from alteration, and any changes must be traceable and logged.
• Readability and Accessibility: Invoices must remain readable, searchable, and exportable throughout the retention period. Tax authorities must be able to access stored data through a read-only interface or structured export.
• Hybrid Formats: For hybrid formats like ZUGFeRD, the embedded structured XML is considered the legally binding element and must be archived. The PDF component is optional unless it contains additional tax-relevant information not present in the XML.

Adhering to these record-keeping requirements is essential for deducting input VAT and avoiding penalties during tax audits.

While Germany is moving towards a comprehensive e-invoicing mandate, certain exemptions and special cases exist, offering a nuanced view of compliance obligations. Understanding these can help businesses determine if they qualify for any exceptions.

Key exemptions from the mandatory e-invoicing requirements include:

• Small-Amount Invoices: Invoices with a gross total of €250 or less are generally exempt from the structured e-invoicing mandate.
• Passenger Transport Tickets: Tickets for passenger transport services are also exempt from the structured invoice requirements.
• Certain VAT-Exempt Supplies: Transactions that are exempt from VAT under specific provisions of the VAT Act (UStG) may also be excluded from the e-invoicing mandate where issuing a VAT invoice is voluntary.
• Small Businesses (Kleinunternehmer): Businesses operating under the small business regulation (§19 UStG), typically those with an annual turnover up to €22,000, are exempt from issuing structured e-invoices. However, they are still obligated to receive e-invoices from their suppliers starting January 1, 2025.
• Foreign Businesses without a Fixed Establishment: Foreign businesses that are only VAT-registered in Germany but do not have a fixed establishment are not required to issue structured e-invoices for domestic B2B transactions.
• Cross-Border Transactions: The mandatory B2B e-invoicing rules primarily apply to domestic transactions where both the supplier and recipient are established in Germany. Intra-Community transactions and Business-to-Consumer (B2C) transactions are generally outside the scope of this mandate.

In addition to these exemptions, it's important to note the established B2G e-invoicing mandate. Since November 27, 2020, any business invoicing a German federal or state authority must submit a structured e-invoice, typically in the XRechnung format, as paper and PDFs are no longer accepted for these transactions. While the federal mandate sets a clear path, individual federal states (Bundesländer) may have their own decrees regarding communication systems and entry points for B2G e-invoicing, with Peppol being a universally supported channel.