E-Invoicing Basics
Last updated: June 18, 2026
Your solid B2B foundation for the legal mandate in Germany
What is an E-Invoice?
An e-invoice (electronic invoice) is far more than an image-based paper invoice or a simple PDF. Legally, it refers to an invoice issued, transmitted, and received in a structured electronic format that enables automated and electronic processing. It must comply with the European standard EN 16931. You can create new invoices easily or use the validator to inspect received documents.
While conventional PDF files are easily readable by the human eye, they do not contain structured, machine-readable data. They require manual data entry or complex OCR software parsing. A true e-invoice, in contrast, consists of an XML data model where all invoice information is stored in defined data fields (so-called Business Terms or BTs). This allows recipient systems to read, check, and book invoices fully automatically – without media breaks and manual data entry errors.
The Difference: Other Invoices vs. E-Invoices
Previously, paper and PDF invoices were treated equally under tax law as electronic invoices (when sent via email). From January 1, 2025, this definition changes fundamentally in Germany:
| Feature | Other Invoice (Paper, simple PDF) | E-Invoice (XML-based complying with EN 16931) |
|---|---|---|
| Format | Paper, image files (.pdf, .jpg, .docx) | XML structure (e.g., XRechnung) or hybrid PDF (ZUGFeRD) |
| Automated Processing | No (requires OCR or manual entry) | Yes (fully automatic via XML structure) |
| Legal Requirement | No (being phased out step-by-step) | Yes (receiving mandate starting 2025, sending by 2027/2028) |
| Archiving | Analog or manually digitized | Digitally native & audit-proof (GoBD) |
Why now? The European perspective (ViDA)
The introduction of e-invoicing is the first step in modernizing the tax system. Within the EU initiative 'VAT in the Digital Age' (ViDA), a Union-wide real-time reporting system for B2B transactions is planned by 2030. E-invoices form the technical foundation to combat VAT fraud effectively.
The E-Invoice Mandate in Germany – Timeline & Scope
The Growth Opportunities Act (Wachstumschancengesetz) introduces a phased obligation to use e-invoices in domestic B2B transactions in Germany starting January 1, 2025. It affects all transactions between domestic businesses (Business-to-Business, B2B) where both the supplier and the recipient have their registered office, head office, or a permanent establishment in Germany.
It is key to note that the e-invoice mandate does not apply to B2C transactions (sales to consumers). In addition, there are legal exceptions, such as for low-value invoices up to a gross amount of 250 Euros or for travel tickets. Nevertheless, all German freelancers, self-employed, and businesses – regardless of their revenue size (including small businesses / Kleinunternehmer) – must prepare for receiving e-invoices starting 2025.
The Official Phased Timeline of the German E-Invoice Mandate
| Timeline | Receiving Obligation (B2B) | Sending Obligation (B2B) | Transition Rules / Exceptions |
|---|---|---|---|
| From 01.01.2025 | Mandatory for ALL domestic B2B recipients. Every business must be capable of receiving e-invoices. | Until 31.12.2026, sending other invoices (paper/PDF) is still permitted with the recipient's consent. | Transition phase: paper and PDF invoices require recipient consent. |
| From 01.01.2027 | Mandatory for ALL. | Mandatory for B2B senders with prior-year revenue (in 2026) exceeding €800,000. | Smaller businesses (< €800,000 revenue) may still issue other invoices. |
| From 01.01.2028 | Mandatory for ALL. | Mandatory for ALL domestic B2B companies without exception. | Only statutory exceptions remain (e.g., low-value invoices up to €250 gross or travel tickets). |
Special Case B2G: Invoicing Public Authorities
In the Business-to-Government (B2G) sector – i.e., contracts for the public administration of the Federation and many Federal States – e-invoicing has been mandatory since late 2020. The XRechnung format is typically required, and invoices must contain a Buyer Reference (Leitweg-ID) to ensure routing to the correct department. In contrast, a Leitweg-ID is not required in B2B transactions between businesses.
Key Standards and Formate of E-Invoicing
The European standard EN 16931 defines the semantic data model of an e-invoice. It specifies exactly which mandatory elements an invoice must contain and how they must be structured technically. In Germany, two formats have emerged as dominant standard implementations:
1. EN 16931 (The European Standard)
The common European foundation. Any compliant format must satisfy the syntactical and semantic rules of this standard to ensure cross-border compatibility within the EU.
2. XRechnung (The XML Standard Format)
XRechnung is a purely structured XML format without any visual representation. It is the official standard for German public administration (B2G) and is transmitted via web portals or Peppol. Since it is unreadable for humans, it requires visualization software.
3. ZUGFeRD / Factur-X (The Hybrid Format)
ZUGFeRD combines the best of both worlds: a visual PDF/A-3 file for human eyes and an embedded, structured XML file for machine processing. This format is highly popular in B2B because it can be read without special software.
4. Peppol BIS Billing & EDI
Peppol is an international network for securely exchanging e-invoices. Traditional EDI (Electronic Data Interchange) procedures can also continue to be used under certain tax conditions if adapted to EN 16931.
Direct Format Comparison
| Format | Type | Human Readability | Common Use Case |
|---|---|---|---|
| XRechnung | Pure XML (CII/UBL) | No (requires visualization software) | German public administration (B2G), Federal authorities |
| ZUGFeRD (2.0+) | Hybrid (PDF + XML) | Yes (via any standard PDF viewer) | B2B sector, trade, professional services, freelancers |
| Peppol BIS | XML via Peppol network | No (requires software) | Cross-border B2B/B2G transactions, large enterprises |
BT Numbers and Technical Structure of an E-Invoice
To enable automated processing, an e-invoice is structured into logical fields. The European standard EN 16931 designates these fields as Business Terms (BT) and groups them into Business Groups (BG). These are accompanied by Business Rules (BR), which govern logical dependencies and verification rules.
For developers, accountants, and IT managers, understanding these BT structures is crucial. The following overview showcases the key BT numbers relevant to almost every legally compliant e-invoice:
| BT Number | Name (English) | Mandatory | Meaning / Description |
|---|---|---|---|
| General Invoice Information | |||
| BT-1 | Invoice number | Yes | Unique invoice identifier |
| BT-2 | Invoice issue date | Yes | Issue date |
| BT-3 | Invoice type code | Yes | e.g., 380 (commercial invoice), 381 (credit note) |
| BT-5 | Invoice currency | Yes | ISO code (usually EUR) |
| BT-9 | Due date | Conditional (often relevant) | Due date / payment term |
| BT-10 / BT-24 | Buyer reference / Leitweg-ID | No (mandatory for B2G) | Automated routing identifier, especially for public administration |
| BT-13 | Purchase order reference | Conditional | Purchase order or contract reference |
| Seller (Supplier) | |||
| BT-27 | Seller name | Yes | Official company name of the seller |
| BT-31 / BT-32 | VAT ID / Tax number seller | Yes | VAT identification number |
| BT-35 ff. | Address of the seller | Yes | Street, postal code, city, country |
| Buyer (Recipient) | |||
| BT-44 | Buyer name | Yes | Official company name of the buyer |
| BT-48 ff. | VAT ID of the buyer | Conditional (mostly Yes) | VAT identification number |
| BT-50 ff. | Address of the buyer | Yes | Complete address |
| Payment Information | |||
| BT-81 | Payment instruction / payment method | Yes | e.g., bank transfer, SEPA direct debit |
| BT-82 / BT-83 | IBAN / BIC | Conditional (for bank transfers) | Bank details (IBAN / BIC) |
| Invoice Totals & Taxes | |||
| BT-106 | Total amount excluding VAT (Net) | Yes | Sum of all line net amounts |
| BT-109 | Invoice total amount (Net) | Yes | Total net amount |
| BT-110 / BT-112 | Total VAT amount / Gross amount | Yes | VAT amount and total gross amount |
| Invoice Lines | |||
| BT-131 ff. | Invoice lines (details) | Yes (if lines exist) | Individual invoice lines with quantity, price, description |
The complete list of all BTs includes over 200 fields. Those listed here are the most important for most legally compliant e-invoices (EN 16931 / XRechnung / ZUGFeRD). Additional BTs apply for specific industries or B2G transactions.
Additional Useful Fields (depending on context)
- BT-20: Payment terms (cash discount, etc.)
- BT-77 / BT-78: Seller contact details (email, phone)
- BT-92: Payment due date in days
- BT-126: Total allowances/discounts sum
- BT-134 / BT-135: Billing period (for recurring services)
- Tax breakdown per tax rate (BT-116 et seq.)
- Delivery date / Date of performance (BT-7, BT-72 et seq.)
Note: This is not an exhaustive list (the standard contains significantly more fields). The exact status as mandatory or optional can vary depending on the invoice type (B2B vs. B2G), country, and CIUS (e.g., XRechnung).
The Benefits of E-Invoicing for B2B Companies
While transitioning requires initial effort, e-invoicing delivers significant strategic and operational benefits to your company. According to European Commission and chamber of commerce studies, massive savings can be achieved:
1. Significant Cost Savings
Save on paper, printer ink, envelopes, and postage. Studies by the Federal Ministry of Finance (BMF) and the EU Commission show savings of up to 80% in administrative costs (around €10 per invoice) compared to physical mail.
2. Automation & Speed
Invoice data flows directly and digitally into your accounting system. Manual data entry is eliminated, cutting processing times down – invoices are processed, validated, and approved up to 80% faster.
3. Error Reduction
Automatic validation and the removal of manual transcription reduce the risk of booking errors and typos to zero. Mathematical calculations of tax rates are verified automatically.
4. Compliant Archiving
Save office space with digital archiving. GoBD-compliant software like Billance makes meeting the statutory 10-year retention rule effortless, completely eliminating physical paper folders.
5. Faster Payments
Since e-invoices reach recipients instantly and can be processed immediately, your outstanding payments (DSO) are resolved noticeably faster, strengthening your company's liquidity.
E-Invoice: Features & Guide
With the right software, creating a compliant e-invoice is very simple. Just follow these four steps:
Step 1: Capture Invoice Data
Fill in the standard invoice elements using the invoice designer or invoice creator: seller and buyer details (including VAT IDs), lines, prices, and tax rates.
Step 2: Formal Validation under EN 16931
Billance runs an automatic formal validation in the background to check that all required fields (BT numbers) are present and mathematics match.
Step 3: Generate E-Invoice Format
Choose your format. You can use the converter for importing existing PDFs. For public agencies, generate an XRechnung XML; for commercial partners, a ZUGFeRD hybrid PDF is recommended.
Step 4: Secure Transmission and Archiving
Send the file via email. Store the original XML/PDF file in an audit-proof digital archive and organize it directly in the central invoice management area.
Billance: Compliant E-Invoicing – Easy & Offline
Billance runs as a native desktop app completely on your computer. There is no cloud obligation, fair pricing with flexible terms, and no sharing of your sensitive invoice and customer data on remote servers. Meet all e-invoice legal requirements 100% GoBD-compliant and secure.
Frequently Asked Questions (FAQ)
Find answers to the most common questions about the e-invoice mandate in Germany.
No, starting January 1, 2025, a simple PDF file is no longer legally considered an e-invoice under German tax law; instead, it is classified as 'other invoice'. An e-invoice must be structured in XML according to EN 16931. Standard PDFs are only permitted in B2B during transitional phases; from 2028 on, they are entirely forbidden in domestic B2B transactions (unless it is a ZUGFeRD PDF containing a valid XML payload).
No. A Leitweg-ID (Buyer Reference / BT-24) is a routing identifier used exclusively in the B2G (public administration) sector. In B2B transactions between private companies, it is not required. Standard business identifiers like your VAT ID are sufficient.
If you fail to issue a compliant e-invoice starting 2028, your invoice violates formal VAT rules. The recipient will lose their input VAT deduction. Fines may be levied by tax authorities, and business clients will likely withhold payments because they need legally compliant records for bookkeeping.
The difference is layout-driven: XRechnung is a raw XML file, unreadable to humans without visualizers. It is mandatory for German B2G. ZUGFeRD is a hybrid format (PDF/A-3 containing an embedded XML). It opens like a normal PDF, but systems can parse it instantly. For B2B transactions, ZUGFeRD is generally preferred since it is comfortable for both humans and machines.
Yes. The receiving mandate from January 1, 2025, applies to all domestic businesses without exception, including small businesses. Small businesses must be able to receive and archive incoming e-invoices in a GoBD-compliant manner. Regarding the sending obligation, general transitional arrangements apply to them until the end of 2027.
According to GoBD rules, e-invoices must be stored in their original electronic format. For XRechnung, this is the XML file; for ZUGFeRD, the complete PDF/A-3 file. A printout on paper is not acceptable and results in tax non-compliance. Your archiving system must guarantee that records remain unalterable and readable during the 10-year statutory retention period.
No, starting January 1, 2025, the requirement for recipient consent for using e-invoices is repealed. Every domestic B2B business is legally required to accept incoming e-invoices. Conversely, sending 'other invoices' (like paper or plain PDF) during the transition phase still requires mutual agreement.
Yes, email is the simplest and most common transmission channel. Alternatively, e-invoices can be provided via download portals, web uploads, or dedicated networks like Peppol.
Yes. Billance supports the creation of XRechnung XML (in both CII and UBL syntaxes), EN16931 XML (in CII syntax), and ZUGFeRD hybrid PDFs (with the EN16931/Comfort, XRechnung, and Extended profiles). Exporting XRechnung in UBL syntax also generates a fully compatible Peppol BIS Billing 3.0 UBL document. Every created invoice is validated directly and locally within the app for formal compliance with the European standard EN 16931.
Billance is a desktop application for Windows, macOS, and Linux. By default, it runs completely locally on your computer. Cloud usage is entirely optional: you can connect your own preferred cloud storage (such as iCloud, Google Drive, OneDrive, Dropbox, or a custom WebDAV server) for synchronization and backups. Your invoice data, customer details, or financial records are never uploaded to our servers – you retain full sovereignty over your data.
The Leitweg-ID is a structured routing address number used in Germany for electronic transactions with public administrators (B2G). It routes the e-invoice automatically to the correct department within a public entity.
The German e-invoice mandate only applies to domestic B2B transactions (where both supplier and buyer are located in Germany). International cross-border invoices are not subject to the domestic German mandate for now, but must comply with respective national or EU-wide regulations.
Ready for the E-Invoice Mandate?
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