E-Invoicing for B2B vs. B2G Transactions in Germany: Key Differences and Benefits

Germany is currently moving towards full digitization. The country already has a B2G e-invoicing mandate and is about to embrace mandatory electronic invoicing in B2B transactions.

This means businesses of all shapes and sizes will be required to send and receive invoices electronically. Thus, understanding the requirements for B2G and B2B e-invoicing in Germany is essential for e-invoicing compliance.

This article will discuss everything you need to know about electronic invoicing in B2B and B2G transactions in Germany, including implementation timelines, e-invoicing requirements, and the e-invoicing process.

Is B2B e-invoicing mandatory in Germany?

B2B e-invoicing will soon become mandatory in Germany, as the country has already passed a law that will slowly make electronic invoicing mandatory by 2028.

On March 23, 2024, the German Federal Ministry of Finance passed the Wachstumschancengesetz. This law, now known as the Growth Opportunities Act, aims to strengthen growth opportunities, investments, and innovation and simplify taxes to ensure tax equity.

The Growth Opportunities Act stipulates that electronic invoicing will become the standard method in the B2B environment from January 1, 2025. However, B2B invoicing will not immediately become mandatory for all companies.

Implementation timeline for B2B e-invoicing in Germany

According to the Growth Opportunities Act, electronic invoicing in Germany will be implemented in three stages:

January 1, 2025: By this date, all companies in Germany must be able to receive electronic invoices. However, the issuance of e-invoices at this stage will remain voluntary. Suppliers may continue to issue paper invoices as long as the buyer consents.
January 1, 2027: From this date, companies with a prior year turnover of €800,000 or more are required to issue electronic invoices when dealing with other companies.
January 1, 2028: From this date, companies with a turnover of less than €800,000 are required to issue electronic invoices when transacting business with any other company in Germany.

In summary, the implementation of B2B e-invoicing in Germany will start on January 1, 2025. However, it will become mandatory for large companies on January 1, 2027, and for all companies on January 1, 2028.

Requirements for B2B e-invoicing in Germany

Germany’s B2B e-invoicing proposal aligns with the European VAT in the Digital Age (ViDA) initiative, which calls for using the European e-invoicing standard EN-16931. Thus, once fully implemented, the B2B e-invoicing system in Germany will require companies to use EN 16931 for all electronic invoices.

This format ensures consistency and compatibility across EU member states, enabling businesses to exchange invoices seamlessly across borders.

Here are other requirements:

All B2B e-invoices must be created in a standardized format (such as XML or UBL) following the EN 16931 standard. The mandate specifies using XRechnung and ZUFeRD.
The XRechnung, which meets the requirements of EN 16931, converts invoice information into an XML data file, which constitutes the e-invoice. ZUGFeRD, which also meets the requirements of the European standard (EN 16931), is aimed at cross-border transactions. It is a unique hybrid e-invoicing format that integrates a PDF invoice with an embedded XML file, allowing invoices to be sent either as attachments or embedded within an email.
Germany does not require e-invoices to be electronically signed. However, it requires that all electronic invoices be stored in their original form for 10 years after they are created and executed. So, when B2B e-invoicing becomes mandatory, the e-invoices must be archived for 10 years.

B2B e-invoicing process in Germany

Germany does not have a centralized platform for B2B e-invoicing, unlike the government’s ZRE portal for B2G invoicing. Businesses can leverage third-party e-invoicing platforms to facilitate invoice submission, validation, and payment tracking.

Businesses can generate electronic invoices using their ERP system or a dedicated invoicing software and ensure they include all necessary details.

Once the invoice is generated, you can transmit it to the recipient through two methods.

Direct transmission: This involves sending the invoice directly to your receiver using email, a web portal, or a third-party platform.
PEPPOL network: This involves using the PEPPOL eDelivery network, which facilitates document exchange between businesses in different countries.

Is B2G e-invoicing mandatory in Germany?

Electronic invoicing is mandatory in Germany for business-to-government (B2G) transactions.

Implementation timeline for B2G e-invoicing in Germany

After the EU’s Directive 2014/55/EU, which aims to standardize electronic invoicing across EU member states for public procurement, the German government enacted e-invoicing laws to implement the directive.

Through the National IT Planning Council, the government resolved that public authorities should be able to receive at least XInvoice invoices by June 2017. Then, in April 2018, it decided to establish a standardized web service to transport e-invoices.

By April 2020, government suppliers were required to be able to receive and process electronic invoices. Then, by November 2020, the E-invoicing Act came into force, requiring all suppliers to federal, state, and municipal governments to submit invoices electronically.

Requirements for B2G e-invoicing in Germany

Under the E-Rechnungsgesetz (E-Invoicing Act), businesses must submit e-invoices for all contracts with federal, state, or municipal authorities that exceed a certain threshold (typically €1,000). Because of the federal structure in Germany, the federal government and the federal states must make their own e-invoicing laws.
The federal government has adopted the ZRE (Zentrale Rechnungseingangsplattform) as its B2G electronic invoice portal. The ZRE, which translates as the Central Invoice Submission Portal, is a web portal that allows suppliers to send electronic invoices to federal entities.
The ZRE is integrated with PEPPOL, a cross-border electronic invoicing network that allows the exchange of e-invoices in standardized formats.
The PEPPOL network is a four-corner network similar to a communications network. To send and receive e-invoices through the PEPPOL network, a reliable Access Point (AP) provider like Storecove needs to connect you to the network. When sending an e-invoice, it moves from your station to your access point provider. Your AP provider sends it to your receiver's AP provider, and they send it to your receiver.
Only the XRechnung format is accepted for the ZRE, while the PEPPOL BIS format is accepted when using the PEPPOL eDelivery network. Since federal states have legislative freedom to develop their own e-invoicing platforms, the type of platform used will depend on the state to which you send an e-invoice. However, the majority of states feature a PEPPOL interface.
Electronic signatures are not mandatory, but all electronic invoices must be archived for at least 10 years.

B2G e-invoicing process in Germany

When invoicing government entities, the primary format is the XRechnung, and the e-invoice must be sent through the ZRE portal. Once the invoice reaches the ZRE, it is validated to check whether it is complete, correctly formatted, and contains all the necessary data. If the invoice passes this validation, it is forwarded to the relevant government authority for processing.

When submitting an e-invoice through the PEPPOL network, you create the invoice and submit it through your Access Point. Your Access Point will ensure the e-invoice is compliant with relevant standards and securely transmit it through the PEPPOL network. The German government entity then receives it via the ZRE portal. This step ensures the e-invoice is validated and complies with Germany’s legal requirements.

Benefits of e-invoicing in Germany

B2B and B2G e-invoicing in Germany offers many benefits, which include:

Cost efficiency

Electronic invoicing eliminates the need for physical paper invoices. This eliminates the costs associated with using paper invoices, such as paper, printing, postage, and storage facilities. For organizations that process a high volume of invoices, the savings can be significant, leading to increased profit.

Improved accuracy

E-invoicing allows for automated data entry, where data is automatically captured from the electronic invoice and entered into accounting or ERP systems. This eliminates manual data entry and the human errors associated with such manual processes, such as incorrect amounts, missing information, and more.

Also, the e-invoicing platforms, including Germany’s ZRE portal and PEPPOL integration, have built-in data validation features. These check the invoice for missing or incorrect information. For example, they can check that VAT numbers and tax rates are correctly included.

This ensures your invoice is accurate and prevents issues that can delay payment or cause compliance problems.

Faster payment cycles

Electronic invoices are processed more quickly, leading to faster payments and improved cash flow.

First, there is quicker invoice delivery. While paper invoices can take days or even weeks to be delivered, electronic invoices are received almost immediately after they are submitted. Thus, invoicing processing can begin sooner.

Secondly, invoice processing itself is faster. Invoices are validated automatically, eliminating the slower process of manually checking them for accuracy. Data is also automatically captured from the invoice and entered into accounting, ERP, or financial systems, eliminating the much slower manual data entry.

Processing invoices faster often leads to quicker payments. This can improve cash flow, especially for small and medium-sized companies that rely on timely payments to maintain operations.

Better compliance

E-invoicing ensures that businesses are compliant with both domestic and EU tax regulations, reducing the risk of costly errors or penalties.

E-invoicing mandates require invoices to be submitted in a standardized format. These formats ensure the invoice includes the necessary tax and legal information, such as VAT, tax IDs, payment, terms, etc. E-invoicing systems also include automatic tax rate calculations, ensuring the correct tax is applied. This helps you avoid undercharging or overcharging, which could lead to costly corrections, fines, or penalties.

Increased transparency

E-invoicing enhances transparency in the invoicing process by creating a more structured workflow.

The electronic invoices are stored in digital format. Unlike paper invoicing, where you’ll have to search through files, digitally stored e-invoices can be instantly accessed, offering full visibility into an invoice's status.

E-invoicing also leaves a clear audit trail. The system records every action on an invoice, making it easier to trace the source of an issue should any discrepancy arise regarding an invoice.

Takeaway: Send compliant e-invoices in Germany with Storecove

E-invoicing has been mandatory for B2G transactions in Germany since 2020 and will soon be mandatory for B2B transactions. Companies in Germany must be able to accept e-invoices from January 1, 2025. Large-size companies will be required to send e-invoices by January 2027, while all other companies will be required to send e-invoices by January 2028.

The ZRE, which integrates with PEPPOL, is Germany’s e-invoicing platform for B2G transactions and will also be adopted for B2B transactions.

With 2025 fast approaching, now is the time for e-invoicing adoption by connecting to the PEPPOL network. This is where Storecove comes in!

Storecove is one of Germany’s most reliable Access Point providers. Storecove’s invoicing solutions will connect your business to the PEPPOL e-invoicing network, ensuring you automatically comply with e-invoicing regulations and tax regulations when sending electronic invoices to clients within and outside Germany.

Ready to become e-invoicing compliant when sending invoices to customers within and outside Germany? Contact Storecove today to set up your e-invoicing process!

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