Germany B2B E-Invoicing 2027: XRechnung Mandate Explained

Germany is rolling out mandatory Business-to-Business (B2B) e-invoicing through the Wachstumschancengesetz (Growth Opportunities Act). Starting January 1, 2025, all businesses must be able to receive electronic invoices, and by January 1, 2027, large companies must issue them.

This guide covers everything you need to know about Germany's e-invoicing mandate, including timelines, required formats, penalties, and how to prepare.

What is Germany's E-Invoicing Mandate?

Germany's e-invoicing reform affects all businesses conducting domestic B2B transactions. The mandate requires invoices to be issued in structured electronic formats that comply with the European standard EN 16931¹.

According to the European Commission's official guidance, the key requirement is that invoices must be transmitted as "structured electronic documents that can be automatically and electronically processed."

Important: Simply emailing a PDF invoice no longer counts as an e-invoice under the new rules².

Timeline: When Does This Take Effect?

The implementation follows a phased rollout over four years:

January 1, 2025: Mandatory Reception

ALL businesses must be able to receive e-invoices that comply with EN 16931².

This applies to:

• Large corporations
• Mid-sized companies
• Small businesses
• Sole proprietors

Transition period: During 2025-2026, businesses can still issue paper invoices or PDF invoices while preparing their systems. However, they must already be capable of receiving electronic invoices.

January 1, 2027: Large Companies Must Issue E-Invoices

Companies with annual turnover exceeding €800,000 in the previous year (2026) must begin issuing e-invoices for all domestic B2B transactions³.

Who this affects:

• Large enterprises
• Mid-sized companies with revenue > €800,000

January 1, 2028: Universal E-Invoicing

ALL businesses, regardless of size, must issue e-invoices for domestic B2B transactions².

This includes:

• Small and medium enterprises (SMEs)
• Micro-businesses
• Freelancers and self-employed professionals

Exception: EDI Users

Businesses using EDI (Electronic Data Interchange) systems get additional time:

• EDI formats can be used until December 31, 2027 with the recipient's consent⁴
• After December 31, 2027, EDI systems must be able to extract data into EN 16931-compliant formats⁴
• Pure EDI without EN 16931 compatibility will no longer be permitted from 2028

What Counts as an E-Invoice?

Under German law (specifically §14 of the Umsatzsteuergesetz - German VAT Act), an e-invoice must meet the following criteria:

1. Structured electronic format - Machine-readable data (not just a scanned image or PDF)
2. EN 16931 compliance - Must follow the European standard for semantic data models
3. Electronic transmission - Sent digitally (not printed and mailed)
4. Electronic processing - Recipient can process it automatically without manual data entry

Accepted Formats

Germany recognizes two primary formats that comply with EN 16931¹:

1. XRechnung

• Pure XML format (no visual representation)
• Developed specifically for the German public sector
• Current version: XRechnung 3.0.2⁵ (released 2024)
• Supports two XML syntaxes: UBL (Universal Business Language) and UN/CEFACT CII (Cross Industry Invoice)⁵
• Official specifications available at xeinkauf.de

XRechnung is purely a digital data file—there is no human-readable version embedded in the file itself¹.

2. ZUGFeRD (Zentraler User Guide des Forums elektronische Rechnung Deutschland)

• Hybrid PDF/XML format - Combines a visual PDF with embedded XML data
• Compatible with French Factur-X standard since version 2.1⁶
• Current version: ZUGFeRD 2.3⁶ (released September 2024)
• Must use ZUGFeRD 2.0.1 or higher²
• Excludes MINIMUM and BASIC-WL profiles (these do not meet EN 16931 requirements)²

ZUGFeRD includes both a digital data file and a PDF that people can read¹, making it easier for recipients to view invoices visually while still enabling automated processing.

We'll cover the differences between XRechnung and ZUGFeRD in detail in a separate article.

Who Must Comply?

Businesses Required to Issue E-Invoices:

From January 2027:

• Companies with turnover > €800,000 (measured in 2026)

From January 2028:

• ALL businesses, including:
  • Small businesses
  • Micro-enterprises
  • Freelancers
  • Self-employed individuals

Exemptions from E-Invoicing Obligation:

Small entrepreneur scheme (Kleinunternehmerregelung):

• Businesses qualifying under §19 UStG (turnover ≤ €25,000 previous year and ≤ €100,000 current year) are exempt from issuing e-invoices⁷
• However, they must still be able to receive e-invoices⁷

Other exemptions:

• B2C transactions (business to consumer) - Not affected by the mandate
• VAT-exempt transactions under §4 Nos. 8–29 UStG
• Low-value invoices ≤ €250 gross amount
• International/cross-border transactions (different rules apply until 2030)

Penalties for Non-Compliance

Germany enforces e-invoicing compliance through existing VAT regulations.

Financial Penalties

Failure to issue e-invoices in the required format after the transition periods can result in fines up to €5,000 per offense⁸.

According to VATupdate's analysis, these penalties apply to the managing director who is the legal representative of the business⁸.

Important: During the transition phase (2025–2026, and up to 2027 for small businesses/EDI users), using paper or PDF invoices is explicitly allowed by law and is not penalized⁸.

VAT Deduction Risk

Beyond direct fines, non-compliance carries another significant risk:

Recipients who do not receive a proper e-invoice may be denied input VAT deduction⁸.

German VAT law requires a compliant invoice as a prerequisite for deducting input tax. If your client doesn't receive a proper e-invoice after the mandate takes effect, they may refuse payment or request a corrected invoice—delaying your cash flow.

How to Prepare: Compliance Checklist

With January 2025 already here and 2027 approaching quickly, businesses need to act now. Here's your action plan:

Immediate Actions (Q1 2026):

✅ 1. Assess your current situation

• Annual turnover (determines your 2027 or 2028 deadline)
• Current invoicing software capabilities
• Number of invoices issued per month
• Customer requirements (some may request e-invoices before the mandate)

✅ 2. Verify your software compatibility

• Does your accounting/ERP software support XRechnung or ZUGFeRD?
• Can it generate EN 16931-compliant XML?
• Does it need an update or plugin?

✅ 3. Choose your e-invoicing format

• XRechnung: Best for pure B2B transactions, maximum automation
• ZUGFeRD: Best if you want recipients to see a visual PDF (easier transition)

Mid-Term Actions (Q2-Q3 2026):

✅ 4. Update your systems

• Install necessary software updates
• Integrate e-invoicing modules
• Set up XML generation capabilities

✅ 5. Test with willing customers

• Send test e-invoices to a few clients
• Verify they can receive and process the files
• Identify and fix any technical issues

✅ 6. Train your team

• Finance/accounting staff on new processes
• IT team on technical troubleshooting
• Customer service on handling client questions

Before Your Deadline (2027 or 2028):

✅ 7. Communicate with customers and suppliers

• Inform them of your e-invoicing capabilities
• Request their preferred format (XRechnung or ZUGFeRD)
• Verify their reception capabilities

✅ 8. Update contracts and terms

• Add e-invoicing clauses if needed
• Specify accepted formats
• Update payment terms if necessary

✅ 9. Go live

• Transition fully to e-invoicing
• Monitor for issues in first weeks
• Have a support plan ready

Technical Requirements

File Size and Structure

According to official XRechnung documentation:

XRechnung:

• Maximum file size: 10 MB (for email) or 11 MB (for web entry)⁵
• Embedded files must be Base64-encoded
• Up to 200 embedded files allowed, totaling not more than 11MB⁵

ZUGFeRD:

• PDF size typically 100-500 KB (depending on complexity)
• Embedded XML adds minimal overhead
• Compatible with standard PDF readers

Transmission Methods

E-invoices can be transmitted via:

• Email (with XML/PDF attachment)
• Web portals (upload to customer systems)
• EDI networks (until December 31, 2027, then must support EN 16931 extraction)⁴
• PEPPOL network (European standard for electronic document exchange)¹

Common Questions

Do I need to register with a government platform?

No. Unlike France's PDP requirement, Germany does not require businesses to use a centralized platform or register with a government portal for B2B invoicing.

You can:

• Generate e-invoices directly from your accounting software
• Use third-party e-invoicing service providers
• Implement your own XML generation system

Can I still issue paper invoices to some clients?

Only during transition periods:

• Until December 31, 2026: Yes, all businesses can still issue paper/PDF invoices
• January 1, 2027 - December 31, 2027: Only if your turnover is ≤ €800,000
• From January 1, 2028: No (except for B2C, cross-border, and exempt transactions)

What if my client's system can't receive e-invoices?

During 2025, all businesses must implement e-invoice reception. If a client claims they cannot receive e-invoices after January 1, 2025, they are non-compliant with German law.

However, you may:

• Send both e-invoice (for legal compliance) and PDF copy (for their convenience)
• Offer to help them find compatible software
• Remind them of the January 2025 reception requirement

Are cross-border invoices affected?

Not until 2030. The current mandate applies only to domestic B2B transactions where both supplier and customer are established in Germany².

Cross-border invoicing (Germany ↔ other EU countries) will be addressed under the EU's ViDA (VAT in the Digital Age) initiative, with near real-time reporting expected to launch in 2030².

Benefits of E-Invoicing

While compliance is mandatory, e-invoicing offers significant advantages:

Cost Savings

• Eliminate paper, printing, postage, and archiving costs
• Reduce manual data entry and associated errors
• Lower administrative overhead

Faster Processing

• Automated invoice matching and approval
• Faster payment cycles (improved cash flow)
• Real-time tracking of invoice status

Improved Accuracy

• Reduced manual data entry errors
• Automatic VAT calculation validation
• Fewer invoice disputes

Environmental Impact

• Significant reduction in paper waste
• Lower carbon footprint from transportation
• Digital archiving instead of physical storage

Next Steps

Germany's e-invoicing mandate represents a major shift in how businesses operate. Whether your deadline is 2027 or 2028, preparation should start now.

Recommended immediate actions:

1. Check your 2025/2026 turnover to determine your deadline (2027 or 2028)
2. Verify your accounting software supports XRechnung or ZUGFeRD
3. Test e-invoice generation with your software
4. Communicate with your top customers about their e-invoicing readiness

Official Resources

• German Federal Ministry of Finance: BMF Guidance on E-Invoicing
• XRechnung Official Portal: xeinkauf.de
• ZUGFeRD Information: FeRD - Forum elektronische Rechnung Deutschland
• European Commission: EN 16931 Standard

Tools to Simplify Compliance

At Compliant Invoice, we offer a free invoice generator that supports:

• EN 16931-compliant invoice generation
• German mandatory fields (§14 UStG)
• Multi-language support
• Export to standard formats

Create a compliant invoice now →

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Sources and References

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Last updated: January 8, 2026

This article provides general information based on publicly available sources and should not be considered legal or tax advice. Consult with a qualified German tax advisor for guidance specific to your business situation.

Footnotes

1. European Commission (2025). eInvoicing in Germany. Digital Building Blocks. ↩ ↩² ↩³ ↩⁴ ↩⁵

2. VATupdate (2025). Germany E-Invoicing B2B Mandate, Timeline and Compliance. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷

3. Stripe (2024). Germany E-invoicing €800,000 turnover threshold. ↩

4. Storecove (2024). E-invoicing in Germany: What Businesses Need to Know for 2025-2026. ↩ ↩² ↩³

5. XStandards (2024). Updated specifications of XRechnung 3.0.2. ↩ ↩² ↩³ ↩⁴

6. SEEBURGER (2024). ZUGFeRD 2.3 and Factur-X 1.0.07 for e-invoices. ↩ ↩²

7. Norman Finance (2025). Kleinunternehmer 2025 Guide – rules, VAT & taxes explained. ↩ ↩²

8. Fonoa (2025). Germany E-invoicing Guide - Penalties. ↩ ↩² ↩³ ↩⁴