E-Invoicing in Germany: Countdown to January 2027

08/17/2026
Reading time 8 Minutes

From 1 January 2027, the issuance of e-invoices in the B2B sector will become mandatory for most businesses in Germany. Companies that have not yet fully implemented the obligation to receive e-invoices, which has already been in effect since January 2025, are already at risk of operational challenges. This article outlines where immediate action is required and which measures should now be taken.

Key deadlines for implementing e-invoicing in Germany

1 January 2025 Mandatory capability to receive e-invoices
1 January 2027 Mandatory issuance of e-invoices as a general rule
31 December 2027 End of the extrended transitional period for businesses with annual revenue of EUR 800,000 or less in 2026 and for EDI procedures

Scope of the e-invoicing obligation

The obligation applies to taxable domestic B2B transactions where both the supplier and the recipient are established in Germany. Exemptions include, among others, VAT-exempt transactions pursuant to Section 4 Nos. 8-29 of the German VAT Act (UStG), low-value invoices up to EUR 250, and transport tickets.

An e-invoice is defined as a structured electronic invoice that either complies with the EN 16931 standard (e.g. XRechnung or ZUGFeRD invoices) or has been agreed between the parties and meets specific legal requirements.

Action required before 1 January 2027

Companies should first assess whether and to what extent the obligation applies to their business. Key factors include their place of establishment, supplier and customer structure, and business model.

The ability to receive e-invoices must be ensured without delay, as this requirement has already been mandatory since 1 January 2025.

At the same time, businesses should prepare for the mandatory issuance of e-invoices from 1 January 2027. It is advisable to:

Coordinate invoice formats and transmission channels with customers and suppliers.
Review and amend existing contracts and general terms and conditions where necessary.
Verify that the software solutions in use can support compliant e-invoicing processes.

Specific implementation requirements and common challenges

Implementing e-invoicing is far more than a technical system change. In practice, businesses face numerous VAT-related and procedural questions, the answers to which depend heavily on their structure and business model.

The following questions can help assess your current level of readiness:

Are your master data records, such as supplier and customer data, bank details, and tax-relevant information, sufficiently complete and consistent to support reliable automated invoice processing?
Have formats, mandatory data fields, and transmission channels already been aligned with customers and suppliers, and is there clarity regarding how e-invoices will be sent and received?
Are your contractual provisions and general terms prepared for the e-invoicing obligation, or do they still refer exclusively to paper or PDF invoices, potentially creating payment delays or rights of retention?
Are your current descriptions of goods and services sufficiently detailed, or will references to delivery notes and attachments no longer meet the new requirements?
In the case of ongoing contractual relationships, such as taxable lease agreements or additional service charge settlements, when does a change in consideration trigger the obligation to issue a new or corrected e-invoice?
How do you ensure that successful technical validation of an e-invoice does not conceal underlying VAT errors that could jeopardise either your own input VAT deduction or that of your customer?

An early review of business processes and transaction flows helps avoid errors, unnecessary administrative effort, and risks relating to input VAT recovery.

Please contact us if you would like support in identifying and addressing the issues most relevant to your organisation.

How Baker Tilly can support you

We support businesses throughout the entire implementation process, combining technical expertise with practical VAT advice:

Validation of incoming and outgoing invoices from both a technical perspective (syntax and business rules) and a VAT perspective (mandatory information and input VAT deduction).
Support in selecting invoice formats and coordinating transmission requirements with customers and suppliers.
Advice on the correct VAT treatment, including tax codes, invoice types, and the mapping of individual use cases within e-invoice formats.
Project management for e-invoicing implementation from a VAT perspective.
Analysis of existing risk exposure and recommendations regarding suitable technical solutions.

Please feel free to contact us at any time for an initial assessment.

Background Information: Scope, Formats and Validation Requirements

Implementation timeline for e-invoicing in Germany

Since 1 January 2025, businesses must be capable of receiving electronic invoices for taxable domestic B2B transactions. The transitional provisions described below apply exclusively to the issuance of invoices.

For transactions carried out up to and including 31 December 2026, alternative invoice formats remain permissible. This includes both paper invoices and electronic invoices that do not comply with the mandatory EN 16931 standard or are not interoperable.

Where such electronic formats are used, the recipient's consent is required, although no specific form is prescribed by law. During this period, paper invoices may continue to be issued without the recipient's consent.

If the supplier's total annual turnover does not exceed EUR 800,000 in 2026, the option to continue using alternative invoice formats under the above conditions is extended until 31 December 2027.

Irrespective of these rules, invoices may continue to be issued and transmitted via EDI until 31 December 2027, provided the recipient agrees.

Scope of the e-invoicing obligation and transmission channels

The obligation to issue e-invoices applies to domestic supplies of goods and services where both the supplier and recipient are established in Germany or in a territory referred to in Section 1(3) UStG.

Such establishment may arise, in particular, from:

The place of business activity,
The place of management,
A VAT-relevant fixed establishment involved in the transaction,
Residence or habitual abode.

A mere VAT registration or a postal address in Germany without employees or technical infrastructure is generally insufficient to establish residency for these purposes.

The scope includes:

Supplies of goods and services where VAT is owed by the supplier;
Reverse-charge transactions where VAT liability is transferred to the recipient;
Travel services;
Transactions subject to flat-rate taxation or margin schemes.

Excluded are transactions covered by the VAT exemptions in Section 4 Nos. 8-29 UStG (for example, certain financial services or VAT-exempt property rentals), low-value invoices up to EUR 250, and transport tickets.

Small businesses benefiting from the German small business regime are not required to issue e-invoices. However, since 1 January 2025, they must also be capable of receiving e-invoices for domestic B2B transactions.

Currently, there are no statutory requirements regarding transmission channels. Businesses must therefore determine themselves how e-invoices are sent and received and establish the necessary technical processes.

As no central government portal, mandatory routing system, or clearing house is currently planned, many companies intend to continue exchanging e-invoices primarily via email. Alternative transmission channels include:

PEPPOL,
EDI solutions,
Download portals,
Other electronic transmission methods.

Definition of an e-invoice, accepted formats and validation requirements

An e-invoice is an invoice that is issued, transmitted, and received in a structured electronic format that enables automated electronic processing.

As a general rule, the structured electronic format must comply with the European standard EN 16931. However, alternative formats may also be agreed between the parties.

All mandatory invoice information pursuant to Sections 14 and 14a UStG, such as:

Date or period of supply,
VAT rate,
Net amount,
VAT amount,
Description of goods or services,

must be included in the XML dataset in a machine-readable format.

For hybrid invoice formats, such as ZUGFeRD files containing both a PDF representation and embedded XML data, the structured data record is legally decisive.

In Germany, the most widely used compliant formats are:

XRechnung
ZUGFeRD

However, other EN 16931-compliant formats, such as PEPPOL BIS Billing 3.0 and other European implementation standards, may also be used, provided they enable electronic processing of invoice data.

Validation requirements for invoice recipients

To ensure compliance and safeguard input VAT deduction rights, invoice recipients are subject to certain validation obligations. A distinction must be made between format errors, business rule errors, and content errors.

Format errors

Violations of EN 16931 syntax requirements (UBL/CII) or incorrect/incomplete extraction of structured invoice data in freely agreed formats.

In such cases, the document is generally not considered a valid e-invoice under German law. Where an e-invoice is mandatory, input VAT deduction is typically not available.

Business rule errors

Violations of the validation and plausibility checks defined in EN 16931, such as a missing VAT category code.

Where the error affects a VAT-relevant mandatory field, input VAT deduction is generally denied. Under certain circumstances, however, retroactive correction may be possible.

Content errors

Incorrect or incomplete VAT-relevant mandatory information, such as an insufficient description of services supplied.

In these cases, input VAT deduction is also generally not available, although subsequent correction with retroactive effect may be possible.

Businesses issuing invoices should therefore ensure that e-invoices are not only technically valid but also fully compliant from a VAT perspective. Otherwise, they risk: