E-invoices from 2025: Are you prepared as a business owner?
Digitization is advancing in all areas, including invoicing. From 2025, entrepreneurs and self-employed persons in Germany must be ready to receive electronic invoices, known as e-invoices.
This obligation to accept e-invoices was adopted as part of the law implementing Directive (EU) 2019/2235, which amends the VAT Directive regarding the harmonization and simplification of certain provisions of the VAT system.
What exactly does this mean, and what are the consequences? What technical requirements must be met, and how can entrepreneurs best prepare for the changeover? For a broader overview of upcoming changes, you can also consult our series on which portals, changes, and subsidies will be introduced in 2025.
In this blog post, we look at the most important aspects and give you valuable tips. Our goal is to help you, as an entrepreneur, receive and process e-invoices smoothly from 2025. E-invoicing is undoubtedly the future of invoicing, offering numerous advantages such as time savings, cost reductions, and automated processes. Those who address the issue now and take the necessary steps will benefit from digitalization in the long term.
What are E-invoices?
E-invoices are invoices that are issued, transmitted, and received in a structured electronic format. They differ from the previously widely used PDF invoices in that they are machine-readable and can be processed automatically. This saves time and reduces errors in accounting, as the data can be transferred directly to accounting systems without manual input.
Furthermore, e-invoices are easier to archive and quicker to find, which facilitates administration and control. E-invoices must meet certain requirements to be considered valid.
This includes a standardized format like XRechnung or ZUGFeRD, as well as compliance with VAT regulations. Both standards ensure smooth communication between invoice issuers and recipients and provide a uniform structure for invoice data. Specifically:
- XRechnung: A standard developed by the public administration in Germany, based on the European standard EN 16931. It enables the simple creation, transmission, and processing of e-invoices.
- ZUGFeRD (Zentraler User Guide des Forums elektronische Rechnung Deutschland): A cross-industry standard developed jointly by associations and companies, also based on EN 16931.
In addition, e-invoices must contain mandatory information under VAT law. This includes the full name and address of the supplier, their tax number or VAT identification number, the date of issue, a consecutive invoice number, and the time of delivery or service. Only when all these requirements are met can an electronic invoice be recognized as an e-invoice, allowing for associated benefits such as input tax deduction and simplified archiving.
Obligation to be Ready to Receive E-invoices from 2025
Many entrepreneurs and self-employed individuals mistakenly believe that they are not yet affected by the obligation to use e-invoices from 2025, as they do not have to issue e-invoices themselves. However, this assumption is a fallacy.
From January 1, 2025, all entrepreneurs and self-employed persons will be obliged to be ready to receive e-invoices. This means they must be technically capable of receiving and processing e-invoices, regardless of whether they send e-invoices themselves. For more detailed information on the specific requirements, refer to the BMF specifications on the e-invoicing obligation from 2025.
Being ready to receive e-invoices can be a challenge for many companies, especially if they have no prior experience with electronic invoice formats. The aim is to create the necessary technical conditions for receiving, processing, and archiving e-invoices.
This includes, for example, acquiring suitable software that enables the receipt and processing of e-invoices in standardized formats like XRechnung or ZUGFeRD. It may also be necessary to connect to an electronic archiving system to store received e-invoices in an audit-proof manner for the legally prescribed period.
Anyone who fails to comply with the obligation to be ready to receive e-invoices from 2025 risks severe fines and disadvantages in business transactions.
Business partners who have already switched to e-invoices also expect their customers and suppliers to be able to receive and process electronic invoices. A lack of readiness to receive can therefore lead to delays in invoice processing and, in the worst case, even to the termination of the business relationship.
There are no transitional periods for the readiness to receive e-invoices. Entrepreneurs and the self-employed should therefore ensure they meet the technical requirements in good time. Early preparation is crucial for a smooth transition to electronic invoice processing.
In addition to purchasing suitable software, commissioning an external service provider can also be an option to ensure that e-invoices are ready to be received. Specialized providers handle the task of receiving and processing incoming e-invoices, forwarding them to the company’s accounting system. Entrepreneurs and the self-employed should not underestimate this obligation.
Addressing the issue at an early stage and creating the necessary conditions in good time are essential to remain competitive and benefit from the advantages of electronic invoicing in the future.
No More Entitlement to PDF Invoices
With the introduction of the obligation to be ready to receive e-invoices, the entitlement to receive invoices in PDF format also disappears. Entrepreneurs and self-employed individuals who previously relied on PDF invoices for their bookkeeping must now expect that these will no longer necessarily be available.
Instead, billers are likely to increasingly switch to sending their invoices in a structured electronic format such as XRechnung or ZUGFeRD.
This can especially challenge small companies and the self-employed, as they may lack the necessary technical and human resources to manage the switch to e-invoices without problems. The changeover requires not only the purchase or rental of suitable software for processing e-invoices but often also an adaptation of internal processes.
Employees must be trained to handle the new system and procedures. It may also be necessary to employ additional personnel or external service providers to meet the increased demands of invoice processing.
Furthermore, smaller companies often work closely with their business partners and rely on their support. If these partners have not yet switched to e-invoices or experience technical problems with the transmission and processing of e-invoices, this can cause delays and disruptions in cooperation.
It is therefore important that companies engage early with their partners and jointly develop solutions to ensure a frictionless transition to electronic invoicing. Despite these challenges, smaller companies and self-employed individuals should view the conversion to e-invoices not as an insurmountable hurdle but as an opportunity.
Electronic invoice processing also offers many advantages, such as faster and more efficient processing of invoices, a reduction of error sources, and a simplification of archiving. There are now a variety of software solutions and service providers tailored to the needs of small and medium-sized enterprises, enabling a cost-effective and uncomplicated introduction of e-invoices.
No More VAT from PDF Invoices from 2026
Another important aspect concerns the tax deduction from invoices. From January 1, 2026, companies and self-employed persons will only be able to deduct sales tax from e-invoices that meet the legal requirements. PDF invoices that do not meet the criteria of an e-invoice will then no longer entitle to input tax deduction.
This means that companies unable to receive and process e-invoices by then will no longer have the option of claiming the VAT shown on invoices as input tax.
This problem can theoretically arise as early as 2025. The obligation to be ready to receive e-invoices simultaneously eliminates the entitlement to receive an invoice in another format, such as a PDF file. If a company from 2025 cannot receive e-invoices, and the invoicing party only sends e-bills in XRechnung or ZUGFeRD format, the invoice recipient factually no longer has the possibility to claim the input tax from this invoice.
This situation can lead to considerable financial disadvantages, as input tax is a significant factor for businesses. Especially for small and medium-sized companies, which often have a high proportion of input tax, the loss of the input tax deduction can have threatening consequences. It is therefore essential that entrepreneurs and self-employed persons create the necessary preconditions to be able to receive and process e-invoices. Adhering to these new regulations is crucial for overall GDPR compliance for the self-employed and all businesses.
To prepare for the new regulations, entrepreneurs should deal early with the technical and organizational requirements for the receipt and processing of e-invoices. This includes the selection of suitable software or a service provider that enables the processing of e-invoices in XRechnung or ZUGFeRD format. Also, the training of employees in dealing with the new processes and technologies is an important step to ensure a smooth transition to electronic invoice processing.
Conclusion
The switch to e-invoices is an important step towards digitization and offers many advantages, such as time savings and error reduction. This broader trend of digitization also impacts areas like digitalization and contract law, making electronic signatures increasingly relevant.
While there are no transitional periods for the receipt of e-invoices, and companies must be equipped for this from 2025, the law provides for a gradual introduction for the issuing of invoices. Paper and PDF invoices can still be issued until the end of 2026. From 2027, this will only apply to companies with a maximum turnover of EUR 800,000 in the previous year, and from 2028, all companies will have to issue e-invoices, unless specific exceptions apply. These transitional periods are intended to make the changeover easier for smaller companies in particular, giving them more time to adapt their processes.
It is important to emphasize that the obligation to use e-invoices will apply to all companies from 2025, regardless of their size or sector. Whether you are a small business, craftsman, landlord, or freelancer, every entrepreneur should explicitly prepare for the changeover. From 2025, there will no longer be any entitlement to any other form of invoice than the e-invoice. If you do not act in time, you run the risk of falling behind and losing competitive edge. Early engagement with the topic of e-invoicing is therefore essential for every entrepreneur who wants to remain successful in the market in the future.