E-invoicing for 2025: How to Implement the Federal Ministry of Finance Requirements

+++ Update March 2025: Obligatory B2B e-invoicing in Germany as of January 1, 2025

As part of the “Act to Strengthen Growth Opportunities, Investments, Innovation, as well as Tax Simplification and Fairness”1 (Wachstumschancengesetz), the German Federal Ministry of Finance (BMF) published a directive on October 15, 2024 titled “Issuance of Invoices under Section 14 of the German VAT Act (UStG); Introduction of Mandatory Electronic Invoicing for Domestic B2B Transactions from January 1, 2025”2.

According to this directive, all taxable transactions between businesses in Germany must be invoiced electronically starting January 1, 2025. This means that traditional paper and PDF invoices will no longer be valid for B2B transactions. Companies must take the necessary steps now to comply with these new invoicing regulations.

Additionally, the 2024 Annual Tax Act (JStG 2024)3 explicitly exempts small businesses from the obligation to issue e-invoices. However, the requirement to receive and process e-invoices will still apply as of January 1, 2025.

Businesses should act now to ensure a smooth transition to fully digital invoicing and remain compliant with the latest tax regulations.

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As of 1 January 2025, a legislative change will come into force that will make electronic invoicing (e-invoicing) mandatory for domestic B2B transactions. This change is anchored in the Growth Opportunities Act and aims to digitize and increase the efficiency of business transactions. According to a letter from the German Federal Ministry of Finance dated 15 October 2024, all taxable services between domestic companies must be invoiced electronically, replacing paper and PDF invoices.

The new legal situation

In its letter, the Federal Ministry of Finance explains that as of 1 January 2025, an e-invoice will be required for all domestic B2B transactions in accordance with Section 14 of the German Value Added Tax Act (UStG). This is defined as an “invoice in a structured electronic format” that allows for electronic processing. The new regulation applies to all taxable transactions between companies based in Germany. Small value invoices up to 250 euros and public transport tickets are exempt from this obligation and may continue to be issued in a simplified form.

Changes due to the Growth Opportunities Act

The Growth Opportunities Act brings fundamental changes to invoicing. From 2025, all invoices covered by the Act must be in a machine-readable format that is compliant or compatible with the European standard EN 16931. Formats such as XRechnung and ZUGFeRD from version 2.0.1 on will be accepted, because they provide the required tax information in a structured format. The recipient’s consent to e-invoicing is no longer required; however, the recipient is required to provide the technical infrastructure to receive and process e-invoices.

Mandatory e-invoicing – who is affected?

The obligation to issue an e-invoice applies to transactions between domestic companies that have their registered office, management or permanent establishment in Germany. Exceptions apply to tax-exempt transactions, such as certain health and education services. In addition to increasing efficiency, this new regulation is intended to improve transparency and control over tax-relevant transactions in the B2B sector.

Accepted formats and technical requirements

The e-invoice must be available in a structured format that allows for automated processing. The Federal Ministry mentions the formats XRechnung and ZUGFeRD, which comply with the EN 16931 standard. These formats are designed to be machine-readable and can be directly integrated into the systems of the tax authorities or the receiving companies without additional processing. Other formats are permitted as long as they allow complete and error-free extraction of the necessary invoice data and are compatible with the European standard.

The most important changes in detail

The Federal Ministry of Finance highlights the most important changes related to the e-invoicing obligation. The new regulations affect the definition and requirements for invoice formats that will be considered e-invoices in the future. As of 1 January 2025, an e-invoice will only be accepted if it meets the legal requirements and is in a “structured electronic format” that allows for automated processing.

Definition of the e-bill and permitted formats

XRechnung and ZUGFeRD, as of version 2.0.1, are recognized by the German Federal Ministry of Finance as valid e-invoice formats because they comply with the European standard EN 16931. This standard enables the mapping of tax and legal requirements in a structured way and promotes accounting efficiency. These formats ensure that invoices are machine-readable and can be “imported directly and without media disruption into the processing systems.”

In addition to purely structured formats, hybrid formats such as ZUGFeRD are also permitted. A hybrid format combines a structured data set (such as XML) with a human-readable PDF document. As long as the complete extraction of tax-relevant data is guaranteed, other formats can be used if they are interoperable and compatible with EN 16931.

Obligation to issue and transmit

The obligation to issue e-invoices applies to all domestic transactions, unless an exemption applies. For tax-exempt transactions and invoices up to EUR 250, businesses can use simplified invoice formats that do not require structured data.

A key element of the new regulation is that starting in 2025, the recipient will no longer need to give explicit consent to electronic invoicing. Businesses will be able to send their invoices electronically as long as the recipient meets the technical requirements for acceptance. Businesses must ensure that the e-invoice is issued within six months of the service being provided, as stipulated in Section 14 of the UStG. An e-invoice must be machine-readable, focusing on the structured data record. Human readable PDFs can be added as an option.

Sending and receiving e-invoices

E-invoices can be delivered digitally in a variety of ways, including email, electronic interfaces or downloads from a portal. Organizations must ensure that security issues are addressed to guarantee the authenticity and integrity of the invoice. This can be achieved by using electronic signatures or EDI processes to meet regulatory requirements.

Penalties for noncompliance

Businesses that do not comply with the new requirements risk penalties. The tax authorities can impose fines if companies do not issue legally compliant e-invoices. It is therefore essential to create the technical prerequisites for electronic invoicing. SEEBURGER offers solutions that help companies implement the legal requirements efficiently and on time.

The role of e-invoicing in the digitalization of accounting

The introduction of e-invoicing will significantly advance the digitization of accounting in Germany. Standardized, machine-readable processing can reduce manual steps and errors, resulting in faster approvals and cost savings. E-invoices can be integrated directly into digital systems, greatly increasing efficiency.

E-invoicing integration and implementation

Companies should ensure early on that their systems support formats such as XRechnung and ZUGFeRD. SEEBURGER offers specialized solutions that help companies meet e-invoicing obligations and efficiently digitize their processes. These solutions ensure seamless and legally compliant invoice processes, including compliance with the European standard EN 16931.

In addition, companies must ensure that their infrastructure can automatically receive and process e-invoices. Starting in 2025, they will be obligated to provide such systems. Working with specialized providers like SEEBURGER can help to efficiently implement the legal requirements.

How SEEBURGER can help: Act now to avoid penalties

E-invoicing is more than a legal requirement — it is an opportunity to increase efficiency and transparency in accounting. Companies that do not prepare in time risk sanctions from the tax authorities and miss out on the benefits of digitalization. With SEEBURGER’s solutions, companies can ensure that they meet the legal requirements on time while optimizing their processes.

Although the switch to e-invoicing may seem complex at first, the benefits outweigh the drawbacks: faster processing, lower error rates and more efficient use of resources. As a reliable partner, SEEBURGER supports companies in this change and helps them successfully manage the digitization of accounting and prepare for the future.

Source: https://blog.seeburger.com/e-invoicing-for-2025-how-to-implement-the-federal-ministry-of-finance-requirements/