What an e-invoice is and who has to issue one

In March 2028 a joinery sends an architecture firm an invoice for €4,760 as a PDF by email, as it has done for ten years. The firm replies at once: the file is not an e-invoice, it needs a structured data record. The owner does not understand the objection, because the PDF contains every mandatory detail. The difference lies not in the content but in the form that the law now requires.

Three features define the e-invoice

§ 14(1) UStG knows two ways of transmitting an invoice: as an electronic invoice or as an other invoice, the sonstige Rechnung. The course on the annual VAT return introduces this split briefly. This module deals with the details that decide the correct form in daily business, and with the question of who has to observe them.

Sentence 3 names the features. The invoice must be created, sent and received in a structured electronic format, and it must allow electronic processing. All of this must come together. If one feature is missing, sentence 4 makes it an other invoice, on paper or as a file.

Structured means that the details exist as machine-readable data fields, not as a picture of text. An ordinary PDF shows a person the name, the amount and the tax, but a program would first have to recognise and retype them. According to the Federal Ministry of Finance's FAQ, such a plain PDF therefore falls outside the definition.

This was not always the case. For supplies up to 31 December 2024, the same FAQ explain, any invoice in an electronic format counted as an electronic invoice, including a PDF sent by email. Anyone who knows the term from older documents or training sessions therefore often associates it with something other than today's law.

According to the FAQ, what matters is when the supply was made, not when the invoice is written. A service from December 2024 could still be invoiced later under the old rules. For every invoice, the date of supply is therefore checked first, and only then the format.

Two permitted routes to the right format

Which format is sufficient is governed by § 14(1) sentence 6 UStG. Under the first number, the format must comply with the European standard on electronic invoicing and the list of its syntaxes based on Directive 2014/55/EU. That directive was originally written for public procurement; its set of standards now also carries trade between businesses.

The Federal Ministry of Finance names the standard series: EN 16931, a structured format built on an XML file. It states that XRechnung and ZUGFeRD from version 2.0.1 in particular meet the VAT requirements. It expressly excludes two ZUGFeRD profiles from that statement, namely MINIMUM and BASIC-WL.

The second number permits another format agreed between issuer and recipient. The condition is strict: all details required by the VAT Act must be convertible correctly and completely into a format that complies with the standard or is interoperable with it. According to the FAQ, EDI procedures such as EDIFACT can thus remain in use.

Validating the file against the standard and its business rules is, according to the FAQ, not a direct condition for recognition for tax purposes, for instance for input tax deduction. The ministry nevertheless considers it useful and recommends checking when the invoice is created and sent. For reasons of equal treatment it does not name any particular validation software.

In § 14(6) the Act also empowers the ministry to lay down more detailed rules on the structured format by ordinance. Anyone choosing invoicing software should therefore ask not only about today's format but also whether the provider will follow future adjustments.

When the law requires an e-invoice

The obligation follows from § 14(2) UStG and builds on the general duty to invoice. An invoice must be issued within six months of the supply, among other cases when the supply goes to another trader for that trader's business. Supplies that are exempt under § 4 nos. 8 to 29 UStG are excluded from this duty.

For exactly this case, a supply to a trader for their business, number 1 adds the half-sentence that makes the e-invoice mandatory. It must be issued as an electronic invoice if the supplier and the recipient are both established in Germany or in one of the areas listed in § 1(3) UStG.

Sentence 3 of the same paragraph defines who is established. A registered office, the place of management or a fixed establishment involved in the supply in Germany is enough; without a registered office, residence or habitual abode counts. A translator without business premises living and working in Leipzig is covered just like a GmbH seated in Cologne.

Anyone pursuing a trade or profession on an independent basis counts as a trader. The FAQ expressly mention freelancers, landlords of flats, doctors and small businesses. Anyone who makes a taxable supply to a doctor for the practice therefore invoices electronically once the transition years are over, even though the doctor's own turnover is exempt.

Foreign traders who are merely registered in Germany and have no fixed establishment here are not established in Germany. According to the FAQ, they may point this out on the invoice to explain why no e-invoice is sent. The recipient may rely on this statement if it applies the care of a prudent businessperson.

Where the recipient owes the tax on a supply by a trader not established in Germany, § 14(7) UStG generally applies the invoicing rules of the state in which the supplier is established, unless self-billing has been agreed. The course on the reverse charge deals with these cases.

Where an other invoice is still enough

The e-invoicing obligation reaches only as far as the duty to invoice. The FAQ draw two conclusions from this. For supplies to consumers there is generally no obligation, and neither for many exempt supplies under § 4 nos. 8 to 29, such as financial services or exempt letting of land. There, an invoice is mostly voluntary for VAT purposes.

Even where an invoice is mandatory, an other invoice may be used in a number of cases. The implementing ordinance governs three of them in almost identical words, each in the last sentence of the provision: small-amount invoices in § 33, tickets in § 34 and small businesses in § 34a UStDV.

The course on the annual VAT return covers the small-amount invoice from the recipient's side. For this course only its form rule counts: up to a total of 250 euros the issuer may always use an other invoice, even if customer and supplier are both domestic traders. The till receipt therefore remains permissible there.

Under § 34a UStDV, small businesses issue invoices with simplified details and a note on their exemption, and they too may always choose the other form. The FAQ add that when a small business switches to standard taxation, it becomes obliged to issue e-invoices from that point on, provided the other conditions are met.

According to the FAQ, associations have to be looked at in two parts. Insofar as an association acts as a business, the same rules apply to it as to any company. Supplies to its non-business sphere do require an invoice, because it is a legal person, but that invoice may be an other invoice.

The public sector has its own framework. Invoices to authorities that do not act as traders are, according to the FAQ, outside the VAT obligation but within the federal e-invoicing ordinance. Both sets of rules apply side by side, each with its own threshold: the VAT Act above 250 euros, the ordinance from 1,000 euros.

Only when dealing with authorities does the issuer need a Leitweg-ID, the routing identifier that directs the invoice to the right office. Between businesses it is not required. If a format makes the corresponding data field mandatory, the FAQ say that a placeholder such as a hyphen is enough for VAT purposes.

Consent: who needs it and who does not

§ 14(1) sentence 5 UStG determines when the recipient must be asked. Anyone who wants to transmit an electronic invoice, or an other invoice as a file, needs the recipient's consent. This does not apply insofar as an obligation under § 14(2) sentence 2 no. 1 exists, that is, in dealings between domestic traders.

This creates an asymmetry. A supplier may send a domestic business customer an e-invoice without asking first, because the law requires it. A private individual, on the other hand, may not be sent either an XRechnung or a PDF without their consent. A paper invoice to consumers remains possible without further ado.

§ 14(1) UStG does not say how consent has to be given. Anyone wishing to avoid disputes records it nonetheless, for example in the terms of the order, in an order form or in the customer account. That way it can still be shown years later that a private customer agreed to electronic delivery.

Consent becomes important again in the transition years. Anyone who then sends a PDF instead of an e-invoice needs the recipient's agreement under § 27(38) UStG, whereas paper is allowed without consent. The second module shows these transitional rules together.