E-Invoicing 2026: What Really Works 15 Months After Mandatory Start
⏱ 9 min read
As of January 1, 2025, the mandatory use of e-invoices has become a reality in German B2B business. Fifteen months later, it’s clear what’s working, where bottlenecks remain, and which assumptions from the advisory presentations during the rollout phase haven’t held up in practice. Small and medium-sized enterprises are bearing the brunt of this learning curve, while policymakers are already discussing adjustments to the transition deadlines. This is an assessment for companies that are still preparing for full implementation or have been navigating challenges since the mandate took effect one year ago.
Key Takeaways
- Receiving obligation since January 1, 2025; sending obligation phased in: Companies must be able to receive e-invoices. The mandatory sending requirement begins on January 1, 2027 for companies with revenues exceeding €800,000, and on January 1, 2028 for all B2B transactions in Germany.
- Formats: XRechnung and ZUGFeRD: Both comply with the European standard EN 16931. XRechnung is the structured XML standard (used by public contracting authorities), while ZUGFeRD combines a PDF with embedded XML data.
- A PDF is no longer an e-invoice: A PDF document sent via email has not been considered an electronic invoice under German VAT law since 2025. It is classified as a “regular invoice” and is treated differently under German tax regulations.
- The biggest practical challenges: Invalidated receiving formats, inaccurate master data, unresolved ERP system integration, lack of archiving solutions, and inconsistent processes between procurement, accounting, and tax advisors.
- Cost range: Small businesses can manage one-time costs between €2,500 and €8,000, while medium-sized companies with 50 to 200 employees typically spend €15,000 to €60,000 for a smooth implementation.
What Really Happened Since January 2025
The introduction of the mandatory receipt requirement was legally straightforward but organizationally complex. As of January 1, 2025, German companies were required to be able to receive, process, and securely archive electronic invoices in XRechnung or ZUGFeRD format. In practice, this caught many SMEs off guard, as the distinction between “being able to receive e-invoices” and “actually using e-invoices” was not always clearly communicated by tax advisors and software providers.
A typical example from the first quarter of 2025: A craft business received a ZUGFeRD invoice via email from a major client. The accountant opened the PDF, reviewed the invoice text, filed the document as usual, and recorded the payment. Technically, everything worked. Legally, the invoice was properly received if the PDF contained the embedded XML data and the archiving included all metadata. However, the company did not utilize the structured data within the XML, and an audit by the tax authorities revealed that the archiving was not compliant with audit standards. Such cases kept the consulting industry very busy throughout 2025.
The real problem is that many companies dismissed the outgoing invoicing mandate in 2024 as something still far off and underestimated the incoming invoicing obligation. As a result, they now find themselves in an interim phase where they must accept e-invoices but are not yet equipped to issue them themselves. This asymmetry presents operational challenges, as each customer relationship operates under two different modes.
XRechnung or ZUGFeRD: The Right Choice
The two dominant formats differ in their structure and typical use cases. XRechnung is a pure XML format, defined as the national implementation of the European standard EN 16931, and is primarily required by public contracting authorities. Since 2020, the federal government, states, and municipalities have accepted only XRechnungen through the central submission portal. In B2B transactions between companies, XRechnung is technically permissible as well, but it is used less frequently because it does not include a human-readable representation.
ZUGFeRD is a hybrid format that combines a traditional A3-sized PDF document with an embedded XML component. The PDF serves as the human-readable layer, while the XML provides machine-readable data. For the recipient, this means the invoice can be visually reviewed as before, yet an ERP system can simultaneously extract and process the structured data directly from the XML. The current version, ZUGFeRD 2.3, complies with EN 16931 and is supported by all common invoicing systems.
The pragmatic recommendation for medium-sized businesses is: If you issue invoices in B2B transactions, use ZUGFeRD 2.3 to ensure compatibility across the board. If you also supply public contracting authorities, you will need to provide XRechnung in addition; however, this is typically handled as a parallel process within your ERP system.
“The most common misconception in 2025 was that installing e-invoicing software alone would fulfill the legal obligation. In reality, the technology accounts for only 30 percent of the task. The remaining 70 percent involves processes, master data quality, and clarifying who within the company is actually responsible.”
– Observation from midsize implementation projects in 2025
The Five Most Common Pitfalls from 15 Months of Implementation
Underestimated master data quality. Many companies begin implementing e-invoicing without first auditing their customer and supplier master data. The result: the software generates technically correct invoices with incorrect VAT IDs, outdated addresses, or wrong payment terms. While the legal obligation is met, the recipient rejects the invoice or manually corrects it. Instead of reducing workload, it increases. Best practice: conduct a master data cleanup at least three months before go-live.
Incomplete ERP integration. Another common issue: the e-invoicing solution operates as a standalone system alongside the ERP because integration seems too complex. This leads to duplicate data management, coordination problems, and significant manual effort. A clean integration takes longer, but it is the only economically viable approach in the long run. Organizations that skip this step end up paying for it through ongoing operational costs.
Non-compliant archiving practices. The GoBD guidelines require that e-invoices be archived for ten years in an unaltered and auditable manner. Simply saving them in a folder is insufficient. Audit-proof archiving means ensuring immutability, completeness, traceability, and accessibility. Companies that store e-invoices on a network drive without hash values, versioning, and logging expose themselves to audit risks.
Unclear process ownership. Who within the organization is responsible for e-invoicing: accounting, IT, tax advisors, or procurement? In practice, the answer is often all four departments working together-but no single department taking full responsibility. Organizations that have not established a clear RACI matrix for the e-invoicing process waste time on coordination meetings and make mistakes at the interfaces between departments.
Unthought-out exceptions. Not every invoice qualifies as an e-invoice. Invoices to end consumers, low-value invoices under €250, tickets, and certain tax-exempt services are exempt from the e-invoicing mandate. If these exceptions are not properly accounted for in the processes, companies either generate unnecessary e-invoices or fail to create e-invoices when required by law.
The Cost Question: What SMEs Really Spent in 2025
The introduction of e-invoicing comes at a price. The range of costs that emerged in 2025 was wider than many had anticipated. Small businesses with fewer than 20 employees, already using modern accounting software such as DATEV, Lexware, or Sage, can manage with a software update, a one-day training session, and a second review with their tax advisor. In such cases, the total cost typically falls between €2,500 and €8,000, primarily covering consulting and training.
SMEs with 50 to 200 employees and an established ERP system face significantly higher expenses. Typical cost items include an ERP connector license, interface adjustments, consultancy from a system integrator, master data cleanup, staff training, and testing phases. Based on experience, the overall costs range from €15,000 to €60,000, depending on the complexity of customer relationships and the ERP system’s history. Companies running SAP Business One or older Abas versions tend to be closer to the upper end of this spectrum.
Organizations with over 200 employees and complex international supply chains operate on a different scale altogether. Here, project costs can easily reach €150,000 to €500,000, as considerations extend beyond e-invoicing to include Peppol connectivity and compliance with international e-invoicing regulations in Italy, France, Poland, and other EU member states.
What Companies Should Do Concretely Now
For companies that only implemented the minimum requirements in 2025 and are now approaching the mandatory e-invoicing deadline, 2026 is the year for fine-tuning. The obligation to send e-invoices starting January 1, 2027, for transactions exceeding €800,000 means that every outgoing invoice must be generated electronically in a structured format. Those still using Excel templates or custom-built PDF generators face a significant challenge by the end of 2026.
The recommended roadmap for the next nine months is as follows: First, conduct a process inventory to identify which invoicing processes are currently manual or semi-automated. Second, define a clear target architecture integrating ERP systems with e-invoicing capabilities. Third, clean up master data before implementing the new system. Fourth, run a pilot project with selected customers and suppliers before full-scale operation begins. Fifth, train employees in accounting, procurement, and tax departments on the new process.
Companies that follow this sequence will meet the e-invoicing requirement without undue stress. However, those who have not yet taken action in the second half of 2026 will enter 2027 operating under emergency conditions, which can prove costly.
International: What’s happening in Italy, France, and Poland-and what Germany can learn from it
Germany is not the first country in Europe to introduce a mandatory e-invoicing system. Italy has been using the Sistema di Interscambio (SdI) since 2019, through which all B2B and B2C invoices must be processed obligatorily. France has repeatedly delayed its implementation but is now rolling it out in phases, mirroring the German model. Poland has operated its own central portal, KSeF, since 2022, which is intended to be harmonized with EU-level standards.
A key lesson can be drawn directly from these countries: a centralized platform managed by the tax authority will become the standard for the future. Italy demonstrates that enforcement works when the tax authority serves as the central hub. Germany currently still relies on decentralized formats (XRechnung, ZUGFeRD) and has not yet adopted a central portal. Whether this decision will remain in place long-term or if Germany will follow suit will be decided politically in 2026 and 2027.
For medium-sized companies with international operations, the most important takeaway is this: today’s e-invoicing solution should already support multiple national formats and include Peppol connectivity. Companies that only implement the minimum German requirements will need to upgrade again in two to three years.
Key Facts at a Glance
Receiving Obligation: As of January 1, 2025, German B2B companies must be able to receive e-invoices and archive them in a tamper-proof manner.
Sending Obligation: Starting January 1, 2027, for companies with the previous year’s turnover exceeding €800,000; from January 1, 2028, for all domestic B2B transactions.
Formats: XRechnung (pure XML) and ZUGFeRD 2.3 (a hybrid of PDF/A-3 and XML). Both comply with EN 16931.
Legal Basis: Growth Opportunities Act, amendments to the German Turnover Tax Act (UStG) and the Turnover Tax Implementation Ordinance (UStDV).
Exemptions: B2C invoices, low-value invoices under €250, tickets, certain tax-exempt services.
Archiving: Ten years in a tamper-proof manner according to GoBD guidelines. Integrity, completeness, and traceability are mandatory.
€15,000 to €60,000 for companies with 50 to 200 employees. Costs may be higher for organizations with complex ERP systems or international operations.
Frequently Asked Questions
Does a PDF sent via email still count as an e-invoice?
No. As of January 1, 2025, a plain PDF without an embedded structured XML component is no longer considered an electronic invoice under the Value Added Tax Act. It will be treated as a “regular invoice.” To qualify as an e-invoice, the document must conform to the XRechnung or ZUGFeRD format (both EN 16931-compliant) and be processed in a tamper-proof manner.
What happens if we are technically unable to receive e-invoices?
You will face legal issues. Since January 1, 2025, there has been a mandatory obligation to receive e-invoices, regardless of whether your company sends them out. If you reject e-invoices or cannot process them, you cannot simply request a PDF invoice from the sender-the legally compliant channel for receipt remains the electronic invoice. During the transitional phase, this may still be tolerated, but by 2027 at the latest, it will no longer be acceptable.
Who is responsible for e-invoicing within a company?
Overall responsibility lies with the management team, while operational duties are typically divided among the accounting department, IT, and tax advisors. A RACI matrix has proven effective in clearly defining who is responsible, accountable, informed, and consulted for each sub-process-receiving, verifying, posting, archiving, sending, and handling corrections. Without such clarity, interface errors are likely to occur.
Do micro-enterprises and freelancers have to comply with the e-invoicing mandate?
Yes, even micro-enterprises are required to receive e-invoices if they operate in B2B transactions. The obligation to send e-invoices will be phased in: starting January 1, 2028, it will apply to companies with annual revenues below €800,000. The good news is that many small businesses can rely on common cloud-based accounting solutions that support e-invoicing out of the box.
What role does Peppol play for German SMEs?
Peppol is an international exchange standard for e-invoices and other business documents, already widely adopted in several EU countries, including Italy, Belgium, Norway, and the Netherlands. In Germany, Peppol is currently optional, but it is becoming increasingly relevant for companies operating internationally, as it simplifies connections with foreign customers and suppliers. When implementing an e-invoicing solution today, businesses should check whether their provider offers Peppol access point support.
Further Reading
→ NIS2 Implementation: What SMEs Still Need to Complete Now
→ EU AI Act: 4 Months Until the Main Deadline and What SMEs Should Review Now
→ Managed Services: Why SMEs Outsource IT Instead of Building It In-House
Image source: Pexels / Kindel Media (px:7688187)
