Digital Economy 08.10.2026

7 min read

Three decisions must precede the first problematic invoicing run: which laws apply to each company, whether the data will stand up to scrutiny before the deadline and whether in-house IT can support six countries. Companies that resolve these issues only once operations are under way pay for the delay in unpaid invoices.

Related:E-invoicing 2025: Deadlines, formats, input VAT  /  Document AI: Where bureaucracy costs really fall

What is an e-invoice? An invoice in a structured electronic format that can be processed electronically. Section 14 of Germany’s Value Added Tax Act (UStG) has defined the term this way since the Growth Opportunities Act. Under this definition, a PDF email attachment counts as an “other invoice”.

Receipt, issuance and transition have separate deadlines

Since 1 January 2025, domestic businesses have been required to be able to receive electronic invoices. The Federal Ministry of Finance (BMF) explains in its FAQs that a basic email inbox is sufficient. Starting with receipt therefore requires little technology and can be completed before any other steps. This allows businesses to test and stabilise incoming invoice processing early, long before issuance requirements take effect.

The definition of an electronic invoice requires structured data. Section 14 of the Value Added Tax Act describes an e-invoice as a structured electronic invoice; a PDF email attachment counts as an “other invoice”. This distinction determines which transitional deadlines apply to a document and when the structured version becomes mandatory.

For transactions before 1 January 2027, other invoices remain permissible until 31 December 2026. The Value Added Tax Act sets this out in a separate transitional provision. This period ends on a fixed date. Companies that review issuance and formats late consequently have less time for corrections before the first critical invoicing run.

These three stages therefore require different preparations. Receipt can be secured at the outset because an email inbox meets the minimum standard. Issuance requires correctly formatted data and a reliable process through to dispatch. The transitional stages between them determine when each document remains permissible in which form.

Each legal entity has its own deadline

The deadlines apply separately to each legal entity. A group with several companies must therefore check each entity against the rules that actually apply. Jurisdiction also changes the starting point. Domestic and cross-border transactions face different requirements, so classification at entity level determines each company’s specific timetable. Previous-year turnover and transaction type, together with the entity itself, determine the relevant start date.

A transitional rule applies to issuers with total turnover of no more than 800,000 euros in the previous year and ends on 31 December 2027. The Value Added Tax Act establishes this threshold in its transitional provisions. Previous-year turnover thus determines how long the transition period lasts. Issuers below this threshold gain additional time to adapt.

Issuers above this threshold face the first issuance requirement for transactions from 1 January 2027. For the remaining affected issuers, the requirement begins a year later, on 1 January 2028, unless an exemption applies. Within a group, the requirements may therefore start at different times. Classification at entity level turns this phased system into a specific timetable for each company.

This establishes a clear planning sequence. First, the tax department maps each entity to its jurisdiction and turnover position. Each entity then knows when to expect structured invoices and when it must issue them. Only on this basis can invoicing be switched over on schedule.

Tests against actual requirements reveal errors early

Errors in tax data generally become apparent only in the finished document. Carlos Mercuriali, General Manager Europe at tax technology provider Vertex, therefore recommends testing before the deadline in a written Q&A dated 24 September 2026. He explains: “They should then correct the data before the deadline, not afterwards. Invoices must be tested early against the actual requirements. Otherwise, problems may only be discovered when incoming payments are already delayed.”

Formats provide the first reference point for designing a test. XRechnung and ZUGFeRD can meet VAT requirements, with ZUGFeRD qualifying from version 2.0.1. The Federal Ministry of Finance confirms both in its FAQs and maintains an open choice of formats; XRechnung is permissible for business customers. A test checks both formats against the company’s master data and reveals discrepancies before the deadline.

Master data determines the outcome of every test. Customer records, tax rules and line-item data feed into every invoice, carrying their weaknesses into the finished document. Testing with realistic datasets reveals these weaknesses at a controlled point in time. Without this test, the company discovers the same errors only when incoming payments are already delayed.

“Developing an in-house interface for one market is feasible. Maintaining six such interfaces while rules keep changing is considerably harder.”

Carlos Mercuriali, General Manager Europe at Vertex, in a written interview dated 24 September 2026

The effort must match the actual requirements

Mercuriali sees smaller firms as well placed: “Mittelstand companies have a real advantage here, which I think they do not always recognise. Their existing IT environments are less complex than those of large multinationals. They have fewer systems to reconcile and shorter decision-making processes.”

At the same time, he identifies a constraint: “What they generally lack is capacity. They rarely have a dedicated team tracking requirements in a dozen markets. That is why the effort must match the actual requirements.”

This assessment leads to the third decision: whether to build in-house or buy. Mercuriali considers an in-house interface for a single market feasible. For six such interfaces under continually changing rules, he sees considerably greater maintenance and integration demands. This assessment comes from a provider selling software for tax data processes. The balance between internal development and an external solution therefore shifts with the number of markets involved.

Capacity thus helps determine the procurement approach. A company operating in only a few affected markets can consider in-house development. When several jurisdictions govern invoicing, the effort of monitoring and maintaining the rules grows faster than internal capacity. Comparing external solutions therefore belongs in early planning.

Tax, finance and IT make decisions together from the outset

Mercuriali observes a common pattern in successful projects: “Companies that handle these requirements well bring tax, finance and IT together from the outset rather than waiting until implementation.” The division of responsibilities thus follows from the three decisions themselves.

The tax department maps each legal entity to the applicable rules, establishing the deadline framework. Finance schedules tests and spot checks so that results are available before the deadline. IT assesses master data and interfaces and keeps invoicing technically reliable.

This collaboration feeds directly back into planning. Once the deadline framework is set, a realistic test date can be scheduled before the next invoicing run. When IT knows the scope of the rules, the build-or-buy decision can draw on verifiable estimates of the effort required. The three decisions reinforce one another in this way.

Collaboration should begin by classifying the legal entities. This produces the dates against which testing and procurement decisions must be assessed. If a project assigns these tasks to separate departments, coordination multiplies and invoicing risks delays. Joint planning, by contrast, shortens the path to the first reliable test run.

AI eases teams’ workload before human approval

For companies with limited capacity, Mercuriali’s answer primarily concerns repetitive work in tax departments and finance teams. Artificial intelligence (AI), he says, can flag regulatory changes and understand what an invoice actually contains. Examples at Vertex include plain-language assistance and suggested tax categories for large retail product ranges. Users can ask questions and resume work later. These tasks form part of the teams’ day-to-day work, whose limited capacity Mercuriali already highlights when discussing support for several markets.

For deployment in daily operations, he describes a fixed division of responsibilities: “In each of these cases, AI makes suggestions and a person reviews and approves them before anything goes into production.” Relief from routine tasks leaves responsibility for review and approval with people. Mercuriali also stresses that AI is only as reliable as its underlying data. The master data and early tests described in this article therefore remain relevant to AI-assisted workflows too.

ViDA starts after Germany’s deadlines

The European legal framework ViDA, short for VAT in the Digital Age, follows the European Commission’s own timetable. Under this timetable, digital reporting requirements for cross-border transactions between businesses start on 1 July 2030. ViDA thus provides the later EU framework for VAT digitalisation.

According to the Federal Ministry of Finance, as of 24 September 2026 a German transaction-based reporting system does not constitute law in force with a fixed start date. Germany’s deadlines can be planned for independently of ViDA. Companies keep the two initiatives separate, avoiding repeated adjustments to interim arrangements.

The three decisions are now clear. Mapping each legal entity to the applicable rules establishes the deadline framework, testing against actual requirements safeguards data and invoices, and weighing in-house development against buying aligns the effort with the markets actually affected. Companies that make these three decisions before the first problematic invoicing run enter the new requirements with orderly processes.

Frequently asked questions

Which e-invoice formats meet tax requirements?

XRechnung and ZUGFeRD can meet VAT requirements, with ZUGFeRD qualifying from version 2.0.1. The Federal Ministry of Finance describes XRechnung as permissible for business customers and maintains an open choice of formats.

When does issuing electronic invoices become mandatory?

Issuers with total previous-year turnover above 800,000 euros must issue electronic invoices for transactions from the start of 2027. The remaining affected issuers follow on 1 January 2028, unless an exemption applies.

What reporting requirements apply under the EU’s ViDA framework?

ViDA provides a separate European Union legal framework. Digital reporting requirements for cross-border transactions between businesses begin on 1 July 2030. As of the review date, 24 September 2026, a German transaction-based reporting system had no fixed start date.

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Image source: AI-generated (September 2026)

Translated from the German original using artificial intelligence. The German version is authoritative.