Electronic invoices

by Barbara Schulz , Editor, TrustBills

September 18, 2019

On July 1, 2019, postage costs for letters were again increased from 70 to 80 cents by Deutsche Post. For many corporates who still send their invoices by post*, this means higher costs and more effort. To save money and work, corporates are switching from paper to electronic invoicing. This is because digitized billing processes offer enormous cost savings between 60 and 80 percent compared to paper-based billing processes. Further advantages of eInvoices are fewer entry errors and shorter processing times. In addition, eInvoicing is increasingly becoming legally binding (e.g. through the European Directive 2014/55/EU).

The following article explains the possibilities for eInvoicing in Europe.

What is an eInvoice?

An electronic invoice, according to EU Directive 204/55/EU, is defined as an invoice if it is issued, transmitted and received in an electronic format to enable automatic and electronic processing. Although unstructured, i.e. purely pictorial, data formats such as a scanned paper invoice or in .jpg, .tif or .pdf format are often referred to as electronic invoices, this definition does not apply to them. According to the definition, the following invoice formats are legally valid:

  • Structured data formats from exclusively structured data such as EDI, XML or XRechnung
  • Hybrid data formats consisting of structured data and an image file such as ZUGFeRD or PDF/A

Possible transmission paths include computer fax, DE mail, email, epost, fax server or web download and EDI procedures for large companies.


Image: Example based on an address excerpt of a structured, machine-readable eInvoice (XML of a ZUGFeRD invoice).

Basic requirements for creating an electronic invoice:

  • the invoice must be easy to read by a human being
  • the authenticity of the origin must be guaranteed
  • the integrity of the invoice must be guaranteed (i.e. it must not be changeable or manipulable)
  • the usual mandatory information, as it also applies to the paper invoice, must be available
  • Electronic invoices must be archived in an audit-proof and electronic manner, regardless of the chosen procedure
  • eInvoices must be archived for ten years (UStG §14b)


eInvoices were introduced as part of the Tax Simplification Act on July 1, 2011 - in which electronic and conventional paper invoices were equated - to make business processes simpler and more efficient. On April 4, 2017, the German government passed the eInvoicing ordinance, which will come into force gradually between November 27, 2018 and November 27, 2020. The XRechnung data exchange standard published in this context deals with the technical design of an eInvoice and provides detailed specifications. From November 27, 2020, invoices to public-sector customers must be created electronically.

The digital signature

Since July 1, 2011, invoices sent digitally no longer have to contain a digital signature. It is true that the requirement in the Value Added Tax Act § 14 Para. 3 UStG that the authenticity of the origin and the integrity of the content of an electronic invoice should be proven by a qualified electronic signature or by electronic data exchange via EDI procedure continues to apply. However, the legislator has adapted § 14 (1) UStG in order to make invoicing by means of electronic invoices easier in practice. The first paragraph of the law now states the following: "Every entrepreneur shall determine the manner in which the authenticity of the origin, the integrity of the content and the legibility of the invoice are guaranteed. This can be achieved by any internal control procedure, which can create a reliable audit trail between invoice and service". This makes it even easier for companies to send electronic invoices.

Example ZUGFerD

The ZUGFerD format (abbreviation for Zentraler User Guide des Forums elektronische Rechnung Deutschland = Central User Guide of the Forum electronic invoice Germany) is a uniform format for electronic invoices. It allows the exchange of structured data between the invoicing party and the invoice recipient. It can be used in public administration, business, companies of any size as well as by consumers and is compatible and freely available both within the EU and internationally. ZUGFeRD is a hybrid invoice format consisting of a coded XML file and a pictorial representation in the PDF/A-3 standard. The content of both files is identical. The XML file contains the structured data, which are readable for the machine and can be processed automatically. The PDF is the visual representation of the e-bill, which can be read by humans and is suitable for long-term storage according to the requirements of the storage obligation due to the PDF-A-3 standard.

Advantages and disadvantages of eInvoice

The multitude of formats entails unnecessary complexity and high costs for companies and public institutions. This hinders the smooth transfer of an eInvoice from one location to another and prevents the full exploitation of the benefits and cost savings of e-billing.

Each EU and EEA country has its own eInvoicing practices. These differences in national rules governing the validity and acceptance of eInvoices in legal, financial and administrative terms make it difficult to use them for cross-border transactions within the EU.

In addition, many potential users have concerns about the security of eInvoicing systems and fear the possibility of misrepresentation in case of fraud. This is because it is quite possible for bills to be changed in content during transport through open networks and at the recipient without the sender of the bill being aware of this. Therefore, electronic invoices are only accepted by European member states if they can guarantee authenticity (authenticity of origin = unambiguous identification of the invoice issuer) and integrity (integrity of content = no change to data). For example, QES and EDI or the verification of business letters, contracts, order documents, delivery notes and accounting documents can be used to verify whether the service was ordered and was performed correctly and whether the payment claim is also correct.

The basic rule is that each taxpayer determines for himself how the authenticity, integrity and legibility of the invoice can be guaranteed. This can be achieved by internal control measures: In this audit, the corporate must ensure that the content of the invoice is correct - in other words, that the correct service, the correct company and the correct payee are indicated on the invoice. If this is guaranteed, it can be assumed that the electronic invoice is genuine and not falsified.

Compared to paper invoices, e-invoices are easier to process, reach customers faster and can be stored centrally at low cost. In addition, customers' money can be retrieved more quickly by shortening the processing time of an invoice or payment. In addition, printing and postage costs are lower and processing is faster and more cost-effective because the information in electronic invoices can be entered directly into a company's payment and accounting systems.


It is possible to transmit invoices electronically without paper form. The requirements for such transmission are no longer subject to strict formal requirements, but it must be ensured that the authenticity of the origin, the integrity of its contents and the legibility of the invoice are guaranteed. Since the implementation of the European VAT System Directive (VAT Directive), electronic invoices are subject to the same requirements of integrity (integrity of content) and authenticity (authenticity of origin) as paper invoices. The only difference: with eInvoice, the invoice recipient must agree that invoices may be sent to him in electronic form. This consent may be given orally, in writing on paper or by electronic means, but may also be given if a business partner accepts the electronic invoices of his respective business partner without objecting. In addition, a subsequent approval is also possible.

Companies which want to move to electronic invoicing must also decide on the appropriate software and, if necessary, change their processes. It should also be noted that archived invoices must be available in a file format that can be called up at any time.

*According to a study by Fraunhofer IAO and Comarch, just under half of the 700 German companies surveyed make use of electronic invoices.

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