E-Invoicing for Small Businesses in Germany: Creating, Receiving, Deadlines & Formats

Germany’s 2025 e-invoicing mandate requires all businesses including very small ones to receive structured EN 16931 compliant invoices and eventually issue them. PDFs will no longer qualify, and small businesses must switch to formats like XRechnung or ZUGFeRD by 2028.

Key Takeaways

• From 2025, all businesses must be able to receive structured e invoices; issuing becomes mandatory for everyone by 2028.
• Valid formats are only XRechnung (XML) and ZUGFeRD 2.1+; PDFs and Word files no longer count as invoices.
• Transitional periods allow voluntary issuing until 2026 and extended relief for companies under €800,000 turnover until 2027.
• E-invoicing automates booking, accelerates payments, reduces errors, and ensures VAT secure, audit proof processes.
• Software must clearly support EN 16931 compliance, correct German VAT handling, automated data extraction, and GoBD compliant 10 year archiving.

What is an e-Invoicing in Germany?

An e-invoice is an invoice issued, transmitted, and received in a structured electronic format that can be processed automatically by software. It must comply with the EN 16931 data model and be machine-readable, such as XRechnung (XML) or ZUGFeRD (PDF/A-3 with embedded XML). Static PDFs or images do not qualify.

E-invoicing in Germany covers the full legally regulated lifecycle: creation, transmission, receipt, validation, and electronic archiving of structured invoices for B2B and B2G transactions. Businesses use compliant software to generate XRechnung or ZUGFeRD invoices, send them electronically (e.g. email, Peppol, EDI, or portals), enable automatic processing by recipients, and archive the original files for 10 years in line with GoBD rules.

E-invoice in Germany: Obligation for small businesses

In Germany, the e-invoicing obligation applies to all businesses, including small businesses under §19 UStG, as soon as they issue or receive domestic B2B invoices between taxable persons. The key criterion is the nature of the transaction (B2B, domestic, taxable), not whether the business applies the small-business VAT scheme.

Important terminology:

• Small business (§19 UStG): VAT-exempt “Kleinunternehmer” (turnover up to about €22,000–€25,000, depending on the year).
• Small company (transition category): Businesses with annual turnover up to €800,000, used only for the phased introduction of the issuing obligation.

E-invoicing Deadlines for Small Businesses

The following timeline summarizes the key e-invoicing obligations and dates for small businesses in Germany.

E-Invoicing Formats for Small Businesses

Small businesses must use the same legally recognized formats as larger companies:

1. XRechnung (XML format)

• Official German e-invoice format
• Structured and machine-readable, based on EN 16931
• Pure XML, not visually formatted

2. ZUGFeRD (PDF plus XML hybrid)

• Often most practical for small businesses
• Combines a readable PDF with embedded XML
• Must be version 2.1 or higher

Both formats:

• Fully EN-16931 compliant
• Enable automated processing
• Required for B2B transactions from 2025 or 2028

Receiving e-Invoices for Small Businesses

Receiving structured e-invoices can be simple. The following methods are legally compliant:

1. Email Inbox: Suppliers may send XRechnung XML files or ZUGFeRD PDFs by email. Receiving them in a business inbox already fulfills the legal requirement.
2. Customer or Supplier Portals: Large customers often provide portals where invoices can be downloaded or uploaded via a browser. 
3. Accounting or Invoicing Software: Cloud tools can automatically import, validate, book, and archive XRechnung and ZUGFeRD invoices.
4. Receiving via Peppol: After registering for a Peppol ID through a provider, e-invoices can be received securely and processed automatically. 
5. Receiving Without Special Software: 
   
   
   • XRechnung files can be viewed with free XML or XRechnung viewers.
   • ZUGFeRD invoices open in any PDF reader and include embedded XML.

Issuing e-Invoices for Micro Enterprises

Most small businesses issue compliant e-invoices simply by using software that supports the required German formats XRechnung or ZUGFeRD 2.1+.

Step 1: Choose Suitable Software

Select software that explicitly supports EN 16931 and German formats. Examples include SevDesk, Lexoffice, FastBill, Billbee, Zoho Invoice, Rechnungportal, Accountable, or middleware like ClearTax.

Step 2: Enter Invoice Data

Enter standard invoice details such as customer data, descriptions, quantities, prices, dates, and VAT. Kleinunternehmer must activate the correct VAT exemption setting or legal note.

Step 3: Generate the e-Invoice

The software converts the data into:

• XRechnung (XML) or
• ZUGFeRD (PDF with embedded XML). 

Compliance checks are usually automatic.

Step 4: Send the e-Invoice

Accepted sending methods include:

• Email (XML or ZUGFeRD attachment)
• Peppol
• Customer portals

Step 5: Archive for 10 Years (GoBD)

Issued and received e-invoices must be stored unchanged, readable, and machine-processable for 10 years. Always retain the original XML or ZUGFeRD files in a revision-safe system.

Why e-Invoicing Matters for Small Businesses?

E-invoicing does far more than replace paper. It boosts cash flow, reduces admin burden, strengthens financial credibility, and keeps small firms compliant as digital mandates expand.

• Faster Cash Flow: Digital invoices shorten payment cycles by 30–50% and eliminate delays, errors, and manual approvals. Small businesses gain more predictable inflows, better liquidity, and earlier visibility into cash gaps.
• Less Admin, More Owner Time: Automation cuts data entry, corrections, and invoice chasing. Processing costs can drop by up to 70–80%, freeing founders and small teams to focus on sales and delivery instead of paperwork.
• Better Standing With Banks and Big Customers: Structured invoice data improves financial reporting and creditworthiness. Large buyers prefer or require e-invoices, reducing rejections and speeding up onboarding.
• Compliance and VAT Security: E-invoicing tools ensure correct tax fields and formats, reducing audit risks and protecting VAT recovery. Built-in, tamper-proof archiving meets 10-year retention rules.
• Scalable and Resilient Operations: Small teams can handle higher volumes without extra staff. Standardized digital data makes switching accountants, integrating systems, or scaling operations much easier.

How to Choose E-Invoicing Software as a German Small Business

E-invoicing tools should be selected like any other core system: start from legal requirements, then choose what fits your size, workflow, and budget. 

Non-negotiable Compliance Requirements

Only consider tools that clearly state the following on their website or in their documentation:

• EN 16931 compliance (explicitly named, not implied).
• Support for XRechnung and/or ZUGFeRD 2.x (not just “PDF e-invoice”).
• GoBD-compliant archiving for 10 years or integration with a compliant archive.
• Ability to send and receive e-invoices.

Essential Feature Checklist

When testing an e-invoicing tool, check for these capabilities directly in the interface and ensure each one works as expected:

• Formats and sending: The tool must let you choose the correct e-invoice format (ZUGFeRD or XRechnung) for every invoice and send it easily by email, with optional Peppol or portal upload if required.
• Receiving and processing: You should be able to upload XML or ZUGFeRD invoices you receive and have the system automatically extract the data. It should also clearly indicate which documents are compliant e-invoices versus simple PDFs.
• Archiving and audits: The software should explicitly state that it stores invoices in a GoBD-compliant manner for 10 years, and it must allow exporting all invoices and their XML files for any selected date range (such as a ZIP or CSV + XML bundle for audits).
• German tax specifics: It must handle German VAT rules correctly, including standard rates and reverse charge, and provide DATEV-ready export for your tax advisor.
• Ease of use: The tool must be simple enough that a non-accountant can create and send a compliant e-invoice in under three minutes; anything more complicated will slow down a small team.

Conclusion

The e-invoice obligation marks a major step toward digital accounting, and small businesses are clearly included. While transitional periods exist, by 2028 there is no way around XRechnung or ZUGFeRD. Early adoption offers advantages such as increased efficiency, fewer errors, faster payments and a more professional image. 

With modern software, the transition is easy, affordable and technically straightforward. Now is the ideal time to prepare before the legal countdown ends.