GERMAN E-INVOICING – Driving the e-Invoicing Revolution

Electronic invoicing or e-invoicing in 2020 is utilised by companies around the world and is being increasingly implemented across all industry-sectors and for all kinds of financial transactions. In particular, in Germany, the home of the global headquarters of ivi, approximately 32,000 million e-invoices are exchanged every year. Given the benefits e-invoicing brings to both companies and the public-sector, the German Government has legislated to promote their use; while the European Union (EU) has made them mandatory in certain transactions as the adoption of e-invoicing technologies by the private-sector increases dramatically across Europe.

An important point to note, that in Germany, as well other territories across the EU and around the world; e-invoices are considered a financial instrument with the same legal value as traditional invoices. In addition, Germany, also like many other territories, has its own e-invoicing data formats including XRechnung (XML) and ZUGFeRD.

Although many of our clients were already taking advantage of ivi’s e-Invoicing and AP Automation Solution technologies; it was only in 2011 that, with the implementation of the Taxation Simplification Act; the German Government equated the value of e-invoices to that of invoices traditionally issued in paper form. This regulation, which was the result of the transposition of Directive 2010/45/EU, determined the legal value of e-invoices.

In 2017, the new e-Government Act nationally transposed Directive 2014/55/EU, which established e-invoicing in the public-sector. This law required the public-sector authorities to accept and process e-invoices from their providers in order to facilitate Business to Government (B2G) trade across Europe, reduce corporate fraud, and streamline payments, among the many other benefits.

This directive is now the responsibility of federal authorities; is already in force for regional authorities; and by the 27th of November 2020, will apply to all public-sector procurement transactions over a value of €1000. As of that date, all invoices received by administrations in a non-electronic format will be rejected. They must also follow the XRechnung (XML) data standard in its current version or any other standard which fulfils the European standard’s requirements. In addition, e-Invoices must be sent to and received by the German administrations through the PEPPOL network where ivi is both a German and Singapore Government certified and approved PEPPOL Access Point Operator and e-Invoicing Solutions Provider.

Although these e-invoicing obligations initially affect only the Government and its B2G providers, the adoption and extension of these e-invoicing obligations is expected across the entire Business to Business (B2B) private-sector in pursuit of e-invoicing standardisation, as it promotes both national and international trade.

Whilst a common European framework regulates the use of e-invoices across the EU, there are different regulations in each country, as per their national legislation. For example, in Germany, our e-Archiving Solutions archive our clients e-invoices for a period of 10 years, however this time period varies for our clients in other EU Member States including Poland (5 years) and France or the UK (both 6 years). This is where we ensure that our clients fulfil all local regulatory requirements in the markets where they conduct business.

These measures aim to create a homogeneous system within Germany and with the rest of the EU Member States where e-invoices are expected to be increasingly implemented for all national transactions as well as with other European administrations and companies. The Electronic Invoice Association (VeR) projects that 70% of all invoices in Germany will be exchanged electronically by the end of 2020, making it extensive to all transactions by 2025.