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Mandatory e-invoicing in Germany 2020 – the way of the future

How to use Holvi, Business tips, freelancer · 22/10/20 12:49 · Thomas Schex

Freelancer at laptop happy after e-invoicing

If you’re self-employed and working for Germany’s Federal Government, you’ll have heard of e-invoicing already. How come? Because...

From 27 November 2020, the Federal Government will no longer accept paper or PDF invoices.

Yes, soon ‘XRechnung’ or ‘ZUGFeRd’ invoicing will be mandatory when freelancers and sole traders bill the Federal Government in amounts over €1,000. But hold on… what do these terms even mean? 

And, more importantly, what do they mean for you?

 

E-invoicing in Germany – everything you need to know

  1. What is e-invoicing?
  2. Is e-invoicing mandatory in Germany?
  3. Why is this happening? – EU E-invoicing Directive
  4. How do I e-invoice the Federal Government?
  5. XRechnung or ZUGFeRD? E-invoice formats explained
  6. How do I create and send e-invoices in Germany?
  7. How do I store an e-invoice?
  8. How much will e-invoicing cost?
  9. Glossary of e-invoicing terms

 

What is e-invoicing, anyway?

Electronic invoices are invoices that are issued, transmitted and received in a structured, machine-readable format (using XML file format). This allows for invoice information to be exchanged digitally between companies. The advantage? Huge savings on admin time, and no mistakes. E-invoices can be processed automatically and paid faster.

An ordinary invoice that you send by e-mail as a PDF is not an e-invoice.

 

 

Is e-invoicing mandatory in Germany?

This is today’s [insert-earnings-figures-here]-euro question. And the answer? 

If you have Federal Government clients, then e-invoicing will be mandatory for you from 27 November 2020.

 

Other public bodies – such as regional and municipal administrations, energy companies, schools and hospitals – will soon follow, most likely in 2021. But so far no official deadlines have been announced.

Right now, mandatory e-invoicing is being pushed in the B2G (Business to Government) sector. Nevertheless, more corporations and larger companies are making e-invoicing the standard way of collecting earnings. So if you work for these companies – or want to work for them – you may as well familiarise yourself with e-invoicing now. It’s super easy, and we’re here to break it down for you.

 

Why is this happening? EU E-Invoicing Directive

Mandatory e-invoicing in the public sector comes off the back of Germany’s adoption of the European Directive 2014/55/EU (or ‘E-Invoicing Directive’), dating from 16 April 2014. Other EU countries have already made this a legal requirement, Germany is just catching up!

Get with the Rechnungsprogramm, Germany.

 

The EU expects electronic invoicing to cut costs. Germany alone expects to save 6.5 billion euros per year.

 

How do I e-invoice the German Federal Government?

Manually via the Government's online platform

If you only send a few bills, there’s a manual but time-consuming solution. You can use the Government portal to convert a standard invoice into an e-invoice online. To do this, visit the ‘Zentrale Rechnungseingangsplattform des Bundes’ (ZRE – yes, that’s some Grade-A German bureaucracy humour for you). In English, that’s the ‘Federal Invoice Receipt Platform’. 

Or by using e-invoicing software, like Holvi

But if, like us, you hate government portals and find the word ‘Rechnungseingangsplattform’ mildly terrifying – ‘What is it, a platform for gangs?!*’ – there’s an easier way.

E-invoicing software works just like a normal invoicing tool, except it creates your invoices in machine-readable format. 

*Just kidding, obviously we know what this means. We already translated it above!

 

Tip: Choose Holvi Grower for unlimited e-invoicing

With Holvi Grower, you can create unlimited invoices and e-invoices right in your business account, and send them with a few taps. No extra software, and no messy government portals. All you need to run your B2B, B2C and B2G business, in one place.

 

 

XRechnung or ZUGFeRD? E-invoice formats

Look, we feel you. Studying all of Germany’s available e-invoicing formats is mentally taxing, not to mention confusing. Luckily, you don't have to. Here’s all you need to know:

  • XRechnung is the Federal Government's preferred format, but
  • ZUGFeRD 2.1.1 also meets all the requirements of the EU directive

Holvi supports both formats. So however your recipient chooses to receive your e-invoice, Holvi delivers.

 

Tip: Take a break from freelancing

For a fun foray into fantasy, type ‘zugferd’ into Google Translate and imagine your invoices being delivered by horse-drawn carriage!



 

How do I create and send e-invoices in Germany?

Glad you asked. Exactly the same way you’d create an ordinary invoice with Holvi.

  1. Create your invoice
  2. Enter your customer's e-invoicing address as the recipient
  3. Tick ‘E-invoice’ in sending options
  4. Tap ‘Send’

Complex systems are at work behind the scenes – but fortunately, you don’t need to worry about those. As far as you’re concerned, it’s magic. Quick, effortless, payment-collecting magic.

 

How do I store an electronic invoice?

A long time, truly. 

The same storage requirements apply as for standard invoices, only reversed. So…

  • For 10 years
  • In the invoice’s original form – i.e. in electronic format

This means that a paper printout of the electronic invoice is not valid.

 

How much will e-invoicing cost me?

You might be thinking, ‘This all sounds fine, but how much will it cost me?’ Good news! With Holvi's Grower plan, you can create unlimited electronic invoices – at no extra cost. 

On top of the e-invoicing feature, you also benefit from a business account built-in invoicing and expense management tools.

 

To sum up – e-invoicing in 2020

  • From 27 November 2020, e-invoicing will be mandatory when billing the Federal Government
  • If you’re self-employed and work for federal clients, you will not be able to send a conventional invoice after
  • This should save €6.5 billion in costs per year
  • XRechnung is the Federal Government’s preferred format
  • The easiest way to write e-invoices is to use e-invoicing software
  • You can create, send and store e-invoices easily with Holvi’s business account

 

Tip: A useful German resource

For more information (in German), visit the German Federal Government's e-invoicing page.

 

 

 

Glossary – E-invoicing terms you’ll forget almost instantly

For those who find this kind of thing fascinating and want to learn more technical terms, here’s our e-invoicing glossary.

Leitweg-ID

The invoice recipient’s address. The Federal Government and Länder (Austrian states) have agreed on this standardised format. As a freelancer billing the Government, you’ll be informed of the Leitweg-ID in advance.

OZG-RE

OZG-RE stands for ‘Online Access Act (compliant) Incoming Invoice (platform)’ in English.

You need this platform to send e-invoices manually to authorities of the indirect federal administration and cooperating federal states.

PEPPOL

This is something like the transmission network for e-invoices. If you use an invoicing tool like Holvi's, your e-invoices will be sent in the background over this network.

ZRE

The Federal Government’s Central Invoice Receipt Platform. Here you can submit e-invoices manually to institutions of the direct federal administration (e.g. ministries and higher federal authorities).

ZUGFeRD

Central User Guide of the Forum elektronische Rechnung Deutschland.

XML

No, this doesn’t mean ‘XRechnung My Life’. XML stands for ‘Extensible Markup Language’. It’s a file format used to exchange data between applications.

XRechnung

An e-invoice standard with structured XML data. XRechnung was developed on the basis of the European Standard EN 16931.

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