E-invoicing from January 2027: What businesses in Germany need to change now

The short answer

• If total turnover in 2026 was above €800,000, invoices to businesses in Germany must be e-invoices from January 1, 2027: XRechnung, or ZUGFeRD version 2.0.1 or later (except the MINIMUM and BASIC-WL profiles).
• Up to €800,000, invoices for services provided in 2027 may still be sent on paper until the end of 2027, or as a PDF if the customer agrees.
• Ideally, bill 2026 work in December. Otherwise, the wording of the law requires an e-invoice, even from a small business.
• Every business has had to be able to receive e-invoices since January 1, 2025. An email inbox is enough.
• Invoices to consumers, small amounts up to €250 gross, and invoices from businesses under the VAT small business scheme are not affected.
• According to the Federal Ministry of Finance (BMF), missing the obligation is not an administrative offense. The invoice isn’t considered proper, though, and that mainly affects the customer.

Am I affected? Three questions

Three questions settle whether a business has to switch in January.

Checklist · Question 1 of 3

Are the invoices between two businesses in Germany?

The business and the customer both have their registered office or a participating permanent establishment in Germany. Invoices to consumers, to customers abroad, and to associations or public authorities that aren’t acting as businesses don’t count.

Checklist · Question 2 of 3

Does the business use the VAT small business scheme?

Small businesses under Section 19 UStG don’t charge VAT. Their total turnover was at most €25,000 in the previous year and is at most €100,000 in the current year.

Checklist · Question 3 of 3

Was total turnover in 2026 above €800,000?

What counts is payments received, excluding VAT, excluding sales of fixed assets, and excluding certain VAT-exempt transactions (Section 19(2) UStG).

Even with the obligation, some invoices don’t need to be e-invoices: small amounts up to €250 gross, tickets that count as invoices, and many VAT-exempt transactions, such as exempt rentals or financial services. Businesses that exchange invoices via EDI, an older method of direct data exchange between companies, may keep using it until the end of 2027 if the customer agrees.

Cash purchases count too. According to the BMF, a restaurant that falls under the obligation then has to issue an e-invoice for a business meal above €250, and so does a hardware store for a materials purchase. The BMF suggests a till receipt on site and the e-invoice by email afterward. So anyone who hosts business meals or buys supplies should have an email address for invoices ready.

The service-date trap also affects small businesses

The job is finished in December 2026, and the invoice goes out in January 2027. Taken literally, the law requires an e-invoice for it, even from a small business.

Under Section 27(38) UStG, an invoice for a service provided in 2025 or 2026 may only be sent as a PDF or on paper if it’s sent by December 31, 2026. The extended deadline for businesses up to €800,000 only covers services provided from 2027. Neither transition rule applies to the January invoice.

According to Haufe, the BMF took the opposite view in an unpublished letter to the energy industry: only the service date counts. On that view, 2026 work could still be billed on paper or as a PDF in January. Haufe considers that a contradiction of the law, and it’s open whether the tax authorities will stick to it. I wouldn’t rely on it. The safe route is to bill 2026 work in December, or to issue the January invoice as an e-invoice right away.

Advance and partial invoices get some relief, confirmed by the BMF on October 15, 2026: a business that issues them before its own obligation starts may still send them on paper or, if the customer agrees, as a PDF, even if the work and the payment come later.

Why a PDF from Word is no longer enough

Word and Excel can’t produce an e-invoice on their own. Under the law, an e-invoice is an invoice in a structured electronic format that allows electronic processing. In practice, that’s a file following the European standard EN 16931, with every piece of information in a fixed field: invoice number, date, supplier, line items, tax rate, and amounts. A PDF looks the same to a person, but the customer’s software first has to extract the data from it, with some effort.

Two formats are common in Germany:

• XRechnung is a pure XML file. To read it, a person needs a viewer, such as the free ELSTER e-invoice viewer from the German tax authorities (in German).
• ZUGFeRD is a PDF with an embedded XML file. If the two parts differ, the XML part has taken precedence since 2025, not the visible PDF. ZUGFeRD comes in profiles with different amounts of detail; the two smallest, MINIMUM and BASIC-WL, contain less than the standard requires and therefore don’t count as e-invoices.

Both need the XML part, which a Word or Excel file lacks. All mandatory invoice details have to be in the structured part. An attachment, such as a timesheet as a PDF, may only add to it.

The BMF recommends checking every e-invoice before sending it (validation). It isn’t mandatory, but it finds missing or contradictory details before the customer does.

What the accounting software needs to do

Anyone writing invoices in Word today will need a program that creates e-invoices: the invoicing module of the existing accounting software, a dedicated invoicing program, or an option from the tax advisor. Which fits best depends mainly on the number of invoices and on what the tax advisor works with. Either way, settle five questions before January, ideally with the vendor directly:

• Does the program create XRechnung or ZUGFeRD version 2.0.1 or later, and with which profile? MINIMUM and BASIC-WL aren’t enough.
• Does it validate the file before sending?
• Can it pick up incoming e-invoices from the inbox and display them in readable form?
• Does it keep the XML part unchanged? Every invoice must be kept for eight years, and for an e-invoice at least the structured part in its original form.
• How does the data get to the tax advisor, and does the XML part go with it?

Sending stays simple: an email with the file attached is enough. The law doesn’t prescribe how the invoice reaches the customer, so a portal or an interface works too. A routing ID (Leitweg-ID), which public authorities require, isn’t needed between businesses.

The BMF letter of October 15, 2026: no fine, but consequences for the customer

The third BMF letter on e-invoicing came eleven weeks before the deadline. Four points matter for most businesses:

• Sending a PDF or paper invoice despite the obligation is not an administrative offense. There’s no fine.
• The invoice then isn’t considered proper, though. According to the BMF letter of October 2025, the tax office can still allow the customer’s input VAT deduction if the invoice is correct and complete in substance. I wouldn’t count on that: for the customer, it remains an invoice that doesn’t follow the rules.
• XRechnung and ZUGFeRD don’t have a format for gross prices yet. For invoices based on gross prices, such as books with fixed retail prices, the structured part may contain only the totals per tax rate until the end of 2027, as long as the individual line items follow in a readable attachment.
• Corrections to an e-invoice must also be e-invoices. For now, the BMF leaves the form of the correction open, as long as the final result is clear.

The tax authorities won’t object to e-invoices created by the end of 2026 according to the earlier BMF letters, even if they don’t yet meet the new letter’s finer points.

Incoming invoices are where work can be saved

The law only requires businesses to receive e-invoices, issue them correctly, and keep them. The benefit lies in the voluntary part: processing the data further electronically.

When an invoice arrives as a PDF, someone types in the supplier, amount, tax rate, and due date, or has text recognition read them, which sometimes gets them wrong. In an e-invoice, these details are already in fixed fields. A workflow can fetch the file from the inbox, check it, store the XML part unchanged, send the invoice for approval, and pass the data to accounting without anyone typing. Workflows like this can be built with tools such as n8n or Power Automate. The comparison of workflow tools covers what they cost and what each one suits. The Automation page shows how Katio Tech builds them.

This pays off especially where many invoices come from a few suppliers. With every supplier that switches, the share that runs through without typing grows.

What to do now

The next stage starts on January 1, 2027. Until then, in this order:

• Estimate total turnover for 2026, with the tax advisor if it’s close to €800,000.
• Settle the five questions with the invoicing software vendor and send a test e-invoice to the company’s own address.
• Bill 2026 work in December where possible.
• Set up a dedicated email address for incoming invoices and tell suppliers about it.

The invoice from the beginning will come from an invoicing program instead of Word and still go out by email. What changes is the attachment: a file the customer no longer has to type in.