Do I need ZUGFeRD or XRechnung for my German business invoice compliance?

When does the mandatory e-invoicing transition period end for small businesses?

Navigating the ZUGFeRD and XRechnung Mandates

As we move through 2026, the grace period for ignoring electronic invoicing in Germany has effectively ended. While many business owners hoped to bypass these technical requirements, the Wachstumschancengesetz (Growth Opportunities Act) established strict compliance standards that now affect daily operations. If you operate in the B2B sector, understanding the distinction between ZUGFeRD and XRechnung is no longer optional; it is a prerequisite for proper accounting.

The Shift to E-Invoicing

Since January 1, 2025, the receipt of electronic invoices (e-invoices) became mandatory for transactions between domestic German businesses. While transitional rules exist for issuing invoices, your accounting system must already possess the capability to receive and archive incoming e-invoices.

The goal of this digitalization is to streamline accounting processes by eliminating manual data entry. However, simply sending a standard PDF via email does not satisfy the new legal definition of an e-invoice. A compliant e-invoice requires structured data that machine systems can read automatically.

Understanding the Formats: ZUGFeRD vs. XRechnung

Compliance relies on standards defined by CEN standard EN 16931. In Germany, two primary formats dominate the landscape.

XRechnung (Pure XML)

This format is purely digital. It consists of an XML file containing all invoice data structured for machine processing. It is the preferred standard for public procurement and dealings with federal authorities.

Pros: Highly efficient for automated accounting software.

Cons: Not human-readable without visualization software.

ZUGFeRD (Hybrid Format)

ZUGFeRD combines the best of both worlds. It appears as a standard PDF document (PDF/A-3) which humans can read, but it embeds an XML file containing the structured invoice data within that PDF.

Pros: Human-readable and machine-processable simultaneously.

Cons: File sizes may be slightly larger.

For most private sector B2B transactions, ZUGFeRD is generally the superior choice. It allows the recipient to read the invoice visually while their software processes the embedded XML data.

Critical Exemptions

Not every transaction requires a complex e-invoice. The regulations provide specific exemptions where standard invoicing remains permissible. You do not need to issue a ZUGFeRD or XRechnung invoice for:

• Small Amounts: Invoices totaling up to €250 (gross) pursuant to § 33 UStDV.
• Tickets: Travel tickets that function as invoices (§ 34 UStDV).
• Tax-Exempt Services: Specific services provided to non-entrepreneurs or legal entities lacking entrepreneurial status.
• Specific B2C Services: Certain real estate-related services provided directly to end consumers.

The Implementation Timeline

While receipt is mandatory now, the obligation to issue e-invoices follows a phased rollout to ease the burden on smaller enterprises.

• 2025 – 2026: Businesses may still exchange paper or standard PDF invoices if the recipient agrees.
• January 2027: Companies with a turnover exceeding €800,000 (in the previous year) must issue e-invoices.
• January 2028: The obligation extends to all remaining businesses. At this stage, paper and simple PDFs cease to be compliant for B2B transactions.

Delivery and Security Protocols

You do not need complex proprietary software to receive these invoices; a dedicated email address suffices. However, sending invoices to federal institutions often requires using the OZG-RE portal and a specific routing ID (Leitweg-ID).

A Note on Security

Digitalization introduces specific risks. Handling XML files and hybrid PDFs requires vigilance. Malicious actors can embed scripts or malware within these file structures. Ensure your validation software is up to date and treat unexpected e-invoices with the same caution you apply to unknown email attachments. Open-source solutions like Facturama offer valid pathways for compliance, but your internal security protocols must evolve alongside these new formats.