Understanding B2G E-Invoicing in Germany: A Comprehensive Guide (2/5): The Different Invoicing Standards

In our first blog post in this series on Germany's B2G e-invoicing, we explored the various portals and transmission channels used for invoicing public sector clients in Germany. Today, let's turn our attention to the different invoice standards you will encounter when you delve into Germany's e-invoicing scene, and better understand what they have in common, what sets them apart, and when which standard is generally used.

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The most widely used invoice standards in Germany are the German CIUS XRechnung, which is specifically used by central, regional, and local authorities as well as increasingly in the B2B sector, ZUGFeRD in B2B transactions, and Peppol BIS 3.0, which is also common in the B2B sector and is furthermore acceptable from foreign senders in the B2G sector. The same legal requirements apply to all these formats as for paper-based invoices, but they are nevertheless distinct from each other in some key aspects.

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Let’s take a closer look at each of them in turn.

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XRechnung

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Although other standards are also accepted, provided they fulfil the requirements of the European Standard on eInvoicing (EN) 16931, the XRechnung standard was defined, in the previously mentioned Ordinance on Electronic Invoicing in Federal Public Procurement (E-Rechnungsverordnung - ERechV), to be the principal data exchange standard for the issuance of electronic invoicing to public authorities in Germany.

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The XRechnung is a Core Invoice User Specification (CIUS) of the European Norm (EN) on e-invoicing. The KoSIT (Coordination Office for IT Standards or Koordinationsstelle für IT Standards is responsible for the publication and maintenance of the CIUS XRechnung. This organisation, which plays a role in coordinating and standardising IT-related processes and standards, particularly in the context of e-government and digitisation initiatives, has published a multitude of useful documents about XRechnung, including the latest specifications, on its website.

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One of the key advantages of the XRechnung is the ability for incoming invoices to be automatically processed thanks to their being machine-readable. This reduces the risk of errors, lowers personnel and financial expenditure, and accelerates the invoice processes, resulting in faster receipt of payment by the invoice issuer. Furthermore, thanks to the use of central invoice receipt platforms, the invoices are also automatically checked for errors, and if there is a need for rectification, the invoice issuer is informed immediately.

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While the use of XRechnung was initially limited primarily to public sector invoicing, in recent years, it has increasingly gained traction even in the scope of B2B invoicing in Germany.

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In the context of the federal B2G e-invoicing in Germany, one of the mandatory data elements of the XRechnung schema is the buyer reference, a unique sequence of characters that identifies the invoice recipient and serves as the address when transmitting e-invoices, known as the Leitweg-ID. This routing ID must be communicated to the invoice issuer by the invoice recipient and included in the standard XRechnung invoice in the field "Buyer reference" (BT-10). Next to the German VAT identification number, it is also one of the nationally defined Peppol Participant Identifiers.

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You can find more information about the Leitweg-ID in our next blog post here!

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ZUGFeRD

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ZUGFeRD (Zentraler User Guide des Forums elektronische Rechnung Deutschland) evolved from the Forum elektronische Rechnung Deutschland (FeRD) and strove to transform the vision of equating electronic invoices with their paper counterparts into a tangible reality. This hybrid invoice format provides a common structure and guidelines for the creation of electronic invoices that both humans and computer systems can understand. It aims to standardise the way electronic invoices are formatted and transmitted, promoting efficiency and interoperability in digital invoicing processes.

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The ZUGFeRD invoice is now well established as a frequently used type of e-invoice in the B2B sector. The main benefit of ZUGFeRD invoices is that the invoices are issued as human-readable PDF-A/3 files, with embedded structured invoices as machine-readable XML files - similar to the French equivalent Factur-X.

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As the electronic invoice in ZUGFeRD invoice format contains both the invoice data (XML data) and the invoice image (PDF/A-3), both the data and the image can - in themselves - constitute an invoice entitling the customer to input tax deduction in accordance with Section 14 (4) UStG (German VAT Act). Since both the PDF and the embedded XML should be identical in terms of content, i.e. it should be nothing more than multiple copies of the same invoice (embedded in a PDF as a transport format), the recipient's verification process for an incoming invoice is decisive in determining whether the invoice image (PDF file) or the structured invoice data (XML file) is regarded as the legally binding document.

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As part of the internal control procedure chosen by the taxpayer - which in practice largely corresponds to the conventional procedure for checking incoming invoices - it is up to the taxpayer to decide whether to include the invoice data (XML data) or the invoice image (PDF/A-3) in the internal control procedure chosen by them. This is particularly important if the data and image differ.

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This will change with the introduction of the Growth Opportunities Act: In the event of discrepancies between the structured data and the invoice image, the structured data record (XML file) will take precedence. This ensures that machine-readable data is given priority in terms of standardisation and automation. However, the correct matching of image and data remains central to avoiding potential errors and ensuring smooth processes.

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Further details regarding this can be found in the "Comments on the VAT assessment of the data format for electronic invoices 'ZUGFeRD'" document as published by the FeRD.

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Peppol BIS Billing 3.0

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In order to guarantee international interoperability within the Peppol network, as detailed in Decision (Beschluss) 2018/46 of 25 October 2018, public authorities in Germany that are reachable via Peppol must be able to process Peppol BIS Billing 3.0. Therefore, Peppol BIS Billing 3.0 is accepted for the transmission of electronic invoices from abroad to German public bodies.

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Understanding CII and UBL in e-invoicing

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When discussing e-invoicing standards in Germany, it's also important to note the two main XML-based syntaxes used for formatting invoices: CII (Cross-Industry Invoice) and UBL (Universal Business Language). These formats define how invoice data is structured, ensuring compliance and interoperability.

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• CII: A robust syntax developed by UN/CEFACT, primarily used in more complex invoicing scenarios. Both XRechnung and ZUGFeRD use CII, though ZUGFeRD exclusively relies on it.
• UBL: Designed for simplicity and efficiency, UBL is widely used in international contexts and forms the basis for Peppol BIS Billing 3.0. XRechnung also supports UBL, making it adaptable to global invoicing networks.

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While CII may offer more flexibility for detailed invoices, UBL's lightweight design streamlines processes and is favoured in cross-border use. For hybrid formats like ZUGFeRD, structured data (CII) takes precedence (starting with the introduction of the Growth Opportunities Act, i.e. from 1 January 2025), ensuring machine-readable data integrity.

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We will be delving into more detail on Peppol in the context of German B2G e-invoicing in a future section of this blog series, so stay tuned!

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