E-invoicing and e-reporting are revolutionising financial processes. This blog explains the differences, benefits and why German businesses should act now.
Using the digital transformation of invoicing and tax processes
Digitalisation is fundamentally changing how companies manage their financial and tax processes. Terms such as e-invoicing (electronic invoicing) and e-reporting (electronic reporting) play a central role in this. But what exactly do these terms mean? What are the differences? And why should German businesses take action now, even if the new requirements do not yet affect them directly?
In this blog, we clarify the key questions about e-invoicing and e-reporting, highlight their differences and take a look at current developments in Germany and Europe.
What is e-invoicing?
Electronic invoicing, also known as e-invoicing, describes the fully digital process of creating, sending, receiving and archiving invoices. In contrast to conventional paper invoices or PDF documents, an electronic invoice is created in a structured format (e.g. XML). This format enables automated processing and makes processes faster, more error-free and more efficient.
In Germany, electronic invoicing for the public sector (B2G) has been mandatory since November 2020. Businesses that issue invoices to public authorities must use formats such as XRechnung or ZUGFeRD. The switch to these formats is an important step towards modernising public administration and promoting efficient digital business processes.
According to Germany's Federal Ministry of Finance, this standardisation is a central building block for the digitalisation of financial administration. E-invoicing has also been mandatory in the B2B sector in Germany since 1 January 2025 (with transitional regulations), which further underlines the importance of e-invoicing.
What is e-reporting?
E-reporting, or electronic reporting, goes beyond electronic invoicing. It involves the electronic transmission of financial and business data (e.g. sales reports, transaction details or tax information) to the relevant authorities. The aim is to create transparency, combat tax fraud and enable real-time tax controls. In Europe, this is increasingly being supplemented by mandatory reporting systems.
Unlike e-invoicing, which optimises business-to-business (B2B) or business-to-government (B2G) transactions, e-reporting focuses on regular reporting to tax authorities. One example is the planned introduction of e-reporting in Germany as part of the EU's ViDA initiative. It will be mandatory for intra-community transactions from 2028. This will make e-reporting an integral part of the digital tax landscape in Europe. Countries such as France, Poland and Belgium are already leading the way with e-reporting systems for national and international transactions.
Fundamental differences between e-invoicing and e-reporting
Despite the close connection to digitalisation and automation, e-invoicing and e-reporting differ in their objectives and application. The following overview summarises the main differences:
Germany in the European context
With the introduction of mandatory e-invoicing for B2B transactions from 2025 and the gradual introduction of e-reporting by 2028 at the latest, Germany is part of a comprehensive EU-wide digitalisation strategy. The European Union's VAT in the Digital Age (ViDA) initiative has set itself the goal of creating uniform standards for electronic invoicing and e-reporting. The aim is to reduce bureaucratic hurdles and make cross-border transactions more efficient.
A look at some neighbouring countries shows how these two systems can harmonise:
- With the Chorus Pro project, France is relying on a combined solution for e-invoicing and e-reporting.
- With KSeF (Krajowy System e-Faktur), Poland has introduced a national system that combines e-invoicing and e-reporting.
- Belgium is driving forward the use of the Peppol network for e-invoicing and is testing pilot projects for the introduction of e-reporting.
These countries can serve as a model for further development in Germany. The combination of both systems enables comprehensive tax and financial management, which benefits both businesses and the public sector.
Advantages of integrating e-invoicing and e-reporting
Increasing digitalisation leads to an ever closer integration of e-invoicing and e-reporting. Businesses that use both systems benefit from numerous advantages, including
- Transparency and traceability: Seamless integration facilitates the traceability of transactions and improves transparency for tax and financial authorities.
- Error reduction: Automated processing reduces human error, especially during data entry.
- Cost savings: Automated processes save time and resources.
- Compliance with legal requirements: Businesses that switch to e-invoicing and e-reporting early on are better prepared for upcoming regulations.
- Combating tax fraud: Authorities can react more quickly to potential risks thanks to real-time data.
Conclusion: Why German businesses should act now
The digital future of invoicing and reporting has long since begun. Both e-invoicing and e-reporting play a key role in the transformation of financial and tax processes. Businesses that adopt these technologies at an early stage not only secure a competitive advantage, but also position themselves as pioneers in an increasingly digitalised business environment.
With the e-invoicing mandate and the upcoming e-reporting requirements, it is essential for German businesses to address these issues. The integration of both systems not only helps to meet the legal requirements, but also offers the opportunity to optimise internal processes and operate more successfully in the long term.
Now is the time to prepare for these changes and take advantage of the benefits of digitalisation.
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