E-invoicing and e-reporting are revolutionizing financial processes. This blog explains the differences, benefits and why German companies should act now.
Using the digital transformation of invoicing and tax processes
Digitalization is fundamentally changing how companies organize 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 companies 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, the electronic invoicing for the public sector (B2G) has been has been mandatory since November 2020. Companies that issue invoices to public authorities must use formats such as XRechnung or ZUGFeRD. The switch to these formats is an important step towards modernizing public administration and promoting efficient digital business processes.
According to the Federal Ministry of Finance, this standardization is a central building block for the digitalization of financial administration. Electronic invoicing has also been mandatory in the B2B sector in Germany since January 1, 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.
In contrast to e-invoicing, which optimizes the exchange between companies (B2B) or between companies and authorities (B2G), e-reporting focuses on regular reporting to the tax authorities. One example of this is the planned introduction of e-reporting in Germany as part of the ViDA initiative of the EU. It is to 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 pioneers with e-reporting systems for national and international transactions.
Fundamental differences between e-invoicing and e-reporting
Despite the close connection to digitalization and automation, e-invoicing and e-reporting differ in their objectives and application. The following overview summarizes the main differences:
Germanyin the European context
Withthe 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 digitalization strategy. The initiative VAT in the Digital Age (ViDA) initiative of the European Union 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 neighboring countries shows how these two systems can harmonize:
- 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 companies and the public sector.
Advantagesof integrating e-invoicing and e-reporting
Increasingdigitalization is leading to ever closer integration of e-invoicing and e-reporting. Companies 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: Companies that switch to e-invoicing and e-reporting at an early stage 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 companies should act now
Thedigital 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. Companies that adopt these technologies at an early stage not only secure a competitive advantage, but also position themselves as pioneers in an increasingly digitalized business environment.
With the e-invoicing obligation and the upcoming e-reporting requirements, it is essential for German companies to address these issues. The integration of both systems not only helps to meet the legal requirements, but also offers the opportunity to optimize internal processes and operate more successfully in the long term.
Nowis the right time to prepare for these changes and take advantage of the benefits of digitalization.
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