Mandatory in Germany Starting 2025

Electronic Invoicing:
SAP Solutions

Electronic invoicing, or e-invoicing, will be mandatory for companies in Germany starting in 2025. The biggest challenge is choosing the right software for implementation. SAP customers have various add-on solutions available, both SAP and non-SAP. XEPTUM helps you make the right decision.

The pressure is on: A recent study by the digital association Bitkom found that many companies still use unstructured digital formats like standard PDFs despite the increasing adoption of e-invoices. For these companies, the mandatory implementation of e-invoicing brings numerous requirements, even with a transition period until 2027 (until 2028 for companies with annual revenue under 800,000 euros). There is a lack of user-friendly solutions for getting started, making the selection of suitable software challenging.

What Does the Term E-Invoice Mean Exactly?

An e-invoice is an electronic invoice exchanged digitally between suppliers and customers. Unlike traditional paper invoices, e-invoices are created, transmitted, received, and processed electronically. They contain the same information as a paper invoice, including details about suppliers and customers, purchased products or services, invoice amounts, and payment terms.

What Are the Main Benefits of Mandatory E-Invoicing?

The benefits for federal, state, and local governments are clear: According to estimates by the European Commission and the Federal Ministry of Finance (BMF), the introduction of e-invoicing in Germany could gradually lead to additional tax revenues exceeding ten billion euros annually. Electronic invoice exchange also enables immediate VAT deduction control by tax authorities. 

E-invoicing also offers numerous advantages for companies, such as:
 

  • More Efficiency: Processing electronic invoices is generally faster and more efficient than manually handling paper invoices.
  • Reduced Costs: Eliminating paper, printing costs, and manual processing can reduce expenses.
  • Traceability: E-invoices can be easily tracked and archived in electronic systems.
  • Environmental Friendliness: Using e-invoices helps reduce paper consumption and promotes environmental protection.

The biggest advantage of e-invoicing is that it often drives the digitalization of the entire company, serving as a catalyst for further digitalization processes and making long-term beneficial software more accessible, especially for smaller companies.

What Legal and Technical Requirements Must the E-Invoice Fulfill?

Starting in 2025, the Value Added Tax Act (§ 14 Abs. 1 UStG) differentiates between e-invoices and other invoice types. E-invoices must be created, transmitted, and received in a structured electronic format, enabling automated electronic processing. Invoices in Word or PDF format do not meet these requirements.

The structured electronic format must comply with European standards for electronic invoicing and the corresponding syntaxes. The tax authorities particularly consider invoices in the XStandard (known as XRechnung) and the ZUGFeRD format from version 2.0.1 (a combination of PDF document and XML file) as generally compliant with European e-invoice requirements. For hybrid invoice formats, the structured part should be prioritized in the future. Alternatively, the involved parties – the invoice issuer and recipient – can individually agree on the structured electronic format of the invoice. This also allows for invoices exchanged via EDI procedures. The open-ended technological approach also applies to future and potentially new invoice formats.

How Does SAP Support the Legal Requirements for E-Invoicing?

Companies face the challenge of implementing various laws for sending and receiving invoices in their IT systems. Invoice formats vary by country, and different transmission channels for e-invoices are required.

There are several options for integrating e-invoicing in SAP:

SAP Document Compliance (eDocument)

Companies using SAP as an ERP system can implement e-invoicing using the SAP eDocument Framework in conjunction with the SAP Application Interface Framework (AIF). The eDocument Framework converts documents from logistics, sales, and accounting into common e-invoice formats, such as XML files. However, it cannot send e-invoices via certain services like Peppol (Pan-European Public Procurement Online) for Germany or meet specific country requirements.

Therefore, the SAP Application Interface Framework (AIF) should be used to convert generated eDocuments into the required target format, such as XRechnung for Germany or InvoicePA for Italy. The e-invoices can then be sent via the SAP Cloud Platform using web services or through a service provider.

Electronic Invoicing in SAP
Architecture of Electronic Invoicing in SAP

Third-Party/Service Provider Solution

 

SAP AIF is included as a component of SAP Business Suite and SAP S/4HANA in modern SAP releases. However, a separate license is required for using "SAP Document Compliance, On-Premise Edition." Depending on the size and requirements of a company, it may be beneficial to outsource the conversion of eDocuments to external service providers. This is especially true if a service provider is already connected to the existing SAP ERP system, allowing for a quick and straightforward implementation of the needed process. Given the variety of providers and products available, companies should carefully select the appropriate solution.

How Can XEPTUM Support You with E-Invoicing Requirements in SAP?

In summary, SAP offers a solid foundation for converting e-invoices into common formats with the eDocument Framework. Additional SAP add-ons enable the transmission of invoices to recipients. Alternatively, the entire e-invoicing process can be handled by a service provider. 

With XEPTUM, you have a partner that provides expert advice and guidance in selecting the right approach. We combine extensive SAP technology and process expertise with in-depth knowledge of legal and technical e-invoicing requirements. We also have a comprehensive overview of service providers that can manage e-invoicing for companies. Schedule a consultation with us! We are happy to help you find and integrate a tailored solution into your SAP system landscape.

When Is It Advisable to Implement E-Invoicing Requirements in SAP Without Additional Solutions?

Starting in 2025, electronic invoicing, or e-invoicing, will be mandatory for companies in Germany. This involves exchanging invoices digitally between suppliers and customers. Unlike traditional paper invoices, e-invoices are created, transmitted, received, and processed electronically, containing the same information as paper invoices, such as supplier and customer details, purchased products or services, invoice amounts, and payment terms. 

We have already described above, how SAP ERP customers can meet the e-invoicing mandate with possible add-on solutions, whether using SAP Document Compliance (eDocument) with the SAP Application Interface Framework (AIF) or third-party add-ons integrated into the SAP ERP system. However, it may also be worthwhile to consider the possibilities without add-on solutions.

Why Should Companies Consider Alternative Approaches to E-Invoicing Requirements in SAP?

Depending on a company’s size and requirements, it may be prudent to explore different alternatives for creating and sending e-invoices. There are several reasons against integrating add-on solutions, whether SAP or non-SAP:
 

  • Integration Complexity: Especially when systems use different architectures and data, integrating add-on solutions can be technically challenging and complex.
  • Compatibility Issues: There can be difficulties in seamlessly integrating the add-on solution into the existing SAP system, potentially leading to system outages and performance problems.
  • High Implementation and Operational Costs: Integrating add-on solutions can incur high costs for licenses, implementation, and customization. Ongoing maintenance and support of integrated solutions can also represent additional financial burdens.
  • Strategic Decision: Companies may strategically decide to focus on a limited number of providers and not integrate additional systems.

Therefore, companies should carefully weigh whether to implement the e-invoicing mandate with or without add-on solutions to ensure the chosen approach’s benefits outweigh the potential drawbacks and risks.

What Alternatives Are There for Creating E-Invoices in SAP?

There are several alternative methods for SAP user companies to create and send e-invoices without add-on solutions:
 

Engaging Service Providers:

Typically, only one document type, such as a PDF or CSV file, is sent to the service provider. This can be done directly via email from SAP or outside of SAP without an interface. The service provider converts the document into an e-invoice and either sends it directly to the end recipient or returns it to the company for sending. This solution is only feasible for outgoing invoices and is practical only for companies that need to create and send a small number of e-invoices.
 

EDI Transmission (iDoc):

In theory, the structured electronic format of the e-invoice must comply with European standards for electronic invoicing and corresponding syntaxes. Additionally, the involved parties – the invoice issuer and recipient – can individually define the structured electronic format of the invoice as an alternative to the government proposal. This means that invoices exchanged via EDI procedures, like SAP iDocs, are also permissible.

In SAP: Electronic Invoicing
SAP iDoc as Outgoing E-Invoice

Receiving and sending iDocs is already widespread in companies. This solution can be used for both incoming and outgoing invoices if both parties - sender and recipient - can process iDocs. An additional partner profile must be maintained in SAP for each additional sender or recipient, which causes additional work in day-to-day operations. 

 


ZUGFeRD from PDF Development:

SAP's Adobe Document Services allow converting a PDF file to PDF/A or ZUGFeRD-PDF/A and sending it as an outgoing invoice. The PDF to be converted must meet the following requirements:
 

  • all non-native Adobe fonts are "embedded",
  • the PDF version is 1.3 or higher,
  • the PDF is non-interactive,
  • the PDF is non-dynamic.


The ABAP class contains various methods to generate the XML schema and XMP metadata according to the ZUGFeRD 1.0 specification. The ZUGFeRD version 2.0 includes adjustments per the relevant EU directive, possibly requiring manual intervention to create a ZUGFeRD 2.0 document. A report is also available to test the functionality of the PDF/A-3 conversion.

Electronic Invoicing (SAP)
Conversion of an Adobe Form into the ZUGFeRD Format

Conversely, it is also possible to extract the required ZUGFeRD data for an incoming invoice from the ZUGFeRD-PDF/A file. This solution works for both receiving (incoming invoices) and sending (outgoing invoices) e-invoices.
 

 

XML Mapping Development:

As a custom-developed solution, the option of XML mapping via an iDoc would be available for outgoing invoices. Based on an INVOIC-iDoc, mapping to the XML format of XRechnung can be created in middleware (e.g., SAP-PI, SAP-PO). The necessary structures and descriptions are available from the Coordination Office for IT Standards (KoSIT) for download.

In SAP - Electronic Invoicing
XML Mapping of an SAP iDoc

The conversion of an existing XML format into an iDoc for invoice receipt works similarly. 

 

How Can XEPTUM Assist You with Implementing E-Invoicing Requirements in SAP Without Additional Solutions?

Your company may find it beneficial to implement the upcoming e-invoicing mandate in SAP without add-on solutions. XEPTUM is a partner that provides expert advice and support in choosing the right approach. We combine extensive SAP technology and process expertise with in-depth knowledge of the legal and technical requirements for e-invoicing. 

We also have a comprehensive overview of various alternative methods. Schedule a consultation with us! We are happy to help you find and integrate a tailored solution into your SAP system landscape.

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