What is an e-invoice?

What is an E-Invoice?

An electronic invoice consists of structured, machine-readable data. These XML data enable automatic and seamless processing between accounting and ERP systems.

Advantages of electronic invoice processing:

• No manual effort when issuing an invoice
• More efficient processes through automatic processing
• Faster processing and lower error rates
• An electronic invoice (E-invoice) contains the same information as a paper invoice, such as order number, items, amounts, and credits.

Is a PDF invoice an E-invoice?

No, an invoice in PDF format is not an electronic invoice. PDF files or scanned copies of paper invoices are referred to as digital invoices, not electronic invoices.

Such purely visual representations—like a PDF—are not considered electronic invoices under the definition in EU Directive 2014/55/EU, as they do not allow for electronic and automatic processing.

What is E-Invoicing?

E-Invoicing is a method for exchanging invoices between a supplier and a customer electronically using machine-readable data records. It is also known as E-Invoicing.

The classic requirements for E-invoices can be divided into two main areas:

• B2G (Business-to-Government)
• B2B (Business-to-Business)

The specific details required for each country may vary. SAP offers a suitable solution for all requirements with SAP Document and Reporting Compliance.

Who is required to use the E-invoice?

Since January 1, 2025, the electronic invoice has been mandatory for transactions between domestic companies.

Transition rules apply. Private end consumers, however, are exempt from the obligation to use E-invoices.

• An entrepreneur, according to the Federal Ministry of Finance, is anyone who independently engages in a commercial or professional activity. This also includes freelancers and individuals who provide exclusively tax-exempt transactions.
• A domestic company is one whose headquarters, management, or a business location involved in the turnover is situated in the territory of the Federal Republic of Germany.

What is the Legal Basis for E-Invoicing?

The legal basis for E-Invoicing in Germany was established by the federal government in March 2024 through the "Law to Strengthen Growth Opportunities, Investments, Innovation, as well as Tax Simplification and Tax Fairness" ("Growth Opportunities Act").

This law lays the foundation for the mandatory introduction of electronic invoicing, which came into effect on January 1, 2025.

Important Provisions:

• Since January 1, 2025, mandatory E-invoicing applies to domestic entrepreneurs for B2B transactions.
• Exceptions apply for tax-exempt services under § 4 numbers 8 to 29 of the German VAT Act, small invoices up to €250, and travel tickets.
• Permitted formats include EDI, ZUGFeRD, and XRechnung.

The legal basis for E-invoicing varies in Europe depending on the country or region, as each government sets its own regulations and requirements for electronic invoicing.

However, there are some common elements that play a role in most jurisdictions.

Examples from Europe:

• France: Gradual introduction of the mandatory E-invoice requirement by September 2027 (Large companies: September 2026; Medium-sized companies: September 2026; Small companies: September 2027)
• Italy: Considered a pioneer in the full implementation of the EU Directive 2014/55/EU.

What Exceptions Apply to the E-Invoice Obligation?

The rules for the E-invoice requirement do not apply:

• for invoices to end consumers (B2C transactions), and
• for tax-exempt transactions under § 4 numbers 8 to 29 of the VAT Act (e.g., tax-exempt financial services, tax-exempt property rentals, etc.).

If there is a VAT obligation to issue an invoice, it does not have to be issued as an E-invoice in the following cases, according to the Federal Ministry of Finance:

• for small amounts (up to €250 gross),
• for travel tickets that are considered invoices,
• for services provided by small businesses,
• for services provided to legal entities that are not businesses, and
• for certain services to end consumers related to property.

What Transition Rules Apply to E-Invoicing?

A transition rule applies until December 31, 2026. All invoice issuers may continue to issue regular invoices (including paper invoices) until this date, instead of an E-invoice.

If the recipient agrees, a PDF invoice can also be issued until the end of 2026 and delivered by email.

If the annual turnover of the invoice issuer is under €800,000, the exception rule is extended until December 31, 2027. After these transition periods, the E-invoice becomes mandatory.

What Are the Benefits of E-Invoicing?

With digitized invoicing processes, invoice issuers benefit from simplified and more efficient billing.

• The automatic creation and validation of invoices improve process quality and reduce errors.
• Companies can save costs, such as eliminating paper and postage for delivery.
  Processing times in invoicing are shortened, leading to faster handling and more timely payments.

For invoice recipients, the electronic invoice also offers advantages, as processes become faster and more flexible.

• The automatic reading of invoice data minimizes errors and enhances data quality.
• Costs and efforts in invoice processing decrease.
• Flexibility increases, as companies can process invoices remotely.

What is the E-Invoicing Module of Nooxit?

With the E-invoicing module (plug-in) from GAMBIT partner Nooxit GmbH in Berlin, companies can easily and automatically comply with the E-invoicing obligation since January 1, 2025, using AI.

The plug-in is suitable for SAP systems (SAP ECC and SAP S/4HANA) and existing incoming invoice workflows, and it also serves as an easy entry point into generative AI automation in accounting.

How Can E-Invoicing Be Implemented in SAP?

SAP Document and Reporting Compliance (SAP DRC) is an SAP solution that focuses on documentation and legal compliance in the area of E-invoicing.

This solution offers:

• E-Invoicing Compliance: Support for legal E-invoicing requirements in various countries.
• Automatic Creation and Validation of E-Invoices: SAP DRC checks whether invoices comply with regional regulations and ensures proper submission.
• Integration with SAP S/4HANA: The solution is particularly suitable for companies already using SAP S/4HANA or planning to implement it.

SAP DRC helps meet legal requirements related to the creation, submission, and archiving of E-invoices. The solution supports a variety of countries and their different requirements.

Overview: E-Invoicing with SAP DRC

The electronic invoice with SAP Document and Reporting Compliance (SAP DRC) in SAP S/4HANA enables automated, legally compliant invoicing processes.

It reduces manual effort, minimizes errors, and speeds up approvals and payments through transparent workflows and adherence to standards like ZUGFeRD.