Germany’s E-Invoicing Mandate for 2025: What Finance Professionals in Real Estate Development Need to Know

In 2025, Germany is will introduce a significant shift in business practices with the mandatory adoption of e-invoicing. This change is particularly relevant for Project Managers and Finance professionals in Real Estate Development, as it affects how transactions are documented and processed.

Here’s a breakdown of what you need to know about this upcoming mandate.

What is E-Invoicing?

E-invoicing refers to the electronic generation, transmission, and processing of invoices between suppliers and buyers in a standardised digital format. Unlike traditional invoices sent in paper, PDF, or other non-standardised formats, e-invoices are designed to be automatically read and processed by the recipient’s financial systems, reducing the need for manual data entry and speeding up the process.

Technically, they are an XML or UBL type file which is machine-readable. These files can be accompanied by a human-readable version, for instance a PDF. To keep in mind - just the human-readable version is not enough to constitute an e-invoice.

To learn more about the e-invoice standards, check out this Federal guide.

EU and German Regulations Governing E-Invoicing

The move towards e-invoicing is driven by broader European Union (EU) initiatives aimed at increasing efficiency, transparency, and reducing fraud. The EU's Directive 2014/55/EU on electronic invoicing in public procurement mandates the adoption of e-invoicing standards for public sector transactions, which many member states have extended to the private sector.

In Germany, the introduction of e-invoicing is part of a broader digitalisation strategy. The German government has already implemented e-invoicing requirements for B2G (business-to-government) transactions, and by 2025, it will extend these requirements to B2B (business-to-business) transactions as well. The new mandate will require companies to use a format compatible with the EN 16931 (for example XRechnung format), basically a standardised XML-based format, ensuring compliance with both national and EU regulations.

Benefits of E-Invoicing in Business

This may sound daunting, but ultimately e-invoicing brings a lot of business benefits:

1. Cost Reduction: E-invoicing reduces the costs associated with paper invoices, including printing, postage, and storage. Additionally, it lowers administrative costs by minimising manual processing.
2. Error prevention: So many times people enter wrong data even with OCR which leads to wasted time and sometimes costly mistakes which show up further down the line in erroneous payments and ultimately unreliable reporting data.
3. Increased Efficiency: Automating invoice processing standardises your process, speeds up the payment cycle, reduces errors, and enhances cash flow management. This efficiency is particularly beneficial in the construction industry, where multiple contractors and suppliers often engage in complex transactions.
4. Compliance and Fraud Prevention: E-invoicing enhances compliance with tax regulations by ensuring that invoices meet the required standards and are easily traceable. The digital format also reduces the risk of invoice fraud, which can be a significant concern in large-scale construction projects. It also makes audits easier and faster to conduct which lead to significant cost reductions as well.
5. Environmental Impact: By eliminating the need for paper invoices, e-invoicing contributes to sustainability goals, reducing the carbon footprint of businesses.

Which Companies Are Mandated to Use E-Invoicing in 2025?

Starting in 2025, all businesses operating in Germany will be required to use e-invoicing for B2B transactions, with some exceptions. This mandate covers companies of all sizes, from small enterprises to large corporations, including those in the construction and real estate sectors. The requirement will apply to transactions with other businesses within Germany, and potentially to cross-border transactions within the EU, depending on future regulatory developments.

Exceptions to the E-Invoicing Mandate

While the e-invoicing mandate is broad, several key exceptions are important for businesses to be aware of:

• Cross-Border Invoicing: Currently, the mandate applies only to companies within Germany. Cross-border invoicing is exempt from this requirement.
• Private Individuals: Private individuals are not required to send or accept e-invoices.
• Small Invoices: Invoices with a gross amount of less than €250 and invoices that do not include a tax amount are exempt from the e-invoicing requirement.
• Temporary Exceptions:
  • Until the end of 2025, businesses may still send paper invoices.
  • If a business’s revenue does not exceed €800,000 net in 2024, they may continue to use paper invoices until the end of 2026.
  • Until the end of 2027, e-invoices can be sent in any digital format, meaning PDFs will still be acceptable.

How Alasco Helps with E-Invoicing

As businesses prepare for the 2025 e-invoicing mandate, Alasco offers robust solutions to streamline the transition and ensure compliance. Here’s how Alasco supports your business:

• Invoice Visualisation: One of the challenges with e-invoices is the visualisation of structured data. E-invoices, typically in XML format, are not easily readable by users in their raw form. Alasco addresses this by converting structured e-invoice data into user-friendly views, allowing users to interact with the data meaningfully without having to deal with the complexities of XML files.
• Automatic Processing: Alasco enables the automatic processing of e-invoices, ensuring that they are accepted in various formats and through different channels. Whether invoices are uploaded manually, received via project email, or integrated through APIs, Alasco handles them efficiently. Once an invoice is approved, it can be seamlessly sent through various data integration methods, including email, ensuring that all processes continue to function smoothly.
• Enhanced Data Handling: E-invoices contain more data than traditional PDFs, including additional fields that are crucial for financial analysis and reporting. Alasco’s platform is designed to handle these extra data points, allowing for more detailed insights and improved financial management.

Preparing for the E-Invoicing Mandate

To prepare for the 2025 e-invoicing mandate, construction project developers and finance professionals should:

• Assess Current Systems: Evaluate if your current invoicing and financial systems are compatible with e-invoicing requirements, particularly the XRechnung format. If you're an Alasco customer, we take care of all the proper processing - however, do check your financial accounting, treasury and ERP systems.
• Invest in Software Solutions: Consider upgrading to software that supports e-invoicing. And that can integrate with your existing systems and processes. If you are already using Alasco, rest assured, will will provide the new capability in time to comply with regulation deadlines.
• Train Staff: Educate your project managers, finance and account teams on the topic of e-invoicing standards.
• Collaborate with Partners: Work with your suppliers to ensure they are preparing for e-invoicing adoption.

In conclusion, the 2025 e-invoicing mandate represents a significant step towards digitalisation and efficiency in business transactions within Germany. By understanding the requirements and preparing in advance, construction project developers and finance professionals can leverage the benefits of e-invoicing while ensuring compliance with the new regulations.

Alasco's solutions can play a critical role in easing this transition, offering tools that simplify visualization, automate processing, and enhance data management.

Would you like to learn more about how we will support your e-invoicing adoption? Please get in touch and subscribe to our newsletter to stay updated on the topic of e-invoicing!