What is Electronic Invoice?

As an entrepreneur, the creation and receipt of invoices are part of day-to-day business. Usually these are still sent by post, but they are increasingly being sent electronically.
This also makes sense to save paper. But not every scanned invoice is automatically an electronic invoice just because it comes by e-mail or PC fax. In this article, we will explain everything you need to know about electronic invoices.

This is what awaits you today:

  • What is an electronic invoice?
  • ZUGFeRD – what is it and what does it have to do with e-billing?
  • Electronic invoice vs. paper invoice
  • Electronic invoice requirements
  • Check electronic invoice
  • Electronic invoice dispatch
  • How do you have to book an e-bill?
  • Instructions: How to create an electronic invoice
  • Conclusion

What is an electronic invoice?

An electronic invoice is an invoice that you can mainly send to your customers via email. But there is more to it than your usual invoice template , which you simply scanned in. This would also correspond to the definition of a bill that comes to the customer electronically, but the real e-bill has to meet even more criteria.

ZUGFeRD – what is it and what does it have to do with e-billing?

You read that right: The format is called ZUGFeRD . The name stands for Central USER Guide of the Forum for Electronic Billing Germany. This is a standard format for e-bills that was co-developed by DATEV, for example. The overall development was a joint project between various ministries, associations and companies.
This format has the great advantage that it can be used anywhere – both for public administration and for all companies in the private sector. You can even use it if you have international business relationships, because it is not only compatible within the EU, but worldwide!
It fulfills the legal requirements and allows the creation of hybrid and structured invoice formats that are machine-readable and can therefore be processed further automatically. It also contains a PDF version that can be read by the user.

Legal basis for e-billing

In order for your electronic invoices to be accepted by the tax office, among other things, they must of course comply with the legal requirements.

It is particularly interesting to observe that with regard to legislation, there are always innovations here. For example, the standard for electronic invoicing was set in June 2017, before the so-called “E-Invoicing Ordinance” was passed in September of the same year. Among other things, minimum requirements were set here.

However, with regard to other aspects, for example in connection with taxes, there are some requirements to be observed.

According to § 14 UStG

  • 14 UStG regulates that paper and electronic invoices are treated equally in terms of sales tax. This paragraph also specifies when an electronic invoice is deemed to be such and which formats must be adhered to in order to guarantee its authenticity.

Furthermore, the content of this paragraph shows that paper and electrical invoices are now on an equal footing, but that this does not result in any other requirements with regard to the classic paper variant. For electronic invoices, however, it also applies that, for example, the “integrity of the content” and legibility must be guaranteed.

Consent requirement of the invoice recipient

Even if it sounds obvious: if you decide to create an electronic invoice, the respective invoice recipient must of course agree to this procedure. If he continues to insist on the “classic receipt” of invoices, you must take this into account.

However, you are not required to ask for written consent. If you send electronic invoices, and your customer accepts and pays them, this counts as consent.

Permitted formats and transmission options for e-bills

Simply scanning in and sending as jpg, pdf or tif does NOT correspond to an electronic invoice. The following formats are permitted and legally valid:

      • The so-called structured data formats such as XML, EDI or XRechnung
      • In addition, the hybrid data formats, which are composed of a structured file (see above) and an image file. This image file may have a PDF / A format or a ZUGFeRD format.

When transferring the invoice, you can use email, De-Mail, E-Post, computer fax, fax server or web download as standard.

Electronic invoice vs. paper invoice

In the age of the “paper-free offices” in particular, there is a tendency to opt directly for electronic invoices as the “best alternative”. And yes: as you can already read above, the electronic version actually offers you many advantages that you should not underestimate in everyday life.

But: of course, the electronic invoice is not a “free ticket” with which you could circumvent the rules of regular bookkeeping. In connection with the electronic variant, various guidelines must be met, which ultimately help to make your bookkeeping even clearer and more comprehensible for third parties.

The e-bill has a lot of advantages for you, because first of all you save a lot of time and money and work much more effectively. Archiving is also child’s play.

In detail:

  • E-bills do not include all of the usual costs associated with paper bills: paper, ink, postage, envelopes, filing folders.
  • In addition, there is no working time for printing, inserting or going to the post office.
  • Scanning is not necessary because the data is already electronically available.
  • All data can be viewed electronically at any time.
  • There is no obligation to use an electronic signature.

Nevertheless, you also have a few disadvantages, as you have to make sure that the electronic process works properly and properly.

  • The invoice must contain the same mandatory components as a paper invoice
  • It must be genuine, intact and legible. These conditions are listed in § 14 UStG.

To ensure this, you need sufficient internal controls and secure processes that prevent data loss.
Also in the archive you have to make sure that the data is the full 10 years more than readable.
In addition, you can only use electronic invoices if the customer agrees!

Electronic invoice requirements

Some requirements overlap with the disadvantages mentioned above. According to the law, e-bills have been put on an equal footing with paper bills and must therefore also meet the same requirements.
This includes:

Consent of the invoice recipient

It is important that your customer agrees to receive electronic invoices: “Invoices must be sent on paper or, subject to the recipient’s consent, electronically.”
You can also require this consent if you have sent an e-invoice and the customer has not contradicts, but pays. Then he tacitly agreed. It would of course be more polite and safer to discuss the matter with the customer. Mainly because you can then discuss the necessary encryption procedures with him.

Mandatory information on an invoice

All mandatory information on an invoice according to § 14 (4) UStG with regard to the full name and addresses of sender and recipient, tax number, date of issue, consecutive number, quantity and type of delivery, time of delivery, tax rates or tax exemptions … So all information that you already have to consider in your current bills.

Signature law

A law that is closely related to the creation of electronic invoices is the so-called signature law. The corresponding requirements for this have been changed again and again over the course of time. The current regulations relieve the biller to the extent that he – as also explained below – can dispense with the insertion of a digital signature.

The EDI process

Many companies use the so-called “EDI procedure” when sending their electronic invoices. This is a system with which the relevant documents can be securely transmitted.

Of course, it is also important to ensure that the sender’s system and the recipient’s system are compatible. Many companies now use EDI not only for exchanging invoices, but also for transmitting various documents from a wide variety of areas. Legal regulations on the subject can be found under Section 14 (3) No. 2 UStG.

Is the digital signature necessary?

Until 2011 it was still the case that, among other things, the integrity of the invoice had to be proven with the electronic signature. However, since July 2011 this requirement is no longer relevant. However, if you want, you can still add a signature to your electronic invoices.

Proof of origin

Proof of origin is an important criterion on the basis of which an invoice must be checked. In this context, the “authenticity of the origin” is often used. This or proof of origin is guaranteed if the sender (and his address) is the same when the document is received as when it was created. Or to put it another way: on the basis of the relevant information, the creator of the invoice must be clearly identified (also at the address given).
In parallel with the so-called “integrity of the content”, this ensures that the electronic invoice has the same status as the invoice in paper form.

Integrity of the invoice content

The integrity of the content – you need to make sure that the content is not changed or deleted. This must be ensured through operational control procedures. “Integrity of the content means that the information required by this law has not been changed.”

Readability

The legibility of the invoice – you must ensure that the invoice remains perfectly legible for the entire retention period. According to §14 b UStG, this is 10 years. Since the electronic invoice has been put on an equal footing with the paper invoice, there is no difference in the retention period either.

The law allows you to use your own control procedures: “Each entrepreneur determines how the authenticity of the origin, the integrity of the content and the legibility of the invoice are guaranteed”.

Retention period for a digital invoice

As already mentioned, e-bills are on an equal footing with paper bills. There is also no logical difference as to why the electronic invoices should be kept longer or shorter. Therefore, the statutory retention period according to § 14b Paragraph 1 UStG applies here and is 10 years.
During this time, the tax office must be able to check your invoices at any time. If you have used a digital signature, you must of course also save the certificate and archive the signature data.
You also have to electronically archive the invoices – just as you received them. If you print them out and put them in a folder, it will be invalid. All invoices must be saved in their original format!

Check electronic invoice

When you receive an electronic invoice, you need to check that it meets all legal requirements. Otherwise you cannot claim it as input tax at the tax office. If an auditor comes and finds out that you have archived the invoice unchecked and that it does not meet the requirements, you may have to repay the input tax that has already been reimbursed.

Electronic invoice dispatch

Shipping is quite simple and time-saving. You can choose between different permitted formats, such as the one developed with ZUGFeRD or XML, EDIFACT, pdf or IDoc. The invoices are then sent to the recipient in the permitted manner by email, PC fax, De-Mail, email, web download, fax server or, of course, by letter.
By the way, faxing an invoice with a normal fax machine does not meet the legal requirement. This fax is then just a piece of paper for the recipient and must be archived and processed in accordance with the regulations for paper invoices.

How do you have to book an e-bill?

Your accounting makes no difference between the form of the invoice. You have to observe the same principles (GoBD) for all invoices and adhere to the same archiving deadlines and archiving regulations.

Since November 27, 2018, only e-bills have been allowed for the highest federal authorities. The remaining federal authorities will follow suit with this regulation in 2019 (from November 27, 2019) and finally from 2020 (again on November 27) all other authorities will follow. In practice, e-bills and paper bills are sometimes separated according to their accounts. You have to decide for yourself whether you want to make this effort and whether it makes sense for you to keep these processes separate.

Transmission procedure

As strict as the requirements in connection with the creation of an electronic invoice are, the regulations that are in connection with the possible transmission procedures are just as “user-friendly”. Because: It is up to the exhibiting company (provided that the invoice recipient agrees) whether the relevant documents are sent via e-mail or made available as a download.

However, special categorizations apply here with regard to the transmission of invoices by fax. Anyone who opts for the well-known standard version, the fax, sends – at least with regard to German legislation – a paper invoice (!). The situation is different if the document is sent via computer fax. Then it can be sorted into the category of electronic invoices.

Instructions: How to create an electronic invoice

If you are not yet working with electronic invoices and an invoicing program, then you should start thinking about switching to them. When choosing a suitable billing software, you should make sure that the GoBD rules are met and adhered to.

Digitize invoices

However, you have to take some precautions for the changeover. You need a good invoicing program, you have to make sure that you can also receive the e-bills digitally, align your process internally accordingly and set up a secure archive for the digital documents.
To do this, you have to get all the departments concerned on board, i.e. your IT, your purchasing, your sales and your accounting – or your shipping. That depends on how you have arranged your invoicing and who does this. The receipt will of course go through the purchasing department and all invoices will end up in the accounting department.

Creating and sending e-bills made easy

The creation of the electronic invoice is based on the formats discussed under point 2 with the mandatory content listed under point 4. The easiest way to create an electronic invoice is to use an online invoice program.

Thanks to the pre-filled master data, you can simply select your customer and all information will appear automatically. The invoice number is also assigned automatically according to a logically comprehensible sequence. This means that you no longer have to worry about whether you have assigned an invoice number twice. In addition, the invoice program automatically fills in all other mandatory information such as the invoice date. The sales tax is calculated based on the applicable tax rates and thus adjusts your invoice amount accordingly. You can insert header and footer text into your invoices, which you can save beforehand as a text template. You can create your products or services in the article catalog and access them again when creating a new invoice.
If you are a small business owner and you have saved this in your settings, your invoice will automatically be shown without sales tax. You can also select this separately in the invoice processing window for an invoice to another EU country or a third country.

If you are satisfied with all the details, you can easily send, print or download your electronic invoice and then send it.

The e-bill meets the requirements of the GoBD

Since the electronic invoice is on the same level as the paper invoice and must meet the same requirements (which are listed in § 14 UStG), the principles of proper bookkeeping are automatically fulfilled.
With electronic invoices, you should therefore pay particular attention to the following:

  • Electronic archiving in its original state (as received).
  • Immutability, legibility, authenticity of origin
  • Prompt recording immediately after receipt and protection against loss
  • The incoming invoices must be provided with a unique index so that all important data can be traced at any time later.
  • Outgoing invoices must also be stored electronically. You also have to save them at least as a PDF file and archive them just as finely as the incoming invoices.
  • If you convert the incoming invoices into another format for any internal programs, you must then archive both versions and mark them. You have to make sure that the content is not changed, deleted or made illegible during the conversion.
  • In the event of a tax audit by the tax office, you must ensure that the auditor has full access to all of this archive data. And quite easily via a normal PC and screen.
  • If you also archive your paper invoices electronically, you must document exactly how you proceeded and ensure that the electronic form and the original invoice match. This documentation must be easily comprehensible for an auditor and must also be kept for 10 years.

Conclusion

The options available to you in terms of creating and sending electronic invoices are extremely varied and can often help both you and your customers to find paper (and storage space in the office) by sending the invoices by email. to save. Nevertheless, the electronic solutions (even if the requirements for the signature have been relaxed over the years) are of course special documents that should be treated carefully with regard to accounting aspects.

Accordingly, due to the current developments and the numerous advantages that electronic invoices bring with them, they will certainly continue to play a major role in everyday office life in the future. However, so that you can fully benefit from the corresponding technology, it is important to keep yourself informed about the current regulations on the subject and, of course, to ensure that the invoices are available at any time with the appropriate technical requirements. Reliable archiving is a factor that should never be underestimated – also with regard to a possible tax audit.

And: always prepare yourself for the fact that not all of your customers may appreciate the advantages of an electronic invoice, reject it and prefer the classic variant in printed form.

Electronic Invoice