ZUGFeRD vs XRechnung: Which E-Invoice Format Should You Use in Germany?

So, you’re running a business in Germany and suddenly everyone’s talking about e-invoicing mandates coming in 2025?

You’re probably scratching your head, wondering what ZUGFeRD and XRechnung even mean, let alone which one you should use for your business. Don’t worry, you’re not alone in this confusion.

Let’s break down everything you need to know about these two e-invoice formats so you can make the right choice for your business.

What’s All This E-Invoice Fuss About?

Here’s the deal: Since January 1, 2025, companies in the B2B sector must be able to receive and process electronic invoices in XRechnung or ZUGFeRD format. By January 1, 2027, they will also be required to issue and send invoices in these formats.

Think of e-invoices as super-smart digital documents that can talk directly to your accounting software. Unlike those PDF invoices you’ve been emailing around, the former contains structured data that machines can read and process automatically.

The benefits are pretty sweet:

• No more manual data entry headaches
• Faster payment processing
• Fewer human errors
• Cost savings on paper and postage
• Better for the environment

ZUGFeRD

ZUGFeRD (that’s short for “Zentraler User Guide des Forums elektronische Rechnung Deutschland” – quite a mouthful, right?) is like the Swiss Army knife of e-invoices.

Here’s what makes it special:

The Hybrid Approach

ZUGFeRD has two components: a PDF file and an embedded XML file. This means you get the best of both worlds, a normal-looking invoice that humans can read and machine-readable data for automated processing.

It’s like having a bilingual document that speaks both “human” and “computer” fluently.

Perfect for Most Businesses

ZUGFeRD works great for:

• B2B transactions (business-to-business)
• B2C transactions (business-to-consumer)
• Some B2G transactions (business-to-government)

XRechnung

XRechnung is the no-nonsense, government-approved format that’s all business, no frills.

Pure XML Power

The XRechnung is based on an XML data format. Instead of a readable document, the XRechnung consists of a data set in the form of lines of code.

Think of it as the raw data your accounting system craves, structured, standardized, and ready for automation.

When You MUST Use XRechnung

The XRechnung format is required for B2G invoices. If you’re billing any German government entity, federal administration, or public institution, XRechnung isn’t optional, it’s the law.

Since November 2020, this has been mandatory for all public sector invoicing.

The Head-to-Head Comparison

Let’s put these formats in the ring and see how they stack up:

The Real-World Differences

Readability

With ZUGFeRD, your accountant can still print out invoices and read them like normal. xRechnung is a purely XML-based format, ensuring interoperability and adherence to European e-invoicing standards. But you’ll need special software to make sense of it.

Implementation

• ZUGFeRD: Businesses can implement it gradually, integrating it with existing processes without significant disruption.
• XRechnung: Requires compliance with specific technical standards, which may necessitate more comprehensive changes to invoicing systems.

Which Format Should You Choose?

Here’s your decision tree:

Choose ZUGFeRD If:

• You primarily deal with other businesses (B2B)
• You want easier adoption with less technical hassle
• Your team needs to read invoices visually
• You serve mixed customers (private companies and some government entities)

Real Example: A manufacturing company selling to automotive suppliers would benefit from ZUGFeRD’s flexibility and visual PDF component for their sales team.

Choose XRechnung If:

• You primarily invoice government entities
• Your systems are already set up for pure XML processing
• You need strict compliance with public sector requirements

Real Example: An IT consulting firm working exclusively with German federal agencies must use XRechnung for all their invoicing.

The Smart Play: Hybrid Strategy

Yes, ZUGFeRD integrates XRechnung; you can use both versions in parallel. This simplifies the invoicing process, especially if you send invoices to both private and public clients.

Many businesses are going with ZUGFeRD because it gives them the flexibility to handle both private and government clients with one system.

Implementation Timeline: What You Need to Know

Here’s the rollout schedule that affects everyone:

• January 1, 2025: Must be able to RECEIVE e-invoices
• January 1, 2027: Companies with € 800 K+ revenue must SEND e-invoices
• January 1, 2028: ALL companies must send e-invoices

Common Myths

1. Myth: “E-invoices are just PDF invoices sent by email.”

Reality: Nope! A digitized invoice is not automatically an e-invoice. A digitized invoice is a physical version of an invoice that has been scanned and converted into a digital format. An e-invoice, on the other hand, is created from the outset in a structured electronic format that enables automatic processing.

2. Myth: “I have to choose one format and stick with it.”

Reality: Many businesses use both formats depending on their customers’ needs.

3. Myth: “This is too complicated for small businesses.”

Reality: ZUGFeRD offers a more flexible approach, making it easier for businesses of all sizes to adopt e-invoicing.

Getting Started: Your Action Plan

Step 1: Audit Your Customer Base

• How many government clients do you have?
• What do your B2B customers prefer?
• Are you ready for automated processing?

Step 2: Choose Your Software

Look for solutions that support both formats. Many modern accounting systems now offer built-in e-invoicing capabilities.

Step 3: Test Before You Leap

Start with a few friendly customers who are willing to help you test the new format.

Step 4: Train Your Team

Make sure everyone understands the new processes and benefits.

The Bottom Line

The e-invoicing revolution is here, and it’s pretty exciting once you get past the intimidating acronyms.

For most businesses, ZUGFeRD offers the perfect balance of functionality and ease of use. It’s like having training wheels that you don’t need to remove, the PDF component keeps things familiar while the XML data works its magic behind the scenes.

If you’re dealing with government clients, XRechnung is non-negotiable. But even then, choosing a system that can handle both formats gives you maximum flexibility.

The key is to start now. Failing to adhere to the e-invoicing mandate in Germany could lead to serious financial and legal penalties. Non-compliance may result in rejected invoices, delayed payments, and disruptions in business relationships.

Get in touch with our experts today and let’s make your transition to e-invoicing as smooth as possible!