E-Invoicing Mandate for Small Businesses: 2027 Rules

An e-invoice is, according to § 14 para. 1 of the Value Added Tax Act, an invoice that is issued, transmitted, and received in a structured electronic format and enables electronic processing. The format must comply with the European standard EN 16931 or be agreed upon between the issuer and recipient, provided it enables the correct and complete extraction of the information required for VAT purposes. Common examples are XRechnung (pure XML) and ZUGFeRD from version 2.0.1 onward, i.e., a PDF with an embedded XML file; according to the BMF FAQ, the ZUGFeRD profiles MINIMUM and BASIC-WL are not sufficient.

A PDF file sent by email is therefore not an e-invoice. The law refers to it as an "other invoice," just like a paper invoice.

Issuing: The exemption and where it ends

The exemption for small businesses is set out in § 34a of the Value Added Tax Implementation Ordinance (UStDV). According to the BMF FAQ, small businesses may continue to issue paper or PDF invoices; § 34a sentence 4 UStDV explicitly always permits them to issue the "other invoice." A PDF sent by email still requires the recipient's consent (§ 14 para. 1 UStG). However, they may also voluntarily send e-invoices if the customer accepts them.

The exemption depends solely on your status, not on you as a person. If you fall out of the small business regulation, the general rules apply from that point on for transactions with other domestic businesses, including the transition periods. This exact transition is precisely what most small business owners overlook.

Receiving: The part that already affects you

If a supplier, landlord, or software provider sends you an e-invoice as a business owner, according to the BMF FAQ, you cannot invoke the small business regulation and refuse to accept it. According to the BMF's presentation, an email inbox is sufficient for receiving invoices. A special portal or interface is not required for this.

However, the inbox alone is not sufficient for reading the invoice. An XRechnung is an XML file, and in an email program it looks like source code. So you need a viewer or software that displays the data in a readable format.

Where the rule doesn't apply at all

According to the BMF FAQ, two areas are generally exempt from the e-invoicing obligation, regardless of whether you are a small business or not:

• Invoices to private individuals (B2C): Here, paper and PDF remain permissible; an e-invoice is only possible with the customer's consent.
• Small-amount invoices up to 250 euros gross (§ 33 UStDV) as well as travel tickets: These, too, may be issued as "other invoices."

If you sell exclusively to private customers, this topic therefore mainly concerns you when it comes to receiving invoices.

The following overview summarizes the transition rules from § 27 para. 38 UStG and the BMF FAQ. It only applies to transactions between domestic businesses (B2B). Check the current status of the sources before making any decisions, as the administration regularly updates its guidance.

\* A PDF or other unstructured electronic format only with the recipient's consent (§ 27 para. 38 UStG).

How to read this for November and December 2026: Larger suppliers will switch to e-invoicing starting in January 2027. These include, for example, wholesalers, telecommunications providers, or platforms with more than 800,000 euros in revenue. For you as a small business owner, this means: more XML files in your inbox, even if you don't change anything yourself.

Since 2025, § 19 para. 1 UStG sets two thresholds. In the previous year, total revenue must not have exceeded 25,000 euros. In the current year, it must not exceed 100,000 euros. What counts is the total revenue under § 19 para. 2 UStG: the sum of taxable sales, calculated based on payments received, minus certain tax-exempt sales; sales of fixed assets do not count. When in doubt, have your calculation checked by your tax office.

Calculation in three figures

The 25,000-euro threshold corresponds on average to 2,083.33 euros in revenue per month. This figure is easier to keep track of in everyday life than the annual total.

A fictional example: A caretaker service had generated exactly 21,000 euros by the end of October 2026. That's 2,100 euros per month, already slightly above the average. If more than 4,000 euros are added together in November and December, the 2026 annual revenue will exceed 25,000 euros. In that case, the small business regulation will no longer apply in 2027.

What this specifically changes:

1. From January 2027, you will charge VAT and generally need to file advance VAT returns.
2. For invoices to businesses, the exemption under § 34a UStDV no longer applies. However, with prior-year revenue of no more than 800,000 euros, you may still use paper or PDF in 2027 under the transition rule.
3. From 2028 onward, e-invoices are required for B2B invoices. This applies as long as you are no longer a small business.

For invoices worth around 4,000 euros, it's therefore worth asking in December whether the service will still be performed in 2026 or only in 2027. Since total revenue under § 19 para. 2 UStG is calculated based on payments received, what generally counts is the date payment is received, not the invoice date. Only shift services or payments if it fits the contract. Whether such a shift is permissible for tax purposes is a question for your tax advisor, not a table.

The mistake with the 100,000-euro threshold

The second threshold is often misunderstood. Under § 19 para. 1 UStG, total revenue in the current year must not exceed 100,000 euros. According to the tax authorities' view, since 2025 the revenue that causes the threshold to be exceeded is already taxable — the regulation therefore does not only end at year's end. On a monthly average, this threshold is 8,333.33 euros.

This may sound like a problem for only a few businesses. However, a single large order can trigger the threshold. A fictional trade show builder with 24,000 euros in prior-year revenue who takes on an order worth 90,000 euros in March will quickly exceed the threshold once other revenue is added. Once this threshold is exceeded, the e-invoicing exemption no longer applies.

Receiving invoices is the part where small business owners should act soonest. The following sequence has proven effective:

1. Set up a dedicated address. Decide which inbox suppliers should send invoices to, for example invoices@yourbusiness.com. Share this address with suppliers who are switching at the turn of the year.
2. Test a viewer. Open an actual XRechnung, for example from a test file provided by your software vendor. Check whether the invoice number, date, amount, and bank details are displayed legibly.
3. Recognize hybrid invoices. With ZUGFeRD, you see a normal PDF. However, the relevant data is contained in the embedded XML file. According to the tax authorities' view in the BMF FAQ, in the event of discrepancies, the structured part takes precedence.
4. Archive in the original format. Save the XML file or the hybrid PDF exactly as it arrived, not just a printout or screenshot. The retention period for invoices is governed by § 14b UStG. Under the version in effect since 2025, it is eight years.
5. Complete the document flow. Match every incoming invoice to a payment and a booking record before the month ends. This way, an invoice that's just sitting as an unreadable attachment in your inbox will be noticed in time.

A typical error pattern: The email with the XRechnung is read, the attachment looks unusable, and only the text of the email is filed. Months later, the supporting document is missing. So test step 2 before January, not only when the first real case arises.

Small business owners may write e-invoices but are not required to. Whether it's worthwhile depends on your customers, not on the software. These six questions can help with the decision. Each "yes" answer counts as one point:

Decision rule: With 0–1 points, the PDF remains the simpler solution. With 2–3 points, it's worth running a test with a single business customer. With 4 or more points, you should set up e-invoicing now. Otherwise you'll have to make the switch under time pressure if you exceed the small business threshold.

The first two questions carry more weight than the others. For invoices to public sector clients, separate requirements apply under the federal and state e-invoicing laws. These apply independently of § 14 UStG. Ask the client about the required format and submission method before sending your first invoice.

What looks different in a small business e-invoice

Even in the XML file, you do not show VAT. In practice, many programs use the tax category for tax-exempt sales for this purpose and add a note referencing § 19 UStG as the exemption reason. After creating the invoice, check with a validator whether it passes the validation rules. Also check in the readable display whether the note on the small business regulation is included.

For paper and PDF invoices from small businesses, simplified requirements apply under § 34a UStDV. These include the full name and full address of you and your customer, your tax number or (small business) VAT identification number, the issue date, the quantity and type of service, the total amount, and a note on the tax exemption as a small business (§ 19 UStG). Compare your template with the wording of the regulation once, rather than relying on older sample invoices.

What must an invoice from a small business look like?

For small businesses under § 19 UStG, § 34a UStDV provides for simplified information. This includes the full name and address of both parties, your tax number or (small business) VAT identification number, the issue date, the service with quantity and type, the total amount, and a note on the small business regulation. VAT is not shown. According to the BMF FAQ, a paper or PDF invoice remains permissible for small businesses.

Which 10 components of an invoice are mandatory?

The list of ten items refers to the information required under § 14 para. 4 UStG for standard-taxed businesses. This includes, among other things, the tax number, consecutive invoice number, tax rate, and tax amount. For small businesses, the simplified information under § 34a UStDV applies, and for amounts up to 250 euros, the rules for small-amount invoices apply. Compare your template with the current text of the law.

How must an e-invoice be archived?

Store e-invoices in the format in which they arrived, i.e., as an XML file or as a hybrid PDF with embedded data. A printout alone is not sufficient. The retention period is set out in § 14b UStG and is eight years under the version in effect since 2025. It's best to clarify with your tax office how the archive should be technically structured.

Under the small business regulation pursuant to § 19 paragraph 1 UStG, is no VAT calculated?

Yes, as long as the revenue thresholds are observed, the small business owner does not charge VAT and does not show it on invoices. In return, there is no input tax deduction from incoming invoices. If the 100,000-euro threshold is exceeded during the current year, according to the tax authorities' view, the revenue that causes the threshold to be exceeded is already taxable.