New B2B electronic invoicing law in Germany: What you need to know

[monika_wolf]

Starting January 1st, 2025, German regulators will require companies to be technically capable of receiving electronic invoices from their suppliers for domestic business-to-business (B2B) transactions. This new regulation aims to prepare for a later introduction of electronic reporting, streamline invoicing processes and ensure compliance with the European norm (EN16931).

 

Key Points of the New Law

Transition Period 2025-2027: Flexibility in Transmission Channels and Formats

• As of 2025, companies are required to be technically capable to receive electronic invoices from their suppliers. 
• Until 2027, authorities are leaving it up to business partners if they exchange invoices electronically or not. If they choose to exchange the invoices electronically, business partners can also agree on the exchange channel (e.g., Peppol network or email) and file formats (e.g., Universal Business Language (UBL) or Cross Industry Invoice (CII)). While this offers flexibility, it's important for B2B customers to start preparing for the reception of multiple supplier electronic invoice formats and exchange channels.

Requirements after 2027: Mandatory Electronic Invoicing for Large Suppliers

• From 2027, suppliers with an annual turnover above €800,000 must send electronic invoices that comply with the European norm (EN16931). EDI invoices that don’t adhere to the EN 16931 standard are still acceptable. The flexibility in choosing formats (e.g., UBL or CII) and exchange channels (e.g., Peppol network or email) remains.
• From 2028, this requirement will extend to all suppliers, regardless of turnover. EDI invoices not complying with this standard will no longer be permitted.

SAP's Electronic Invoicing Solutions

SAP is well prepared to support businesses in meeting these new requirements:

Current Capabilities

Exchanging Electronic Invoices Through the Peppol Network:

SAP already supports the sending and receiving of German electronic invoices through the Peppol network based on SAP Document and Reporting Compliance, ensuring compliance even beyond 2027.

Sending Electronic Invoices by Email:

SAP also supports sending electronic invoices as email attachments in different formats.

Receiving Electronic Invoices by Email:

As of September 30th, in SAP S/4HANA Cloud Private Edition, SAP S/4HANA, and SAP ERP you can upload and validate the electronic invoices you’ve received by email (SAP Note 3520565). If you are using an incoming automation solution, you can further process the electronic supplier invoice. Further automatization and integration with an email server is planned for December 2024.*

New Developments

Receiving Electronic Invoices by Email:

• For SAP S/4HANA Cloud Public Edition, a solution to receive electronic invoices via SAP Ariba Central Invoice Management is planned for November 15th all based on our SAP Document and Compliance, cloud edition solution.*
• Further enhancement to manually mass upload the received and extracted XML invoice files and validate them in SAP S/4HANA Cloud Public Edition leveraging SAP Document and Reporting Compliance is planned for December 2024.*

* This is the current state of planning and can be changed by SAP without notice – see Regulatory Change Manager for updates.

For more details about SAP offerings for handling electronic invoices received from your supplier, you can check out the following blogs:

• Receiving Electronic Invoices by Email in SAP S/4HANA Cloud Public Edition
• Receiving Electronic Invoices by Email in SAP S/4HANA, SAP S/4HANA Cloud Private Edition, or SAP ERP
• Receiving Electronic Invoices Through the Peppol Network in SAP S/4HANA or SAP ERP
• Receiving Electronic Invoices Through the Peppol Network in SAP S/4HANA Cloud Public Edition
• Receiving Electronic Invoices by Email in SAP Ariba Central Invoice Management
• Receiving Electronic Invoices Through the Peppol Network in SAP Ariba Central Invoice Management 

You can also watch this video: 

Stay Informed

You can stay updated on these changes through various channels:

• Regulatory Change Manager Notifications: Regulatory Change Manager
• Work Zone: SAP Document and Reporting Compliance for Germany. Request access by email to gsworkzone@sap.com.
• Web Sessions and Summits: Recent sessions include a German web session on September 11th, and the SAP Document and Reporting Compliance Virtual Summit 2024 on September 18th. An English web session with a demo has been offered for October 8th.

Embracing these changes will not only ensure compliance but also enhance the efficiency of your invoicing processes. Stay tuned for more updates and make sure your business is ready for the future of electronic invoicing in Germany with SAP Document and Reporting Compliance.

[AlanRoddie]

Hello, any update on how my organization can be compliant on 1st Jan 2025?  We use S4 Hana Public Cloud and have setup DRC Cloud.  How can we test this internally if none of the current suppliers are not connected to the PEPPOL network?

[monika_wolf]

Hi Alan,

thanks for your question!

For SAP S/4HANA Cloud Public Edition you have the option to receive electronic invoices through the Peppol network and two additional options to receive electronic documents by email. About the two new email options:

- You can either use the combination with SAP Ariba Central Invoice Management and SAP Document and Reporting Compliance, cloud edition, both subject for additional pricing.

- Or you can manually mass upload the received and extracted XML invoice files and validate them in S/4HANA Cloud Public Edition leveraging SAP Document and Reporting Compliance, which is planned for December 2024. This solution is subject to the subscription of Document and Reporting Compliance, cloud edition.

Further details can be found in the Regulatory Change Manager.

If you are looking for information about testing the receiving of electronic invoices through the Peppol network, you may find the needed information on this Help Portal page:

Best Practices to Test the Integration with the Peppol Network

If you want to test the receiving of electronic invoices by email, you can take a test XML file (for example from here: https://github.com/itplr-kosit/xrechnung-schematron/tree/master/test/instances) and adjust it with the correct tax ID of the company code that you’re using for testing.

When you want to test the combination with SAP Ariba Central Invoice Management and SAP Document and Reporting Compliance, cloud edition, you can attach this XML file to an email and send it to the email address that is processed in SAP Ariba Central Invoice Management.

When you want to test the manual mass upload option, you can upload the XML file to SAP S/4HANA Cloud Public Edition.

I hope these answers are helpful.

Best regards,

Monika Wolf

[AlanRoddie]

Thanks Monika, looked at the testing help which refers you to a blog for S4 on prem and ECC i think.  It suggests I think to set yourself up as a sender to send a customer invoice?

The new functionality sounds interesting from email to DRC, but is only planned for 13th December, which gives us two weeks to review and be ready for the legislation

We are not connected to the Ariba network.  So we have to test I think via PEPPOL network for the supplier invoice and we can also look at the email option if/when it arrives on the 13th december

[monika_wolf]

Hi Alan,

Yes, you are right, the blog about testing was created for on-premise products. However, the steps in the blog are very similar for the testing for SAP S/4HANA Cloud Public Edition. I can provide you with the links to the documentation for the Step 2 in the blog that need to be performed in your business system:

Example for Germany:

1. For your company code maintain the same identifier that you registered in the service, as described in the documentation Maintain <identifier> for Company Code, for example, for Germany in Maintain VAT Number for Company Code (Mandatory). 
2. Add an entry to the Assign Party ID Types to Companies configuration activity, corresponding to the company code and participant type used at point 1. For the example for Germany, check Assigning Party ID Types to Companies (Mandatory).
3. Enable the company code for source type SRC_FILE in the Activate Source Type Documents for Company Code configuration activity, to be able to receive incoming documents. For the example for Germany, check Activating Source Type Documents for Company Code (Mandatory).
4. Create a test business partner and maintain the same identifier you used for the company code at point 1. Follow the steps described in the documentation Maintain <identifier> for Business Partner, for example, for Germany in Maintain VAT Number for Business Partners.
5. Add an entry to the Assign Party ID Types to Business Partner configuration activity, corresponding to the business partner and the participant type you used. For the example for Germany, check Assigning Party ID Types to Business Partners (Mandatory).

We realize that December 13 doesn’t leave you with a great deal of time. Due to our development and testing activities, we unfortunately aren’t able to deliver the solution any earlier.

Best regards,

Monika Wolf

[Wolfgang_Mayer1]

Dear Monika,

talking about S/4HANA public edition: for both versions you've mentioned,

• integrated via CIM or
• mass upload (directly in S/4 public without CIM?),

it is necessary to license SAP DRC, cloud edition, right?

Thanks & regards

Wolfgang

[ulla_ringler]

Hi Wolfgang,

yes, your understanding is correct, both approaches are subject to the subscription of SAP Document and Reporting Compliance, public edition. 

• If you use the combination with SAP Ariba Central Invoice Management and SAP Document and Reporting Compliance, cloud edition, both are subject for additional pricing.
• If you decide for the manual mass upload of the received and extracted XML invoice files and to validate them in S/4HANA Cloud Public Edition leveraging SAP Document and Reporting Compliance, which is planned for December 2024, this solution is subject to the subscription of Document and Reporting Compliance, cloud edition.

Best regards,

Ulla

[Sanjay_Sota2024]

Dear SAP experts,

How much time will take to implement SAP DRC email solution for Germany?

Regards

[monika_wolf]

Hi Sanjay_Sota,

the implementation timeline can vary depending on the system complexity, customizations, and the existing setup. On average, it may take around three month, but some companies complete it much faster, while other may take longer.

Best regards,

Monika

[Sanjay_Sota2024]

Thanks, Monika, for your reply.

Does this apply to email solution as well?

Regards, Sanjay 

[monika_wolf]

Hi Sanjay, yes, the answer refers to the email solution for Germany.

Best regards, Monika

[Sanjay_Sota2024]

Interesting - Thanks for your reply. Does email solution also requires registration of Peppol network or it can be done without that. 

[monika_wolf]

Hi Sanjay,

If you want to exchange electronic invoices by email, you don't need to register in the Peppol network. However, you still need to create a "virtual" participant in SAP Document and Reporting Compliance, cloud edition using the Configure Participants app (Here you can check how to create one: Creating a Participant for Your Company). The cloud edition does the validation of your electronic document and this “virtual” participant enables this validation.

This blog might also be interesting for you: Email Solution for Germany: Understanding Use of the Peppol Exchange Process in the Cloud Edition 

[Sanjay_Sota2024]

Thanks for your reply