Preparing for E-Invoicing in 2027: The Obligation Companies Now Face

With e-invoicing from 2027, the risk lies in your master data 

In recent months, many companies have prepared their ERP systems for XRechnung or ZUGFeRD in the run-up to the e-invoicing obligation from 2027.

What often goes unchecked is the data inside these formats.

That's because e-invoicing software and ERP validators only check whether the XML structure conforms to the EN 16931 standard. They don't check whether the master data behind it is correct in content.

Errors in the content of e-invoices put the input tax deduction at risk, even when the format is formally correct. The Federal Ministry of Finance has made that clear (the current BMF FAQ on the e-invoicing obligation gives you binding information on this).

With a wrong VAT identification number (VAT ID), a missing country code or a tax rate that isn't broken down, the invoice is technically accepted. However, the input tax deduction can be denied retroactively.

The legal framework for the e-invoicing obligation from 2027 

First, you need to know the planned phase-in. Since 1/1/2025, under the Growth Opportunities Act, all companies must be able to receive e-invoices electronically.

From 1/1/2027, the issuing obligation applies at first to companies with prior-year revenue of more than €800,000 (see the German VAT Act, Section 14 UStG and Section 27 (38) UStG). From 1/1/2028, the obligation applies to all B2B companies regardless of revenue.

Note: You should check all information on deadlines and thresholds with your tax advisor. Xentral doesn't provide tax advice.

The required formats are XRechnung and ZUGFeRD. Both must comply with the European standard EN 16931. XRechnung is a pure XML format and machine-readable. ZUGFeRD combines a readable PDF with an embedded XML layer, making it readable for humans and machines alike. Which format is used depends on the recipient: public-sector buyers generally require XRechnung.

What's most likely to be underestimated during the rollout, though, isn't the format but what's behind it.

Why e-invoicing rollouts fail anyway: the master data risk 

Anyone who considers their e-invoicing rollout finished as soon as the format validates still has the real homework ahead of them. The format is the packaging and the master data is the content. And that can become a problem in four ways.

Error 1: Wrong or missing recipient VAT ID 

The invoice is formally valid. The VAT ID fields are filled in. But the recipient's stored VAT ID is outdated or wrong. That means the recipient's input tax deduction can be denied retroactively. This is especially critical for existing customers whose master data hasn't been updated in years.

Xentral supports B2B validation directly. Validation tools automatically check VAT identification numbers in customer profiles and distinguish between B2B and B2C orders.

Error 2: Missing mandatory BT codes 

E-invoices require certain business terms (BT) as mandatory fields. If you haven't maintained them in your ERP master data, you can't generate a valid invoice. The e-invoice is technically rejected on sending. This mostly affects companies that have so far maintained customer master data only for PDF invoices, where these fields didn't matter.

Error 3: Wrong country code 

BT-40 (seller country) or BT-55 (buyer country) is filled in incorrectly, for example because the country code was historically maintained as free text (rather than as a structured ISO 3166 code). As a result, you get a wrong tax rate calculation and therefore a faulty invoice. This is especially relevant for companies with international customers or suppliers.

Error 4: Mixed tax rates without a breakdown 

Invoices with different tax rates must be broken down by line item in e-invoices. If you haven't differentiated in your item master data, you produce faulty invoices. That's relevant, for example, for food & beverage companies, where 7% and 19% appear on the same invoice, but also for retailers with mixed ranges.

What structured master data in the ERP actually means 

For a legally compliant e-invoice, certain ERP master data isn't needed as a PDF text layer but as evaluable, structured fields. The difference is crucial: a free-text field can't be validated by machine, whereas a structured field can. And only structured fields are correctly transferred into the BT codes of the e-invoice.

Customer master: the three critical fields

• VAT ID: Must be maintained as its own structured field for each customer (not in the address field or as a note). It's transferred directly into BT-48 (Buyer VAT identifier) of XRechnung and ZUGFeRD. Xentral's ERP automatically validates VAT identification numbers and thereby distinguishes B2B from B2C orders.

• Country code: BT-40 (seller) and BT-55 (buyer) must be available as structured ISO 3166 country codes, not as free text.

• Leitweg ID (for XRechnung to public-sector buyers): Must be stored in the customer master as its own field. Without it, no XRechnung can be sent to public authorities.

Item master: tax code per line item

• Tax code per item: Not at invoice level, but per item line. If you currently manage tax rates only at invoice level, you need to change that before 2027.

• Product group/classification: Relevant for later ViDA reporting (from 2030). Maintain product groups in a structured way today, and you won't have to build that up retroactively in 2030.

• Items with a reduced tax rate or tax exemption: Must be flagged as their own tax code in the item master (not as a free-text footnote on the invoice). In our lexicon article, you can learn more about how to maintain item master data in a structured way.

Prices and discounts: structured fields instead of free text

• Discount types in structured fields: Discounts must be stored as their own fields (percentage or absolute amount) in the ERP, not as a free-text footnote. XRechnung requires discounts as their own BT fields.

• Payment terms and cash discounts: Must be available as evaluable fields, not as free text in the invoice body.

Items that today are marked "tax-exempt" or "reduced tax rate" only in the PDF text will become a problem in 2027. So the changeover starts with data maintenance in the ERP.

How Xentral solves e-invoicing and master data together 

Xentral solves the master data risk structurally: the fields needed for a legally compliant e-invoice are anchored directly in the ERP. They sit in the customer and item master, not in a subsequent export. The technical functions required for German B2B compliance from 2027 are already supported on the platform.

BT code support for e-invoicing: mandatory master data fields directly in the ERP 

Missing BT codes make it technically impossible to generate e-invoices. Xentral's ERP supports the mandatory BT codes directly. Recipient ID, country code and VAT ID are transferred automatically from the structured customer master data into the e-invoice.

ZUGFeRD + XML sending: automatic as soon as the recipient is ready 

Manually sending different formats depending on the recipient is error-prone. Xentral's ERP can send invoices automatically as ZUGFeRD (PDF + XML) or as pure XML. The format isn't chosen manually but controlled from the customer master. As soon as the respective recipient can receive e-invoices, sending runs automatically in the right format.

Payables module: process incoming invoices in a structured way 

Since 1/1/2025, all companies must be able to receive e-invoices. In the payables module, incoming invoices can be captured and processed in a structured way. Invoices that arrive by email are read and processed using automatic text recognition (OCR). Media breaks and manual retyping are a thing of the past.

Incoming invoice agent (beta): AI reads, checks, suggests 

Manually processing incoming e-invoices costs time and creates errors. The incoming invoice agent reads incoming e-invoices, extracts BT codes and tax data, checks them against the purchase order and creates a posting suggestion.

The agent thus takes over the routine, and your finance team approves afterwards. That's the direct link between receiving e-invoices and correct posting.

GetMyInvoices integration: invoices from all sources in one place 

Through the GetMyInvoices integration, Xentral collects invoices from various sources in one place, creating the basis for structured processing and e-invoicing compliance. That's regardless of which channel the invoice arrives through.

Outlook: ViDA and live reporting from 2030 

The e-invoicing rules from 2027 are the prelude to fully digitalized tax communication. ViDA (VAT in the Digital Age) is the EU initiative for digital real-time VAT reporting. It's planned from 2030.

Companies are to report VAT data to the tax authorities in real time in the future. This runs via dedicated networks such as Peppol directly to national and EU portals and serves real-time tax monitoring in cross-border trade.

Preparing for e-invoicing from 2027 is the first step toward fully digital tax communication.

By building up item master data with product groups and tax codes in a structured way today, you lay the foundation for it. Product group classification, tax code per item and structured customer data form the same data basis for e-invoicing 2027 and ViDA 2030. If you only catch up in 2029, you'll face a significantly bigger data project.