What is E-Invoicing: Why Electronic Invoices Are Essential for VAT, B2B and B2G.

At a Glance.

• As of 1 January 2025, various countries in the European Union are introducing regulations requiring companies to receive electronic invoices for domestic B2B invoicing. These requirements will gradually expand – by 2028 in many regions – to also mandate the creation and sending of e-invoices.
• An e-invoice is a machine-readable invoice – typically based on a structured data format such as XML. While specific formats differ by country, the purpose remains the same – to enhance compliance, accuracy, and efficiency in invoicing.
• Numerous e-invoicing solutions are available to help businesses meet these evolving legal standards. Lobster is one such solution – designed to comply with global e-invoicing requirements and streamline the handling of electronic invoices.

While Germany’s 2025 e-invoicing mandate has captured attention, electronic invoicing (e-invoicing) is not just a German phenomenon – it’s a rising global standard. With the European Commission pushing forward the VAT in the Digital Age (ViDA) initiative, many countries are preparing for a future where paper invoices are replaced in both B2B and B2G transactions.

For companies that trade with EU partners, operate internationally, or uk businesses and the public sector wanting to automate their invoicing processes and improve invoice accuracy, now is the time to start thinking about an e-invoicing solution. Here are 10 key questions and answers to help you understand the current landscape, European standards on einvoicing and how to prepare.

What is an e-invoice?

While mandates differ by country, many public and private organisations are either required – or strongly encouraged – to adopt e-invoicing, especially when working with government bodies (B2G) or trading cross-border within the EU.

For example, e-invoicing is already mandatory for B2G invoicing in several EU member states and will soon extend to B2B. Even businesses outside the EU that send invoices to European partners may need to comply with specific format or transmission standards.

Who needs to work with e-invoices?

Any organisation involved in B2B (business-to-business) or B2G (business-to-government) transactions within or with the EU increasingly needs to work with e-invoices. This includes suppliers, service providers, and public sector contractors who are required to issue or receive invoices in a structured electronic format. Even if you’re based outside the EU, if you trade with European entities or bid on government contracts, you may be expected to comply with local e-invoicing mandates.

Additionally, multinational companies and small and medium-sized enterprises seeking to optimise their accounts payable and reduce administrative overhead are adopting einvoicing to stay competitive and meet evolving VAT compliance requirements.

When is e-invoicing becoming mandatory?

The move towards e-invoicing mandates is gaining pace across Europe:

• Germany requires businesses to be able to receive e-invoices in domestic B2B scenarios from January 2025.
• France and Spain will roll out their own mandates in mid-2025.
• Belgium will follow in 2026.
• Other EU countries are preparing for similar transitions under the Digital Europe Programme and the VAT in the Digital Age reform.

Even if your country hasn’t announced a formal mandate, aligning early with international einvoicing standards can offer significant advantages – particularly if you work with EU suppliers, customers, or public institutions.

What happens if companies don’t comply?

In jurisdictions with e-invoicing mandates, non-compliance can lead to:

• Invoice rejections
• Payment delays
• Penalties from tax authorities

Even where no mandate exists, failing to adopt standardised invoicing formats could result in operational inefficiencies and friction with trading partners.

What are the benefits of e-invoicing?

Switching to e-invoices delivers immediate and long-term value:

• Efficiency: Automated data capture and streamlined validation reduces processing time.
• Accuracy: Reduces errors from manual data entry.
• Cost savings: Cuts printing, postage, and labour costs.
• Compliance: Keeps you aligned with evolving VAT and digital reporting requirements to avoid tax evasion.
• Security: Ensures secure transmission using digital certificates, digital signatures and structured invoice data.

For finance teams, it’s a game-changer – especially in accounts payable, where automation can reduce processing costs by over 60%.

What technical requirements must an e-invoice meet?

To qualify as a proper electronic invoice, a document must be:

• Issued, sent, and received in a structured electronic format (e.g. XML, not PDF).
• Processable by machines without manual intervention.
• Compliant with national or EU-wide VAT regulations and standards such as EN 16931.

Depending on your market, accepted formats and invoicing methods include XRechnung, ZUGFeRD, Factur-X, FacturaE, and FatturaPA. Many of these support electronic data interchange (EDI) and enable seamless integration with business systems and government portals.

What’s the difference between e-invoicing and formats like XRechnung?

“E-invoicing” is the general term for processing invoices electronically using structured data. XRechnung, ZUGFeRD, and others are specific e-invoice formats designed to meet national or EU standards.

For instance, XRechnung is a purely XML-based format widely used in Germany, while Factur-X blends PDF and XML for better human and machine readability – ideal for SMEs.

What information must be included in an e-invoice?

A valid e-invoice must contain all standard invoice information required by VAT regulations, including:

• Names and addresses of sender and recipient
• VAT number and/or tax ID of the issuer
• Invoice date and number
• Description and quantity of goods or services
• Date of delivery or service
• Net amount, VAT rate, and tax due
• Any relevant notes on tax exemption or credit notes

The structured electronic format ensures that all fields are machine-readable and ready for automatic processing.

How are e-invoices transmitted?

There are several channels available for transmitting an e-invoice. In addition to email and web uploads, businesses can also receive and process electronic invoices via their own portals or through the PEPPOL network. Specialised data integration software makes it possible to automatically transfer incoming invoice data into existing systems for further processing.

PEPPOL, XRechnung, ZUGFeRD, XML, PDF/A-3 – if you’re dealing with e-invoicing for the first time, you’ll come across a range of new terms. We explain the most important ones clearly and concisely in our e-invoicing glossary

How do you send and receive e-invoices?

Companies can send and receive invoices using several channels:

• Email (with structured XML attachments)
• Secure web portals
• PEPPOL (Pan-European Public Procurement Online)
• API integrations via ERP or data integration platforms

Solutions like Lobster’s Invoicing Data Product support key formats and networks, enabling businesses to automateinvoice exchange with both customers and authorities.

E-invoicing compliance made easy – powered by Lobster.

XRechnung. ZUGFeRD. Factur-X. FacturaE. With Lobster, you can create electronic invoices in all key formats and send or receive them through every major channel – not only in Germany, but across international markets.

Our solution helps drive the uptake of e-invoicing by making it easy for suppliers and business partners to submit e-invoices independently and validate them automatically. Thanks to seamless connections with leading e-invoicing networks and clearing systems, your invoices reliably reach both business clients and government authorities. We even offer our own PEPPOL Access Point, making it even simpler to send e-invoice data to public-sector bodies.