E-invoices in VAT4U
Written by VAT4U Team
Updated at March 17th, 2025
Table of Contents
E-invoices, or electronic invoices, are digital invoices issued, sent, and received in a structured electronic format, like XML, which allows for automatic processing. Unlike PDFs, which are human-readable but not suitable for automation or machine reading, e-invoices are designed to be easily processed by systems. We generate these e-invoices because many governments now mandate them for tax compliance, fraud prevention, and overall efficiency. This helps businesses like ours streamline accounting, reduce errors, and enhance transaction security.
Generation of E-invoices
Before generating e-invoices, there are a few things to keep in mind. First, the company generating the invoices must be either a franchisee or an expert company, and the e-invoice module needs to be enabled.
To enable the e-invoice module, go to the "Companies" section, select your company, and navigate to the "Invoicing" section. If the company is a franchisee or expert, you’ll see an "Enable E-Invoicing" checkbox, which is disabled by default. Once enabled, you'll need to fill out four mandatory fields: the billing reply email (finance email), the contact person’s full name, phone number, and email address. These details are essential for the e-invoice validation process:
Once the e-invoicing module is enabled and saved in the company settings, you can go to the Invoicing module → Manage Invoices and select "Create Invoice" for the company you want to generate the invoice:
After proceeding to the invoicing page, you’ll need to add the necessary invoice content and lines.
If e-invoicing is enabled, you’ll have three options available:
- Create XRechnung.XML – This is an XML file format required by German authorities that allows for fast, automated processing.
- Create ZUGfeRD.XML – This XML file can be embedded into a PDF to be validated alongside the PDF.
- Mark Invoice as Prepaid – This option indicates that the invoice amount has already been paid.
Once these options are set, you can create the invoice. If everything is in place, the system will generate the invoice, and you can download both the XRechnung.xml and ZUGfeRD.xml files.
The invoices will contain all relevant details, including the invoice number, date, type, line items, amounts, tax breakdowns, and whether the invoice has been prepaid. For prepaid invoices, the due payable amount will be marked as zero, reflecting the payment status.
When we generate the ZUGFeRD.xml along with the PDF invoice, the PDF remains readable as usual. However, it also contains an embedded ZUGFeRD XML, which allows it to pass machine validation. This means that while we can read the invoice as a standard PDF, machines will process the embedded XML for automated data extraction and validation.
This process simplifies invoice generation and ensures compliance with e-invoicing standards, making it easier to manage invoices and integrate with government requirements.
