France will introduce mandatory e-invoicing and e-reporting in a phased approach starting July 1, 2024. All French businesses will need to be able to receive e-invoices from their suppliers from this date. We have set out some of the key details of this new mandate below:
Business-to-Government (B2G) e-invoicing has already been implemented in France from 2017 and has been mandatory since January 1, 2020. Businesses use the Chorus Pro platform to issue e-invoices to public bodies and Government agencies and 140 million invoices have already been issued through this platform.
French VAT registered and established companies will need to issue e-invoices to business customers in France. The e-invoicing mandate legislation does not currently apply to foreign businesses without an establishment in France. However, please note that some foreign companies not established in France, but VAT registered in France, will be subject to the new e-reporting obligation where their customer is not a business customer (including private individuals). Where supplies of goods or services are specifically exempt from VAT and therefore exempt from tax invoicing, they will also not fall within the scope of e-invoicing and e-reporting, for example certain banking and insurance services, medical and health services, educational services).
E-invoicing and e-reporting will be introduced in a phased approach across three phases depending on the size of the business. However, all companies, regardless of their size will be required to receive invoices in electronic format from July 1, 2024 when their suppliers are required to issue e-invoices. The first wave of companies that need to comply will be large companies by July 1, 2024, followed by SMEs by January 1, 2025 and smaller SMEs/VSEs by January 1, 2026.
"E-reporting" refers to the transmission to the French tax administration of certain mandated data relating to transactions that are not covered by the e-invoicing mandate. Therefore, notwithstanding that there is no requirement for French companies to physically issue e-invoices to private consumers (B2C) or to customers based outside of France (including exports and intra-Community supplies), the transactional data must be submitted to the French tax administration. E-reporting will therefore complement e-invoicing and allow for the French tax administration to eventually pre-complete VAT returns for French taxpayers. Imports of goods are not covered by e-reporting and this is because all Import VAT will now be reported through the VAT return (with automatic pre-filing in the VAT return based on import data communicated by importers through the customs declaration).
To assist the French Tax Administration with pre-filling VAT returns and determining the VAT collected, payment information for invoices or sales where the tax point date is on payment must be also reported by the supplier under the e-reporting mandate, unless the supplier has been authorised to pay the VAT accounted for on an accrual basis under régime des debits", or the customer is liable to account for VAT under the reverse charge mechanism. We are awaiting further detail on the payment data that is required but this will likely include:
As the supplier will not be able to impose an e-invoice format on the customer, the partner platform may also convert the format of the e-invoice into a format requested by the customer. However, this must be done in a way that ensures the authenticity, legibility and integrity of the invoice data.
The French government has decided to opt for the Y-Scheme. In this model, electronic invoices are validated by a Certified Provider prior to being reported to the government. One of the countries that served as a reference for this model is Mexico. The success of its CFDI tax system has become an example for many other countries.
Chorus Pro will now become the public invoicing platform. In addition to its existing functions for the declaration, transmission and receipt of electronic invoices in the B2G area, new features will be added for the implementation of the new AND system, including the management of B2B invoicing and e-Reporting. The new B2B2G portal is called the Public Billing Platform (Portail Public de Facturation - PPF).
The public invoicing portal is a publicly trusted third party responsible for concentrating invoices and invoicing data sent by companies and forwarding them to the tax administration. Among its main functions will be:
The Dematerialization Platform will oversee transforming, validating invoices and sending them to the French tax authorities. As well as reporting the invoicing data required for e-Reporting to the government.
In the Y-Scheme, companies create electronic invoices and accounting documents, sending them to the Certified Private Platform for validation. The CPP performs all relevant controls required by the DGFiP and, after the invoices are verified, delivers them to their recipients. The CPP will also report the necessary tax information to the DGFiP through Chorus Pro.
The DGFiP has also created the Annuaire, a centralized register with the identification data of companies to facilitate the exchange of electronic invoices between private companies and government entities.
Among the latest measures announced by the ministry of economy and finance exists the new Annuaire. It is a centralized directory where all parties will be able to search for the necessary information to correctly route electronic invoices.
The flow of electronic invoice interchanges in France obligates companies to generate notifications regarding the status of the transaction, considering the entire life cycle of the issued documents. The goal is to have complete traceability over the document and to rapidly detect any possible issue during its life cycle.
French tax authority has defined a series of mandatory and recommended statements to be transmitted during the invoice flow. The mandatory statements of the Nominal Life Cycle of electronic invoices are:
Besides electronic invoices, companies will have to report a series of digital tax reports, depending on their commercial transactions. Currently it has been stated that the following information must be reported:
Given the positive results of B2G e-invoicing, the government decided to extend its mandatory use to private companies. However, unlike the Italian model, France has decided to delegate the validation of invoices to CPPs in their B2B e-invoicing model.
EDICOM as a global e-invoicing provider and trusted third party has the technical and legal capacity to generate, receive, send and store e-invoices in any B2B, B2C and B2G environment, as well as to perform the e-Reporting invoice information reporting required by the DGFiP.
These mandates were initially scheduled to be gradually implemented, with all taxpayers required to receive e-invoices for purchases effective 1 July 2024, and for sales, France planned to implement the e-invoicing and digital reporting mandate in three phases:
An invoice is a document that itemizes and records a transaction between a business and a customer. Invoices are frequently used in B2B payments that have high average volume order values or require custom contracts with customers. Similar to the rest of Europe, invoicing is very common in a business setting in France as most B2B payments are conducted by bank transfers that are almost always initiated with an invoice.
French invoicing rules apply if the sale of goods or services is taxable in France. [1] Businesses are generally obliged to issue invoices for sales of goods or services to another business. This also applies to advance payments made in respect of such sales. The issuance of invoices is not mandatory for sales of certain exempt services.
Although there is no general obligation to issue invoices to nonbusiness customers, French businesses must issue invoices for sales of goods to private individuals in other EU countries if the One Stop Shop (Union scheme) is not used.
An invoice must generally be issued when the supply of goods or services is made. However, invoices can be issued periodically on a monthly basis for several sales in the same calendar month. The invoice is then issued on the last day of the month at the latest.
Invoices can be issued by electronic means provided that the authenticity of the origin, the integrity of the content, and the legibility of the invoice is ensured. Electronic invoicing is subject to acceptance by the recipient.
For tax purposes, the invoices must be stored for six years. However, a longer document retention period may be prescribed by commercial law. The obligation to retain invoices applies to both sales and purchase invoices.
Over the past decade, the French government has launched strategic initiatives to increase its efficiency in collecting VAT. Technologies designed to achieve this goal are e-invoicing and e-reporting. According to legal order n2021-1190, VAT-liable business documents, such as e-invoices, must be registered on and reported to the governmental platform Portail public de facturation (PPF) or public billing portal.
Companies subject to VAT in France will need to be able to receive e-invoices in the mandated formats UBL 2.1, UN/CEFACT CII, and Factur-X. Make sure your AP solution can receive and process the permitted formats.
E-invoices and e-reporting data can be submitted directly to the government platform PPF (Portail public de facturation) or through an accredited service provider, known as PDP (plateforme de dématérialisation partenaire). This 'Y-model' means companies no longer send invoices directly to customers but via PPF or PDP.
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