As of today, in France, e-invoicing is compulsory in the frame of B2G transactions only. In this respect, the companies must set-up or post their e-invoices in the Chorus portal.
As per Article 153 of the Finance Law for 2020, French government decided to enlarge the scope of the e-invoicing to domestic B2B transactions as from 2023.
This decision was made to achieve the following objectives:
- Strengthening the competitiveness of businesses by reducing the administrative burden of setting-up, sending and processing paper invoices
- Fighting against tax fraud and reduce the VAT gaps by means of automated cross-checks
- Knowing in real time the activity of the companies in order to adjust the Government economic policies in a more efficient way
- Ultimately, pre-filling of the VAT returns
In October 2020, the Ministry of Finances issued a Report based on extensive consultations of companies, advisors, accountants, e-invoicing service providers.
Extension of the e-invoicing obligations to e-reporting obligations
It arises from this Report that the Government wants to implement a solution that combines e-invoicing and e-reporting.
Indeed, the Government identified that limiting the obligation to e-invoicing would not allow an efficient way of combating tax fraud.
This is notably because the mere B2B invoicing data is not sufficient to understand and to reconstitute the VAT situation of a company.
In this respect, the Government outlined that the identification of the following transactions / information are also crucial:
- Transactions with foreign operators, in order to fight against carousel fraud;
- B2C transactions, in order to assess the amount of output VAT to be declared;
- Payment status, in order to assess the VAT due date for services.
These are the reasons why the Government wants to combine the e-invoicing with an additional obligation to transmit data to the tax authorities. Regarding B2C transactions, there will be no nominative data sent to the tax authorities.
Contemplated models of e-invoicing and e-reporting
At this stage, two architectures of exchanges of e-invoicing are contemplated:
- A model with mandatory transit of the e-invoices through the public platform which would be the only one authorized to ensure the transmission to the client, via, if applicable, the private platform to which the client is affiliated (so-called “V model”);
- A model under which certain private platforms, previously certified, are allowed to transmit directly the invoices without transiting by the public platform (so-called “Y model”).
In all cases, the public platform would allow companies, especially the smallest ones, to set-up and transmit online their invoices and to receive them free of charge.
In addition, the e-reporting for the additional transactions / information would be operated through the public platform which would constitute a one stop shop for the receipt of the data.
Note that at this stage the implementation of the Y model is preferred insofar as companies and operators have indicated, in their great majority, their preference for this model. In fact, companies already using e-invoicing providers would like to limit the costs of adaptation and those that do not have implemented e-invoicing solutions yet could use the public platform.
The Government insists on having a minimal structured data. Taking into account the expectations of SMEs and very small businesses, the public platform will offer the functionality to convert native PDF invoices into a more structured format. However, at medium or long-term, it will be necessary for all companies, whatever their size, to be able to issue native invoices in a structured format.
Mandatory wordings on invoices
Invoices will continue to include mandatory tax and commercial information but also information necessary for the activities to be carried out (reference to delivery notes, to an agreement). Some adaptations will be necessary in order to identify the client with certainty (e.g. SIREN number). The tax authorities will only collect the needed data (identification of the supplier and client, transaction date, taxable basis, VAT amount) and will meet the data protection rules.
Entry into force
The e-invoicing and e-reporting should be implemented gradually.
From 2023, all companies will have to be in a position to receive e-invoices.
Regarding the issuance of e-invoices, a progressive implementation will take place: 2023 for large companies, 2024 for mid-sized companies, 2025 for SMEs and VSEs. E-reporting would follow this timing.
French law amendments
Law amendments will have to be voted in respect of the following aspects as currently not in the regulations:
- e-reporting obligation
- subordination of the right to recover input VAT to the obligation to post e-invoicing
- introduction of new mandatory information on invoices
- amend the modalities and place of storage
Derogations from the VAT Directive will also have to be obtained.
Generalize the use of e-invoicing via platforms that will also transmit the data to the French tax authorities
Introduce the e-reporting obligation for additional transactions / information (B2C transactions, transactions with foreign operators, payment date for services.
As many questions remain open, a new phase of consultation is planned between the different operators.