Mandatory electronic invoicing is fast approaching in France, just like other European and global countries. In fact, tax reforms aimed at generalising the use of electronic invoicing are spreading with the common objective: minimising tax fraud.
In France, electronic invoicing was introduced in 2020. Relations between the public and private sectors leading to invoicing are managed via Chorus Pro. This platform is set to expand and become the centralised public invoicing portal “Portail Public de Facturation” (PPF) at the heart of exchanges linked to the new electronic invoicing system.
On the other hand, the repeated postponement of the timetable for implementing the reform provides possibility to use the additional time to ensure successful preparation and thus transform what appears to be a constraint into an opportunity.
What is e-Invoicing in France?
Contrary to popular belief, e-Invoicing is not the simple sending of an invoice in PDF format to customers or tax authorities. It is a structured invoice including a minimum set of information and format meets authorities requirements. The formats selected are: UBL 2.2, CII and Factur-X.
Who is affected by electronic invoicing in France?
All companies subject to VAT and domiciled in France are affected by the reform, regardless their size or sector, with a few professions exceptions operating in the sectors mentioned below.
What is the French scope of e-Invoicing obligations?
All domestic transactions between VAT-registered companies established in France, known as domestic B2B transactions. Operations exempt from VAT under articles 261 and 261E of the General Tax Code, such as healthcare services, education and training, real estate transactions, transactions carried out within the framework of non-profit-making associations and banking and insurance transactions, are excluded from the scope.
Relationships between companies established in France and foreign companies, known as international B2B, and those between companies and B2C consumers, involve a new obligation called e-Reporting. To find out more, please refer to our article on e-Reporting.
How does French e-Invoicing work?
The system will be built on the existing Chorus Pro platform. Exchanges of invoices between commercial parties will no longer be permitted. Invoices must pass through via platforms approved by the authorities. However, taxpayers will have several options for issuing electronic invoices.
The French model is inspired by the Mexican model “Y-scheme”, which admits 3 possible circuits:
- Each party uses the Public invoicing portal (PPF)
- One party uses the public portal while the other uses a private platform
- Each party uses a private platform
There are two types of private platform, and it is up to the company to select the one that meets its specific needs: Partner Dematerialisation Platform (PDP) and Dematerialisation Operator (OD).
PDPs are certified service providers and official partners of the French government, guaranteeing compliance with all the tax and legal requirements imposed by the reform. The DGFiP will shortly be publishing an official list of PDPs that will be registered in accordance with stringent certification and audit requirements, guaranteeing a high level of security. Their role is very comprehensive, from sending to receiving electronic invoices.
ODs are operators who support businesses in their transition to dematerialization and offer services similar to those of the PDP. However, they are not registered by the authorities.
They are both responsible for providing the PPF with invoicing information in a compliant manner, but PDPs are able to send invoices directly to recipients (provided that the recipient also requests a PDP as a platform), unlike ODs who must go through the PPF. Invoices are also received via a dematerialisation platform. Each company is free to choose its own platform.
In the case of direct use of the Public Billing Portal, the data will be recorded and consulted manually via the public portal.
There is no deadline for submitting electronic invoices. They will be submitted “as and when required”.
The reform also provides traceability over life cycle of an invoice. Customers are informed that they have an invoice to pay, and suppliers are notified that the invoice has been processed. The stages in the life cycle of an invoice are validated or rejected by statuses. These can be mandatory, recommended or free. Only mandatory statuses are transmitted to the portal. This provides a shared, real-time view of the status of invoice processing and helps to detect any errors during the lifecycle.
What is the implementation timetable?
To ensure that companies and the PPF portal are as well prepared as possible, the government has decided to postpone the timetable originally planned. The obligations will come into force gradually.
Here is the new planned schedule:
It is important to specify that a new timetable with an advance date of July 2025 for large companies has been voted by the Senate. The Finance Bill will be definitively adopted at the end of December 2023.
The size of the company is assessed as follows:
Large companies: companies with at least 5,000 employees or with more than €1.5 billion turnover and total assets of more than €2 billion.
Intermediate-sized companies (ETI): companies with between 250 and 4,999 employees and whose annual turnover does not exceed €1.5 billion or total assets does not exceed €2 billion.
PME and TPE: companies with fewer than 250 employees and an annual turnover not exceeding €50 million or total assets not exceeding €43 million.
What is the archiving period required by French legislation?
According to tax law, the archiving period is 6 years and 10 years according to commercial law. The obligation to retain documents is set at 10 years to produce evidence in the event of a dispute or disagreement.
What are the advantages of the reform?
From the government’s point of view, the implementation of e-Invoicing makes it possible to:
- Track VAT collected in real time. The main reason for this is to combat fraud and, consequently, reduce the State’s loss of revenue from VAT collection.
- Gather information on business activities in real time and help steer the State’s economic policy actions.
From a business point of view, the advantages are multiple:
- Opportunity to automate the invoicing process when implementation of electronic invoicing.
- Reduced invoicing costs and shorter payment times.
- Improved business performance through better management and a reduction of time-consuming administrative tasks.
- Simplification of reporting obligations over time, with pre-filled VAT declarations.
What are new features compared to the current invoice?
In addition to new obligations related to the format, issuing and receipt of invoices mentioned above, this reform will require new information to be added to invoices.
There are 4 new items of information that will be added as part of the reform:
- SIREN number
- Delivery address
- Information on the category of the transaction: delivery of goods, services or both
- Option for VAT on debits to be mentioned, where applicable
What are penalties for non-compliance?
There are penalties of €15 per non-compliant invoice, capped at €15,000 per year.
How to prepare your business?
The additional time granted by authorities must be seized as an opportunity by businesses. Solid initial preparation will not only ensure compliance with the requirements, but also enable companies to benefit from the advantages offered by this reform. Consideration could be given to:
- Mapping its data flows to determine their complexity and measure the efforts required to achieve compliance.
- Determine its functional architecture and check the possible solution to optimise implementation. The solution must be flexible and scalable in the light of changing regulations.
- Participate in the pilot phase to ensure that all use cases are tested and adjusted in time.
- Surround yourself with trusted service providers to provide the best possible support in tackling this major transition.
Concretely, what should we remember?
In short, here are the key points to remember:
- Use of the platform for all invoice exchanges between national B2Bs.
- Mandatory e-reporting for international B2B and B2C transactions.
- Formats: UBL, CII and Factur-X.
- Choice of 3 possible platforms: PPF, OD or PDP.
- Timetable: 2025 Pilot phase, September 2026 for Large and Mid-size companies and September 2027 for SMEs and micro-businesses.
- Archiving period: 10 years.
- Additional information on the invoice: 4 new items.
- Invoice lifecycle traceability: invoices will have statuses that can be shared with the authorities throughout their lifecycle.
- Penalties for non-compliance: €15 per invoice, capped at €15,000 per year.
- Anticipate the transition: take advantage of the extra time allowed to better understand the transition to the new system.
How can RTC support you?
The PDP serves as a reliable source of security for businesses, consistently keeping up with any changes in government regulations. RTC’s expertise in e-invoicing is crucial in helping businesses adjust to the necessary technological updates for e-invoicing. The RTC Suite Platform efficiently manages and transforms your data into the required formats set by France’s Ministry of Finance, ensuring it reaches the right destination successfully. Crucially, the RTC Suite Platform guarantees straightforward and secure end-to-end tax compliance, protecting your business in the dynamic world of e-Invoicing.