In the fight against VAT fraud, France is now also requiring companies to use electronic invoicing and transaction-based invoice reporting or e-reporting beginning in July 2024. What does this mean for non-French companies?
France is the fourth country in the EU after Italy, Spain and Hungary to introduce mandatory e-invoicing and e-reporting. French companies are already required to transmit invoices to the public sector electronically since 2020. This is managed through the governmental platform Chorus Pro. The whole procedure and and the platform are now being expanded for business-to-business (B2B) and business-to-customer (B2C) invoice exchange to become the national B2B2G portal for e-billing.
Which requirements for whom?
E-invoicing: Companies are required to issue invoices electronically for all domestic B2B transactions.
E-reporting: The requirement to report invoice data electronically to tax authorities applies to all
- business-to-consumer (B2C) sales
- international B2B sales
- intra-EU deliveries
- foreign companies, provided they are subject to VAT in France and charge VAT
Implementation between July 2024 and July 2026
The change in policy will be introduced and applied gradually:
- by July 1, 2024 for large companies
- no later than January 1, 2025 for medium-sized companies
- no later than January 1, 2026 for small companies (thus all companies)
All invoices issued electronically must also be archived electronically. The prescribed retention period in France is 10 years.
Receipt of e-invoices must be made possible starting July 2024 by all companies whose suppliers are required to issue invoices electronically.
What does this mean for invoice exchanges with French companies?
For companies that are not based in France and are subject to VAT, not much will change for the time being.
When invoicing French companies: For example, if suppliers from the USA or UK send an invoice to a French company, they can send it as a simple PDF invoice. French buyers, in order to comply with their national reporting requirements, must send an e-report (summary of all invoices received within one week) to the French invoice portal PPF.
The French tax authority will analyze the data flow through its PPF portal for control purposes. If companies subject to tax in France do not comply with their invoice reporting obligation, penalties will be incurred.
If a French buyer receives a paper invoice from a foreign supplier, the French buyer must digitize it and report the invoice data to the PPF as well.
When receiving invoices from French companies: If French suppliers send an invoice to a U.S. or UK company, for example, they can send it by email in simple PDF format. Again, they must include the invoice in their e-reporting.
Different requirements depending on the contents of an invoice may need to be observed from country to country when invoices are sent abroad.
The future of e-invoicing and e-reporting in the EU
Companies operating internationally need to closely follow these developments in invoice exchange. For B2B, the trend in Europe is clearly moving from the post-audit process to the clearance center, i.e., to central release platforms provided by the tax authorities. In this context, it is important that global standards such as PEPPOL (Pan-European Public Procurement OnLine) can be met. PEPPOL is an international project with the aim of standardizing cross-border, electronically supported public procurement procedures within the European Union.
Under the heading VAT in the Digital Age , the EU Commission is currently preparing a draft law for, among other things, electronic reporting obligations via e-invoices. Current EU-wide regulations for invoices can be found here.