Electronic invoicing: What does the reform entail?

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This page presents the main aspects of the reform and is updated periodically (last updated on 04/01/2024).

The legislative framework is defined by the Amending Finance law No. 2022-1157 of 16 August 2022 (art. 26).

Decree No. 2022-1299 and a ministerial order of 7 October 2022 set out the technical and practical aspects of the reform’s implementation.

As announced in a press release dated 28 July 2023 [in French], the finance bill for 2024 (art. 91) has postponed, the entry into effect progressively between 1 September 2026 and 1 September 2027.

Obligation to issue and receive invoices electronically (e-invoicing)

• According to article 289 of the French Tax Code - FTC) this obligation will cover transactions between taxable persons (see our infographic here) or else between a taxable person and a non-taxable legal entity, established in France,  when involving:
  • supplies of goods and services (excluding those exempt from VAT pursuant to Articles 261 to 261 E of the FTC and transactions related to top-secret defence matters) as well as the related payments made on account before the goods or services are supplied;
  • supplies of second-hand goods, works of art, collector's items or antiques via public auction.

• All businesses must be able to receive electronic invoices as from the reform’s initial entry into effect, i.e., as from 1 September 2026 (see our infographic here).
• The obligation to issue electronic invoices in one of the formats accepted by the public invoicing portal (PPF) will come into effect in stages. Businesses that wish to continue using an invoice format not accepted by the PPF will have to partner with a registered private platform (PDP). Large and intermediate-sized enterprises will be required to issue invoices electronically as from 1 September 2026, and SMEs/VSEs as from 1 September 2027.
• A central directory listing all businesses by SIREN number will be used to identify issuers and recipients of invoices, together with their chosen PDPs, where applicable.
• When invoices are sent electronically, certain data will be extracted and sent on to the tax authorities via the PPF (which is being designed based on the CHORUS PRO platform used for B2G transactions). Businesses will be able to choose between issuing/receiving invoices directly or engaging one or more PDPs to assist them. In the latter case, the PDP will carry out certain checks on invoices and extract the requisite data for reporting to the authorities.
• Dematerialising operators (ODs) can apply for PDP status for three years renewable. The approval process involves two stages: applicants must first submit a complete application and, if approved, are granted PDP status and added to the public list of PDPs. They will then have twelve months in which to produce a compliance report, drawn up in accordance with the regulatory conditions and specifications, to make their registration official for the full three-year term (renewable). An additional compliance audit will have to be carried out on the occasion of each triennial identification renewal. The authorities will be able to strike from the list of PDPs any operators that breach their obligations (see, in particular, Art. 242 nonies B–D, FTC Annex II and Art. 41 septies A, FTC Annex IV).
• Under the initial version of the reform, e-reporting obligations were to enter into effect progressively – whether businesses opted to report directly or via a PDP –, with all  mandatory informationbecoming reportable only as from 1 January 2026.
  
  It is not yet clear whether the authorities intend to keep this gradual ramping up of the e-reporting obligations under the new calendar.
  
  What is certain, however, is that the list of mandatory information for invoices will be extended to include: the client’s SIREN number, the full address of delivery or performance of the service, classification of the invoice as being for goods, services or both and, whether the company has opted to pay VAT on debits. All invoices must be submitted and received via a platform (either the PPF directly or else a PDP) in one of the approved syntactic formats from which data can be extracted for reporting to the tax authorities. At present, the approved formats (Art. 41 septies C, FTC Annex IV) are as follows:
  o  a PDF file containing a structured XML file (such as Factur-X);
  o  an invoice sent by means of a structured message (EDI) UBL, CII or Edifact (but, in the latter case, only with the intervention of a PDP);
  o  or an invoice in PDF native format (i.e. a PDF file without an associated XML and directly issued by the company’s information system). This solution intended to be offered only on a temporary basis, except in case of use of a PDP.
• Under the initial timetable, native PDF invoices were to have been accepted only until 31 December 2027. It is not yet clear whether a similar transitional period will be retained now that entry into effect is to be deferred.
• The PPF will also offer businesses the option of entering their invoicing data manually.

Obligation to report transaction data (e-reporting)

This obligation will apply to:

• all French taxable persons, for all transactions listed under the new Art. 290 I, FTC, unless the transaction in question is exempt under Art. 261–261 E, FTC;
• all non-French taxable persons, for transactions performed in France and requiring them to pay French VAT.

The transactions concerned are as follows:

• transactions between two non-French taxable persons, when the operation would be covered by the e-invoicing obligation;
• supplies of goods or services to any non-taxable person, whether established or resident in France or elsewhere;
• intra-Community acquisitions of goods, as well as acquisitions of goods or services on which a French taxable person is liable for VAT under the reverse charge mechanism;
• transactions involving persons established in Monaco, in accordance with the applicable rules.

In addition to VAT exempt transactions and those which are not subject to mandatory invoicing (such as training services, medical activities or certain banking and financial transactions) and those related to top-secret defence matters, the following operations will not be subject to the e-reporting obligation: imports, transactions carried out by non-taxable legal entities or those carried out between non-taxable persons.

The transaction type will determine what data need to be reported (Art. 242 nonies M, FTC Annex II).

For B2B transactions, the data to be reported will mirror the mandatory information for e-invoicing (except for the number used to identify the client – see Art. 41 septies K, FTC Annex IV).

For other transactions (BtoC such as retail sales, distance sales, etc.), the data must be aggregated by day and must include, in addition to the identity of the taxable person, the period concerned, the existence of an option to pay VAT on debit, the category of transaction and, for each tax rate, the amount exclusive of tax and the corresponding tax, the total amount of VAT due in France, the date and the number of transactions.The data should be transmitted in a structured format.

If an invoice is issued (even if it is not compulsory under the tax regulations) its number will have to be reported.

The frequency of transmission depends on the reporting regime to which the company belongs, i.e. at least three transmissions per month for those subject to the normal regime, one per month for those subject to a simplified regime and only one every two months for other companies (FTC, ann. II, art. 242 nonies O and ann. IV, art. 41 septies M).

Obligation to report payment data

Except in situations where the reverse charge mechanism applies or when the service provider has opted for the payment of VAT debit, the tax authorities must also receive (according to the Y scheme similar to the one for the other obligations) information relating to the payment of services falling within the e-invoicing or e-reporting obligations (FTC, new Article 290 A) as well as information relating to public sector contracts, but with the exception of information linked to top-secret defence matters.

The scope of this obligation deserves particular attention, especially as the administration intends to require payment reporting for advance payments received by service providers who have opted for payment of VAT on debits.

The party responsible for providing this information will generally be the service provider based on its cash receipts.

The data to be transmitted are, in addition to the identity number of the declarant and the period covered, the date of collection, the amount collected split by tax rate, and for transactions giving rise to an invoice, the invoice numbers (collections of BtoC transactions are aggregated by day).

The data will ultimately allow (not defined to date) the pre-filling of VAT returns, taking into account the chargeability rules applicable to the transaction.

Compliance with this obligation requires a systematic matching between invoicing data and payment data compatible with the reporting frequency set at once a month for companies subject to the normal or simplified regime (to be transmitted before the 10th of the following month for the former and between the 25th and 30th of the following month for the latter) and once every two months for the other companies (to be transmitted between the 25th and 30th of the month following the end of the period)

Invoice life cycle

The monitoring of the invoices' life cycle will be carried out on the public portal through various statuses. Only 4 statuses are currently considered mandatory for all transactions concerned by the reform: submission and rejection (i.e. by the platform), which are automatically entered, and refusal and receipt of payment (only for companies bound by this obligation) that require manual processing by the recipient for refusal and by the seller or service provider for collection (FTC, ann. IV, art. 41 septies G).

Platform intervention

The PPF which is an adaptation of the CHORUS PRO platform which must be used for B2G transactions, will be the central element of the system for receiving all transaction data, whether transmitted by the taxable person or by a PDP in accordance with the obligations to issue electronic invoices or to transmit data.

The tax administration will receive from the PPF data related to invoices, transaction and payment data that businesses will be required to submit to it, and only this data.

Each PDP will have to be able to enable its users to use electronic invoicing under conditions that comply with the regulations, to carry out certain formal checks and to identify the recipients of invoices, and to update the central directory of data concerning their users. It must, of course, be able to extract and transmit within the required deadlines and in the accepted formats (semantics and syntactic) the data that it receives from its users and that must be transmitted to the tax authorities (FTC, Ann. II, Art. 242 nonies E).

When an invoice covered by the obligation to issue/receive by electronic means is sent directly to the public platform, it is the platform that is responsible for routing the invoice to its recipient, either directly or via a PDP if the recipient has designated one.

Sanctions

Specific sanctions will apply  in the event of non-compliance with the new obligations.

• Regarding the e-invoicing obligation:
  • Non-compliance with the obligation to issue an electronic invoice will be punished by a €15 fine  per invoice with a maximum of €15,000 per calendar year;
  • Any omission or breach by a PDP of its transmission obligations gives rise to a €15 fine per invoice without exceeding €45,000 per calendar year.
• Regarding the e-reporting obligation (transmission of transaction and payment data):
  • the fine applicable to the taxable person is €250 per transfer without exceeding €15,000 per calendar year for each of these two obligations;
  • failure to comply with its obligations by a PDP gives rise to a fine of €750 per transmission capped at €45,000 per calendar year for each of the two obligations.

The operator shall be exempted from each of these sanctions in the event of a first breach in a calendar year and the previous three years and provided that the infringement is immediately remedied or within 30 days of a first request from the authorities.

What are the next stages?

We are waiting on further announcements regarding the next stages of the reform but as summer 2023 drew to a close, the authorities announced that they intended to publish the initial list of approved PDPs in early 2024 and to have the PPF ready in the second half of 2024.

Businesses must not allow themselves to be lulled into inaction by the reform’s deferral: now is the time for them to be reviewing their processes and constraints, working out how they will meet their upcoming obligations, weighing up the various options available to them under the reform and ensuring they and their systems will be ready when the big day comes round.

For businesses, the extra time that should result from the Finance bill for 2024 should not conceal the urgent need to assess the current situation and the constraints specific to their activities deriving from the new obligations, to consider the solutions complying with the reform framework and to plan the necessary upgrade of their systems.

Our infographics

• French companies: here are your new obligations!
• Timetable of the reform
• Glossary of electronic invocing
• E-reporting of payment data
• E-reporting for transaction data
• Central directory: Who does what?
• Central directory: Essentials

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E-invoicing and e-reporting video (1/2)

E-invoicing and e-reporting video (2/2)