In the rapidly evolving digital landscape, efficiency is key to driving success for businesses. France is taking a leap forward with the implementation of mandatory e-invoicing. Let’s explore how this change in law sets France apart, and consider its implications for large, medium and small enterprises.
The timeline – e-invoicing and e-reporting in France
France has been gradually implementing the e-invoicing mandate, starting with the B2G requirement for companies to send invoices to the public sector in electronic format since 2020. A phased transition to mandatory B2B e-invoicing and e-reporting is also planned, which will cover:
- Large companies
- Mid-sized companies
- Small companies
On July 28, 2023, the French government announced a delay in the implementation of mandatory B2B e-invoicing and e-reporting. The implementation, previously planned for July 1, 2024, has been postponed. The date of commencement will be determined as part of the work on the adoption of the Finance Act for 2024. As part of preparations for the implementation of mandatory e-invoicing, a pilot phase will begin on January 3, 2024, during which participants, suppliers who plan to act as private partner dematerialization platforms, and invoice issuers and recipients will participate in monthly meetings with the Agency for State Financial Computing (AIFE) and report results, including data volume, use case coverage, and incident resolution.
The mandate aims not only to digitize invoicing and improve efficiency but also to combat VAT fraud, enhance business competitiveness, and facilitate VAT returns.
The CTC model in France
Continuous transaction control (CTC) allows tax agencies to collect real-time or near real-time data on business operations. Different countries have adopted various CTC models, such as the clearance model in most Latin American countries, the centralized model in Italy, Poland and Romania, and the real-time invoice reporting model in Hungary, India, Philippines and South Korea.
France has incorporated a mix of CTC models. If the taxpayer decides to connect directly to the government platform (PPF), this form of invoice exchange can be described as centralized CTC (clearance). The Portal Public de Facturation (PPF) can be connected by taxpayers or service providers through API, SFTP, AS2, AS4 or the PPF’s web portal. After an operation is reported, the PPF sends the transaction data to the tax authority. However, if the exchange of invoices takes place through a certified provider (PDP), we will be dealing with a decentralized CTC model. Service providers, known as dematerialising operators (ODs) and certified private platforms (PDPs), help businesses connect to the PPF. PDPs facilitate transactions between suppliers and buyers, reporting operations periodically to the PPF.
E-reporting in France
E-reporting, just like e-invoicing, will be mandated at different times. E-reporting means that information on transactions not covered by mandatory e-invoicing must be reported to the tax authorities. E-reporting requirements apply to international B2B and B2C transactions, as well as payment data. This obligation usually affects an issuer of invoices.
Depending on the transaction to be reported and the tax regime in which the taxpayer operates, the deadline for electronic reporting may be every 10 days or even every two months.
The mandate’s impact on French businesses
The new e-invoicing mandate is one of the more complex e-invoicing laws in the world, so many companies operating in France will find it challenging to meet the requirements. The choice between the PPF platform, dedicated to small businesses, or certified PDPs that will support larger business entities in the field of sending electronic invoices and e-reporting to the tax office, is only the first step.
Companies must ensure that their ERP systems are ready for this change, and the scope of possible modifications cannot be over-estimated in the way a company will exchange data with the government platform: directly reporting to PPF or using PDP services. Once the reform has been implemented, users should be trained on how to execute the processes and use the new tools correctly. Businesses also need to understand the new e-invoicing and e-reporting process.
The global shift towards digitization
France is part of a larger group of countries embracing electronic invoicing. Some of the first adopters of digitization were Latin American countries such as Mexico and Chile, which implemented a clearance model in the 2000s. The clearance model has also been expanding to countries such as Saudi Arabia, China, Indonesia, and Vietnam.
European countries such as Italy adopted the centralized model, and some countries additionally introduced PEPPOL as the preferred exchange mechanism (Sweden, Norway, and Finland). The global shift towards digitization is expected to streamline invoicing processes and benefit businesses in terms of efficiency.
Prepare for mandatory e-Invoicing in France with Comarch
Comarch has actively participated in the implementation of the new French e-invoicing system from the beginning. Our company takes part in PDP registration workshops to deepen the technical and legal knowledge needed for authorization as a registered platform. We intend to continue to gain valuable experiences to provide the best service as a PDP right from the moment of system setup.
As a registered platform, Comarch will act as an intermediary between suppliers and customers, ensuring the integrity, authenticity, and completeness of e-invoices. Comarch e-Invoicing will simplify the e-invoicing and e-reporting process, easing businesses into the digital era.
France’s e-invoicing mandate - conclusion
Mandatory e-invoicing in France marks a pivotal moment in the country’s digital transformation journey. By adopting a unique mix of CTC model elements, France is stepping up its tax compliance monitoring. While businesses face challenges in complying with the complex e-invoicing laws, the shift towards digitization promises greater efficiency and competitiveness.
As the global trend towards electronic invoicing continues, companies worldwide must prepare for the digital era to thrive in the ever-evolving business landscape.
Learn more about Comarch e-Invoicing or simply reach out to our specialists. We’ll be happy to answer your questions regarding mandatory e-invoicing in France and more.