Although everything seemed to be ready, the French Ministry of Economy announced that mandatory electronic invoicing and e-reporting for private companies, the first phase of which was scheduled for July 2024, is postponed until a later date. The issue will be discussed in the fall, and the new plan is expected to be finalized with the next budget law.
Therefore, for everyone that does business with suppliers and customers outside Italy, it will be essential to be up to date with the developments affecting European and non-European countries regarding electronic invoicing and e-reporting. Here, we will provide an overview, and then an analysis of steps taken by our French neighbor.
In other articles, we have already talked about VIDA (VAT in the digital age), the European proposal that gives a strong push toward the mandatory electronic invoice through a series of measures that are expected to be implemented between 2024 and 2028, barring no significant changes or extensions that could push back some deadlines. While the proposal introduces the obligation to use e-invoices in intra-EU B2B transactions, it also removes some of the bureaucratic hurdles that have held back the adoption of e-invoices in domestic transactions thus far.
Alongside this European maneuver, we must also mention the actions that other countries are preparing in order to implement electronic invoicing at the B2B and B2G levels. This includes France, which will introduce the mandate as of 2024. We covered these aspects extensively in our article dedicated to electronic invoicing in Europe where we provide an overview of the roadmaps that the main European countries have outlined.
It’s clear that Europe plans to progressively expand the use of electronic invoicing in order to increase the degree of digitization of business and procurement processes. One of the main objectives, also reiterated by the ViDA proposal, is to combat tax fraud and achieve greater control regarding VAT-related compliance.
It’s understandable that many European countries took the first step with their public administrations, since these are entities that trigger powerful and complex spending cycles, where the requirements for traceability and transparency are especially important. At the same time, the introduction of electronic invoicing even in relations between private individuals, where it has occurred, has brought benefits that are far from negligible. For example, in Italy, the introduction of electronic invoicing has led to an estimated €3.5 billion increase in VAT revenues in 2020.
Here, we will focus on the recent developments announced in France. Until now there was only an obligation in the B2G sphere, but now, the roadmap in the B2B sphere has been mapped out and the country is ready to go.
Electronic invoicing in France: what the obligation includes
Back in 2014, France was one of the first countries to take action to transpose Directive 2014/55. Starting in 2017, the French state embarked on a phased path to gradually extend the use of electronic invoicing to all government suppliers, starting with larger companies.
From a technical point of view, the French e-invoice format was developed in collaboration with German institutions, Factur-X, which is fully compatible with ZUGFeRD. The format is based on the European CII- Cross Industry Invoice standard; therefore, it complies with the EN 16931 standard.
Following the path already taken by Italy and other EU member states, France recently signaled its intention to progressively extend the electronic invoice requirement to all B2B transactions as well. As early as June 2014, the French government implemented Ordinance No. 2014-697, which requires public administration suppliers to issue all their invoices electronically for any type of goods and services provided to the public sector. Following the introduction of mandatory electronic invoicing, also in the private sector, the results and benefits seen in Italy and elsewhere, especially in LATAM area countries, have incentivized the French government to pursue this path as well. Consistent with these experiences, France expects to gain greater control with respect to taxpayer compliance, reducing tax evasion and, in particular, maximizing VAT inducement. At the same time, the goals are to make processes more efficient, making them as fast, automated, and transparent as possible, and to encourage the digitization of businesses.
The drafted proposal contains two obligations:
- The introduction of e-Invoicing in the B2B sphere, initially scheduled to start in July 2024 and now postponed
- The introduction of an e-Reporting system
Steps for the near future
- From July 2024: all companies required to receive electronic invoices; large companies required to only issue electronic invoices to their business customers;
- From January 1, 2025, the obligation extended to include medium-sized businesses.
- From January 1, 2026, the obligation extended to all small businesses.
However, the above dates will be shifted and replaced by a new timetable to be determined by the French government in the coming months.
According to a recent statement by DGFiP (Direction générale des Finances publiques), the existing Chorus Pro platform used to handle B2G e-invoicing will be upgraded in order to support B2B e-invoicing. This platform will be named PPF (Portail Public de Facturation). To send e-invoices to PPF, French companies will be able to rely on a third party provided for in the reform, namely PDP (Plateforme de Dématérialisation Partenaire) platforms set up by certified companies.
The e-Reporting obligation will be supported by the PPF platform. Through e-Reporting, companies subject to VAT liability on French territory will be required to report data regarding international B2B transactions and for B2C transactions.
Electronic invoices will have to be filled in all mandatory fields, as well as those required by trade regulations, including details regarding individual items.
The joint implementation of invoicing and e-reporting will enable control over the activity of operators, which will enable:
- gaining greater effectiveness in he fight against fraud and VAT evasion thanks to the automated cross-referencing of data
- greater simplification for businesses, thanks to the reduction of administrative burdens, payment times, and the general dematerialization of processes
How electronic invoicing will work in France: the Y-shaped model
The electronic invoicing model chosen by France is called the “Y” model. Invoices will be able to pass directly through certified private platforms, which will act as intermediaries to the public platform. The intermediary platform will be in charge of extracting the data to be sent to the tax administration, while the public platform will offer services for sending/receiving invoices to businesses or professionals who do not want to use intermediaries, thereby managing the integration with the Platform themselves.
How does this Y-scheme-based system work?
- Plateforme Publique de Facturation électronique (PPF): the national platform used for B2G e-Invoicing, Chorus Pro, will extend its services to the implementation of the new Y-scheme, which includes the management of B2B invoicing and e-Reporting. Tax document declaration flows will be concentrated and sent from the provider-managed platforms to be transmitted to the DGFiP IT service.
- Plateforme de Dématérialisation Partenaire (PDP): electronic invoices first need to be validated by a certified organization, the Dematerialization Platform (Plateforme de Dématérialisation Partenaire). This figure will act as a trusted third party, ensuring the validity of the documents before sending them both to other PDPs and to the national invoicing platform. To become PDPs, i.e., intermediaries, technology companies are required to register with DFGiP and ensure compliance with specific requirements. In addition, PDPs must be able to generate invoices in compliant formats.
- The new Annuaire: the French government has set up this centralized managed registry to hold the identification data of companies with the intention of facilitating the exchange of electronic invoices between private companies and the government. It identifies the electronic invoicing platform used by different companies, and it aims to enable interoperability for all users, provide accurate routing information, and ensure the security and traceability of the information contained in the document.
What to expect for the future?
We expect to see the same benefits that have been achieved in Italy, although the non-generalized but only B2B and B2G requirement does not make the most of a tool that has proven to be highly effective and full of benefits for us, such as
- Efficiency and rationalization of processes
- Cost savings
- Reduced payment times
- Environmental sustainability and carbon footprint reduction