E-Invoicing & E-Reporting obligations in France

In accordance with European regulations, the scope of the e-invoicing obligation will be extended to all domestic transactions between companies starting 1 January 2023; details depend on their respective turnover/size.

The 2020 French Finance Bill (Article 153) sets four objectives for the introduction of this obligation:

• to strengthen the competitiveness of companies by reducing the administrative burden of preparing, sending and processing paper invoices, and securing commercial relations;
• fight against tax fraud and reduce the VAT gap by means of automated cross-checking;
• allow for ongoing knowledge of business activity in order to facilitate more precise management of the French Government’s actions in terms of economic policy;
• eventually, facilitate VAT returns through pre-filling.

Moreover, the 2021 French Finance Bill (Article 195) further adds that the Government is authorized to adopt by way of an upcoming Ordinance any measure necessary to improve and modernize the management by businesses as well as the collection and control by the administration of VAT, by:

• Generalizing the use of electronic invoicing and modifying the conditions and modalities of this practice;
• Instituting an obligation of dematerialized transmission to the administration of information relating to the operations carried out by VATable persons which are not resulting from the electronic invoices, either that they are complementary to those which result from it, or that they relate to operations not being the subject to the electronic invoicing or not being subjected to the obligation of invoicing for the needs of VAT.

A ratification bill shall be submitted to Parliament within three months of the publication of this Ordinance (from our latest news, the publication of this first text is expected end of September 2021).

Next Steps

Discussions are still ongoing as to the necessary data/format. Still, there is certainty of the fact that the paper invoice will no longer exist as an original: The only original will be a digital one, upon which the VAT deductibility rights will depend.

For the companies in the Financial Services sector, even if largely VAT exempt, this new development requires that the impact of the upcoming changes should be followed carefully, in order to anticipate potential adaptations to processes and IT systems. At the very least, the impact of the reform on the VATable activities should be scrutinized.

If you wish to discuss these topics, please contact: Fidal, Paris

Read the WTS Global Financial Services Newsletter here.