Compliance updates - France

Decree No. 2022-1299 of October 7, 2022, and Order of October 7, 2022, were published in the French Official Journal regarding the frequency of transmission of transaction data (e-reporting) and the procedures for obtaining the status of Partner Dematerialization Platform (PDP).

There is now some light on the different deadlines for e-reporting obligations. These will start on the same date as the domestic B2B e-invoice issuance:

• July 2024: E-invoicing and e-reporting obligations for large taxpayers in France;
• January 2025: E-invoicing and e-reporting obligations for medium taxpayers in France;
• January 2026: E-invoicing and e-reporting obligations for the rest of taxpayers in France.

Requirements for Accredited Service Providers (PDP)

The new decree also specifies requirements for service providers aiming to become a Partner Dematerialization Platform (PDP):

• To be able to receive and process one of the three established formats (UBL 2.1, CII or Factur-X) and to issue at least one of them, guaranteeing the integrity and authenticity of the invoice;
• When e-invoicing between 2 PDPs, the supplier PDP must report/send transaction data to the Public Invoicing Platform (PPF, also known as Chorus Pro today) within 24 hours of invoice delivery to the recipient’s PDP.

Invoice status regulations

Alongside the e-invoicing mandate, there are requirements for reporting specific invoice statuses. The following statuses will become mandatory for enabling in the PPF and the other party’s PDP:

• Deposited: when the supplier’s PDP approves the invoice from a technical perspective (pass validations);
• Technical rejection: when the recipient PDP or PPF rejects the invoice for technical purposes;
• Business Rejection: when the recipient rejects the invoice for commercial reasons;
• Payment Collected: when the supplier (only for services) receives the payment in its bank.

Timelines for cross-border invoices

For cross-border invoices, there will be an e-reporting obligation, and the timeline for this reporting will be as follows:

• Within 10 days of the transaction for taxpayers under a regular monthly tax regime;
• Within the first 10 days of the following month for taxpayers subject to a quarterly tax regime;
• Between the 25th and 30th of the following month of the transmission for taxpayers subject to the simplified tax regime.

Other reporting requirements

Finally, there will also be collected payment data reporting requirements for suppliers of services which can be carried out:

• By PDP aggregating the data and reporting it once a day for B2B cross-border and B2C transactions; or
• By transmitting it via the "payment collected" processing status for transactions with an e-invoice.

Pagero and the Agency for State Financial Information Technology (AIFE) have collaborated to enable this functionality, to assist those preparing their businesses for the upcoming e-invoicing mandate.

The buyer can now use the status supported in Chorus Pro to trigger various responses directly to the vendor’s backend financial system (ERP), such as approval, payment remittance advice, rejection or suspension.

The next B2B mandate in France stipulates that the vendor must be notified of payments for tax-deduction reasons, so this new development is of particular interest to stakeholders.

The ability to directly submit this kind of feedback in the ERP will greatly ease invoice traceability and payment. It should also significantly reduce response time, improve the buyer-seller relationship, speed up payments, and boost net cash flow.

How it works

In an electronic data interchange (EDI) transaction through Peppol, the receiver automatically returns an acknowledgement (ACK) to the sending access point upon message reception.

With Invoice Response (IR), a structured message containing the business status of the invoice can also be returned.

Peppol BIS specification states this will help sellers to:

“…initiate an action early in the case when the processing of an invoice is challenged on the Buyer side. The response informs the Seller whether his invoice is in due process or whether that process is disrupted and requires action from Seller”.

We are proud to have developed this capability in partnership with AIFE to offer the Peppol community easier access to Chorus Pro through Peppol.

Pagero has proudly managed and maintained the access point to Chorus Pro since 2018 and has supported all Peppol partners willing to connect their customers to the French public sector.

For more information, please check our AIFE project page.

With the letters sent to the European Commission on 12 April 2021 and 20 September 2021, France requested the authorization to implement an e-invoicing obligation claiming benefits for combatting value-added tax (VAT) fraud and evasion.

Now, France has obtained the derogation from Articles 218 and 232 of Directive 2006/112/EC on the common system of valued added tax, which will allow them to mandate B2B electronic invoicing.

This derogation will apply from 1 January 2024 to 31 December 2026. Therefore, France will have to apply for a new derogation if they want to maintain mandatory e-invoicing on a country-wide level after that date.

The mandatory e-invoicing will start from 1 July 2024 for large enterprises, from 1 January 2025 for medium-sized enterprises, and 1 January 2026 for the rest taxpayers. At the same time, every company in France will be required to be able to receive e-invoices from 1 July 2024 regardless of their size.

The entry into force of electronic invoicing and electronic reporting obligations is slightly delayed.

The new timelines for the mandatory e-invoicing are as follows:

• 1 July 2024: Mandatory reception of e-invoices (previously 1 January 2023)
• 1 July 2024: Mandatory issuance of e-invoices by large businesses (previously 1 January 2023)
• 1 Jan 2025: Mandatory issuance of e-invoices by medium-size businesses (previously 1 January 2024)
• 1 Jan 2026: Mandatory issuance of e-invoices by small size businesses (instead of 1 January 2025)

In addition, the e-reporting obligation for cross-border B2B and domestic B2C transactions is also postponed to the new timelines.

Find more information about the e-invoicing mandate implementation here (in French).

Under the new mandate, all taxable persons, whether subject to VAT or not, will have to issue and exchange e-invoices and other relevant documents electronically.

Furthermore, taxpayers will need to report these electronic documents in real time to the DGFIP (General Directorate of Public Finance). The reporting will be done either via the national portal, PPF, which could be an updated version of the current platform Chorus Pro, or via certified private platforms called PDPs.

Learn more about the timelines, technical specifications and how to prepare for the mandate in our blog.

The French government has proposed the addition of an article to Projet de Loi Finance (budget law for 2021) that introduces mandatory e-invoicing in France, according to amendment no. II-3211. The amendment proposes to act by way of an ordinance within nine months of publication to:

• introduce mandatory e-invoicing via e-invoicing service providers for domestic B2B transactions; and
• introduce mandatory e-reporting obligation cross-border B2B and domestic B2C transactions.

Indicated timelines

The new mandate is expected to be implemented in phases:Receipt of e-invoices

• 2023: All businesses required to be able to receive e-invoices

Issuance of e-invoices

• 2023: Large enterprises required to issue e-invoices
• 2024: Mid-sized enterprises required to issue e-invoices
• 2025: Small and micro enterprises required to issue e-invoices

Anticipated e-invoicing model

In their proposal, the DGFIP (General Directorate of Public Finances) has studied models from multiple countries, weighing the pros and cons of each model.

The model that had a major impact on the outcome of their report was the Mexican model with accredited service providers who ensure compliant e-invoicing. However, in the French approach, these service providers must also ensure quick and secure interoperability among service providers so that the businesses can gain operational benefits of the new obligation. In certain cases, such as with micro businesses or the governmental sector, the existing platform Chorus Pro will act as the service provider.

Next steps

As many questions remain open, such as formats, semantics, security, interoperability and accreditation requirements, a new phase of consultation is planned between the various stakeholders.

Background

Article 153 of the finance law for 2020 sets four targets for mandatory e-invoicing:Issuance of e-invoices

• strengthen the competitiveness of businesses by reducing the administrative burden of constitution, sending and processing of invoices in paper format as well as securing trade relations;
• fight against tax fraud and reduce the VAT gap by means of automated cross-checks;
• allow knowledge of the activities of companies over time in order to promote more precise steering of the government's policy actions;
• facilitate VAT returns through pre-filling.