Electronic invoices in France will be mandatory in 2023!

All companies will be obligated to use e-invoicing in France in 2023. This was set in place to reduce VAT fraud and to make invoice management easier for businesses.

The French government has recently announced sweeping new electronic invoicing requirements to help tackle VAT evasion. By 2025, new eInvoicing and eReporting obligations will apply to Business-to-Government (B2G), and Business-to-Business (B2B), including cross-border B2B transactions.

This marks another major step towards electronic trading as European governments try to narrow the VAT gap, estimated to be over €164 billion in 20201. Companies that trade in Europe, and globally, must prepare for a multi-standard, multi-format eInvoicing environment.

In the meantime, countries are looking to move from the traditional ‘post-audit’ model of tax to a ‘clearance’ model where information is sent to the tax authorities either simultaneously, slightly before, or slightly after the invoice is exchanged between buyer and supplier. This increases the efficiency of tax collection while removing many reporting and declaration requirements form companies.

In addition, the evolving clearance model will lead a trend towards combining fiscal documents like invoices with other business and supply chain documentation. Digitizing documents and information related to the transport, delivery, customs, and even manufacturing of goods allows them to be integrated with eInvoicing and your company’s ERP system to automate a great deal of the invoicing and tax collection processes.

Sweeping eInvoicing changes in France

In 2014, directives 2014/24/EU and 2014/55/EU were released, paving the way for mandatory B2B eInvoicing across EU states, which came into force for large organizations in December 2020 and a year later for SMBs. The upcoming mandate from the French government builds upon this Europe- wide B2G requirement to extend eInvoicing and eReporting into the B2B sector.

eInvoicing is a major provision in Article 153 of the French Budget Law for 2020. The article sets out the government’s ambition to make eInvoicing mandatory on 1 January 2023 at the earliest, but not later than 1 January 2025. It stipulates that France will:

• Introduce mandatory e-invoicing via e-invoicing service providers for domestic B2B transactions

• Introduce mandatory eReporting obligation for cross-border B2B transactions

In November 2020, the Directorate General of Public Finance (DGFiP) issued its report on the development of e-invoicing in France. The DGFiP favours a technical model where invoices can transit directly between certified private platforms without using the public platform. Certified private platforms would extract the information for the authorities from invoices and forward it to the public platform, which would then group the information before sending it to the DGFiP, enabling multiple billing formats.

In addition, every eInvoicing obligation must be accompanied by an eReporting obligation to achieve a wide set of data and obtain more information, essential for the identification of the VAT owed

Meeting eInvoicing obligations in a rapidly changing world

The increase in European mandates is just another example of the rapid uptake of eInvoicing by many countries and regions around the world. Complying with global e-invoicing regulations is an increasingly complex process.

When working with trading partners around the world, adopting e-invoicing processes will reduce risk. However, every country processes e-invoice differently, from applying different levels of Value

Added Tax (VAT), to a variety of invoice archive requirements, and applying digital signatures. Businesses are faced with different platforms, different data schemas and different information requirements in each jurisdiction.

Managing the changing regulatory environment is extremely difficult to achieve without deploying an enterprise eInvoicing enablement and compliance solution.

Contributing Advisors