In France, as in many other EU countries, a tax reform aiming to combat VAT fraud is underway. One of its key features will be the implementation of an e-reporting and e-invoicing system, which businesses will need to use to invoice their clients and send accounting and tax information to the French tax office (the DGFiP, Direction Générale des Finances Publiques).
The system itself is similar to electronic reporting and invoicing systems in Spain, Portugal and Russia. It will be implemented for B2B and B2C transactions between 2023 and 2025, as follows:
- January 1, 2023: Large enterprises
- January 1, 2024: Mid-size enterprises
- January 1, 2025: Small and medium enterprises (SMEs)
Currently, only B2G (business-to-government) e-invoicing is mandatory in France.
From e-invoicing to e-reporting: extension of the scope of the reform
Initially, the reform aimed to make e-invoicing mandatory, but it was extended to e-reporting, as well, after a report issued by the French Ministry of Finance in the last trimester of 2020. The report was the result of extensive discussions with advisors, accountants, and French businesses. It identified certain weaknesses of the proposed e-invoicing system, namely in terms of identifying and combating VAT fraud.
B2B e-invoicing information alone would not allow the tax office to understand each business’ VAT situation in full, which is why e-reporting was also introduced. B2B e-invoicing alone does not provide information on:
- Trade with foreign companies, which is used to prevent carousel VAT fraud (such as the recent case where €14.2 million were seized in Hungary)
- B2C trade, which is necessary to estimate output VAT
- Payment status, which helps estimate the due date for VAT payments.
For these reasons, the French government has decided to implement additional e-reporting obligations, where companies will need to send accounting data to the DGFiP.
What information should businesses declare through the e-reporting system?
All French businesses that trade with foreign customers (both B2B and B2C) will need to use the e-reporting system of the French tax office, in order to declare information on transactions that did not result in an e-invoice.
Let’s now look at the types of transactions which companies will need to declare through the e-reporting system.
International B2B transactions
For non-domestic B2B trade, companies must report the following:
- All trade of goods and services in the EU
- Exports to companies outside of the EU
- Transactions with overseas French territories.
The e-reporting platform will capture similar information to e-invoicing. Intracommunity VAT numbers will be added for EU trade, while for international, non-EU transactions a different code will be used.
For B2C transactions, the reporting obligations will depend on the payment & IT systems that businesses have in place.
- If the company has a POS terminal, it must file daily summaries of all issued tickets.
- If the company is issuing e-invoices, it must use the same system as for B2B invoicing, simply without sending the invoice to the final client through the system (as end clients won’t have accounts on the e-invoicing platform).
- If the company has neither a POS terminal or the possibility to issue e-invoices, it’ll send a weekly and monthly report of its operations.
The frequency of e-reporting will depend on the tax regime of the business, and in general will be either weekly or monthly.
Fonoa Automated Real-time Invoice Reporting Solution
We are aware that new regulations have a substantial impact on how businesses operate. That’s why we built Fonoa Reporting, a solution that automatically reports sales transactions to tax authorities around the world.
If your business is affected by real-time invoice reporting obligations anywhere in the world, reach out to us, and we will help you automate the invoice reporting process.