France will progressively move towards implementing online invoicing and reporting for B2B transactions. The transition is scheduled to happen gradually between 2023 and 2025, first for large, and then for mid-size and small companies. The reform was announced in Article 153 of the French Finance Law for 2020.
The French legislators and the tax office have decided against using the Italian SdI model, which is based on real-time reporting. Instead, they have decided to go with the Mexican model. In it, the government-certified tax agents need to submit their invoices for a digital signature before sending them to customers.
As a result of this choice (to not implement the Italian model), businesses who have customers in a few countries in the EU will need to respect different requirements for each country. This might make tax compliance and reporting more challenging, and also might impede the European Commission’s plan to create an unified tax and invoicing system.
E-Invoicing for B2G Transactions in France
Currently, e-invoicing is obligatory for B2G (business-to-government) transactions. B2G e-invoicing was introduced in 2017 and paper invoices were gradually phased out. The businesses who are concerned need to use the Chorus Pro portal, where public administrations receive invoices from suppliers. This was done to increase transparency, facilitate tax compliance and to shorten payment times in the public sector.
The Goals of Implementing B2B E-Invoicing
Similarly to B2G e-invoicing, the objectives of implementing obligatory e-invoicing for B2B transactions are:
- Improve tax compliance and prevent tax fraud through automated checks
- Reduce the accounting and administrative burden on companies and help them become more competitive
- Simplify tax returns by providing pre-filled data
Those goals are similar to the reasons other countries are progressively implementing e-invoicing and direct invoicing solutions.
The Implementation of E-Invoicing in France
Private platforms certified by the state might be introduced to handle invoicing data and transmit it to the public platform (Chorus). Currently, two different models are discussed, and the French state aims to provide continuous support and assistance to businesses, in order to help with the transition.
The reception of electronic invoices will be mandated for all businesses, starting from 2023, meaning that all businesses will need to be able to receive and process e-invoices from their suppliers after January 2023.
E-invoicing will only be implemented for domestic B2B transactions subject to VAT, at least at first. This is done in order not to limit companies’ capacity to make cross-border sales or buy supplies from abroad.
Issuing electronic invoices will become mandatory in three steps. The scheduled rollout date depends on the size of the company:
- January 2023 for large enterprises
- January 2024 for mid-size companies
- January 2025 for small companies
This means that after 2025, all companies will need to transfer all their invoicing and accounting data for domestic B2B transactions to the government via the platforms that will be put into place.
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.