October 8, 2021
French Government clarifies new requirement for transmission of electronic invoicing and payment data as from 1 July 2024
On 16 September 2021, the French Government published the ordinance concerning the new requirement to transmit electronic invoicing and payment data, announced in article 195 of the 2021 Finance Act.1 The ordinance specifies the overall framework for economic operators and the flows of sales and purchases subject to the new requirement.
New application schedule
The schedule provided for in the Finance Act has been deferred by 18 months for large companies and by one year for others. Therefore, the electronic invoicing requirement will enter into force:
As anticipated, companies will be classified according to the criteria set forth in decree no. 2008--13542 Accordingly, they will be evaluated at the level of each legal entity and not at the group level.3
The requirement to transmit invoicing information and payment data will follow the same schedule.
The requirement to receive electronic invoices will apply for all companies as from 1 July 2024.
Mandatory transmission of electronic invoices4
Mandatory issuance, transmission and receipt of electronic invoices solely concerns Value Added Tax (VAT)-liable companies established in France. This requirement applies to invoices for sales of "domestic" goods and services between taxpayers (B2B). The requirement also applies to credit notes and deposit invoices.
This is combined with mandatory "electronic transmission of invoicing data"5
For companies subject to VAT and established in France, mandatory electronic transmission of invoicing data involves their sales and purchases that are subject to mandatory electronic invoicing but which are taxed for VAT in France or made from France. This concerns notably sales and purchases made with professionals located abroad, as well as sales to Monaco, for example (international B2B transactions) and sales made in France to individuals (B2C transactions). B2G transactions (invoicing government organizations, which has been electronic since 2020) are also impacted by this mandatory data transmission.
Taxpayers that are not established in France but are registered for VAT in France
Such taxpayers are not subject to mandatory electronic invoicing but will be subject to mandatory transmission of invoicing data for the sales for which they are liable to VAT in France (excluding transactions declared to one of the three VAT "one stop shops").
Mandatory transmission of payment data
Certain payment data relating to services taxed in France will have to be transmitted by the vendor (issuer), in addition to invoices or invoicing data.
Circuit for transmission of invoices and data
The ordinance confirms that taxpayers have the option to transmit their invoices and data by using the public invoicing portal (Chorus Pro), or via an e-invoicing platform operator. A central directory will list all of the information needed to submit electronic invoices. Therefore, it has been confirmed that within the scope of application of the new article 289 bis, electronic invoices may no longer be transmitted directly from provider to client, and are only communicated via the intermediary of a platform.
Status of e-invoicing platform operators The e-invoicing platform operators mentioned above will have to have a registration number issued by the administration to be able to perform this role and become a partner platform. The registration criteria for operators have not yet been specified. European derogation The derogation of articles 218 and 232 of the VAT Directive, which is necessary for the implementation of mandatory electronic invoicing, has not yet been granted to France by the Council. It can be understood from the ordinance that the mandatory electronic transmission of invoicing data does not depend on this derogation and could be implemented in any event.
Further, several decrees and orders have been added to this legislative mechanism in order to specify the data (for sales, purchases and payments) to be transmitted, their format, and the conditions for identification of the partner platforms.
In the end, the ordinance confirms that this reform results in a fundamental transformation of the invoicing processes of French taxpayers, and thus of their tax, accounting, legal, financial, commercial and technological processes. Considering the volume of transactions involved, it is likely that the objectives of the legislator - namely addressing VAT fraud, encouraging e-invoicing of the invoices exchanged in France, pre-filling taxpayers' CA3 VAT returns and better control of its economic policy - will be achieved.
As from 2024, taxpayers should expect a growing number of carefully targeted tax audits based on electronically transmitted invoices and data. By nature, indirect transaction and transfer pricing will be specifically concerned by such audits.
The delayed entry into force does not change the need to prepare: companies should take steps to get organized and launch the transformations needed to be ready for the reform.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Société d'Avocats, Indirect Tax, Paris