France: VAT and mandatory e-invoicing; new effective date of 1 July 2024

Article 153 of the Finance Law n°2019-1479 for 2020 introduced electronic invoicing (e-invoicing) requirements for transactions between taxable persons as well as an obligation to transmit to the tax authorities certain invoice data (e-reporting).

An aim of these requirements is to provide for the creation of pre-filled value added tax (VAT) returns.

The government in September 2021 adopted an ordinance to generalize the use of e-invoicing and to impose a new obligation to transmit certain additional data. The tax authorities have published technical guidance with specifications for this requirement, thereby allowing businesses to begin preparing for the new requirements. 

A requirement for e-invoices is introduced for all companies, effective 1 July 2024. The obligation to issue electronic invoices is being phased in between 1 July 2024 and 1 January 2026, depending on the size of the company and according to the following schedule:

• 1 July 2024 for large companies
• 1 January 2025 for small and medium-sized enterprises (SMEs) with a workforce of less than 5,000 people and annual sales of less than €1.5 billion or a balance sheet total of less than €2 billion
• 1 January 2026 for SMEs and very small enterprises (VSEs) with fewer than 250 employees and annual sales of less than €50 million or a balance sheet total of less than €43 million

With regard to e-reporting, the scope of this mechanism (that will follow the same schedule as the e-Invoicing obligation) is to include:

• The transmission of data concerning business-to-business (B2B) transactions for non-French customers
• The transmission of data concerning business-to-customer (B2C) transactions for taxable transactions in France
• The transmission of data concerning purchases from foreign operators (excluding imports)
• The payment status of invoices for services (for services declared on e-invoices as e-reporting)

The e-reporting data will have to be transmitted to the tax authorities four days after the end of the week for companies subject to the standard reporting scheme (réel normal) and within seven days after the last day of the month for all other companies.

The ordinance issued in September also specifies the penalties that will apply for noncompliance:

• Non-compliance with e-invoicing—penalty amount of €15 per invoice, capped at €15,000 per year
• Non-compliance with e-reporting—penalty amount of €250 per transmission, capped at €45,000 per year

As of 1 July 2024, for B2B and business-to-government (B2G) transactions, only certain formats will be accepted—UBL, C2I, Invoice X. For the time being, a readable PDF must be attached. 

New information will have to appear on the invoices:

• SIREN number of the taxable customer established in France
• Identification whether the transaction is for a good, a service or a mixed service
• Option for debits
• Complete address of delivery or service realization

Finally, implementation of the e-invoicing and e-reporting mechanisms will not affect the requirement for a reliable audit trail documentation. This obligation regarding the authenticity of the origin, the integrity of the content, and the legibility of invoices remains unchanged.

The "Y" model (also known as the "Mexican" model) will be applicable. In this scheme, private platforms—previously registered as "partner platforms"—will cooperate with a public platform (i.e., Super Chorus Pro) to issue invoices between VAT taxpayers in an electronic, dematerialized manner and transmit the e-reporting data to the tax authorities. 

The tax authorities have specified that the following transactions will not be subject to reporting (neither the e-invoicing nor the e-reporting requirement):

• Imports of goods
• Transactions that are exempt from invoicing under articles 261 to 261 E of the general tax law (e.g. medical activities, training, certain banking and financial operations)

Foreign companies registered for VAT in France and collecting VAT will have to declare their transactions via e-reporting. 

Tax professionals believe that companies need to prepare to send their data automatically, without delay, to the tax authorities, and this would require a review of the parameters and quality of the data before the implementation of the reform.

KPMG Avocats has developed an approach to test the quality of master data and the parameters of invoicing or management systems in order to prepare companies for the implementation of the new rules.
 

For more information, contact a KPMG tax professional in France:

Laurent Chetcuti | laurentchetcuti@kpmgavocats.fr

Armelle Courtois-Finaz | acourtois-finaz@kpmgavocats.fr