Status of B2B Electronic Invoicing in France

France is moving forward with its new electronic taxation system for private companies. The Ministry of Economy, Finance and Recovery has already established the legal and technical framework for the generalization of mandatory electronic invoicing between private companies (B2B) and e-Reporting. 

To this end, the French tax authority Direction Générale des Finances Publiques (DGFiP) together with the state agency Agence pour l'Informatique Financière de l'Etat (AIFE), have organized a series of working groups with companies and technology providers, including EDICOM.

We analyze the characteristics of the new French e-invoicing model with the latest developments announced by the government.

New e-Invoicing and e-VAT Reporting System

The Direction Générale des Finances Publiques (DGFiP) has announced the framework for the new tax model. These guidelines are based on the results of the pilot phase and evaluation carried out with stakeholders (companies, technology providers, and government).

The new tax scheme includes mandatory electronic invoicing between private companies, as well as electronic reporting of accounting data.

Goals of the New System

Some objectives pursued by the government with the implementation of e-invoicing include:

• Prevent and combat tax fraud.
• Reduce the costs of tax control.
• Streamline tax returns.
• Increase competitiveness by reducing costs.
• Improve understanding of the economic situation with real-time reporting on business activity.

Advantages of electronic invoicing 

With the generalization of electronic invoicing, the French government seeks to modernize the current tax system and benefit both the government and businesses. 

Benefits of electronic invoicing for companies

• Cost reduction in the processing of invoices throughout the sales cycle. 
• Reduction of the administrative burden in tax management processes.
• Improved control of payment deadlines
• Automation of invoicing processes 
• Improvement of the commercial relationship

Benefits of electronic invoicing for the country

• Improvement in the fight against tax fraud. 
• Increased VAT collection.
• Increased knowledge of business activity. 

Proposed Model: Y-Scheme

In the report, the government evaluated two possible schemes, labeled "V" and "Y". The V-Scheme was based on the system in place in Italy, while the Y-Scheme was closer to electronic invoicing systems in Latin America.

The French government has decided to opt for the Y-Scheme. In this model, electronic invoices are validated by a Certified Provider prior to being reported to the government. One of the countries that served as a reference for this model is Mexico. The success of its CFDI tax system has become an example for many other countries.

The DGFiP has announced that companies must use a “Dematerialization Platform Partner” (Plateforme de Dématérialisation Partenaire - PDP) that will act as a trusted third party. The role of the PDP will be to transform, validate and send invoices to the French tax authority.

The government plans to leverage the infrastructure of Chorus Pro, the current portal for e-invoicing with public administrations. It will be adapted to the new B2B e-invoicing system.

The Ministry of Finance has said that the choice of the Y-scheme is based on the reconciliation between the freedom to allow companies to choose the e-invoicing technology provider of their choice and the obligation to communicate invoicing, transaction and payment data to the administration.

Chorus Pro - Public Billing Platform PPF

Chorus Pro will now become the public invoicing platform. In addition to its existing functions for the declaration, transmission and receipt of electronic invoices in the B2G area, new features will be added for the implementation of the new AND system, including the management of B2B invoicing and e-Reporting. The new B2B2G portal is called the Public Billing Platform (Portail Public de Facturation - PPF).

Public Billing Platform (Portail Public de Facturation - PPF)

The public invoicing portal is a publicly trusted third party responsible for concentrating invoices and invoicing data sent by companies and forwarding them to the tax administration. Among its main functions will be:

• DGFiP Middleware: it will concentrate all the tax document declaration flows sent by the Dematerialization Platforms in order to transmit them to the DGFiP information service.
• Update of the Annuaire.

Partner Demateralization Platform (Plateforme de Dématérialisation Partenaire - PDP)

The DGFiP has already announced that companies will have to contract a "Collaborative Dematerialization Platform" (Plateforme de Dématérialisation Partenaire - PDP) that will act as a trusted third party.

The Dematerialization Platform will oversee transforming, validating invoices and sending them to the French tax authorities. As well as reporting the invoicing data required for e-Reporting to the government.

Invoice Dematerialization Platforms Functions

• Send and receive electronic invoices in the structured format defined in the commercial relationship between suppliers and customers.
• Receive, validate and transmit e-Reporting data to the tax administration through the Public Billing Platform (PPF).
• Ensure the integrity, authenticity and confidentiality of the entire electronic invoicing and reporting exchange process.

e-Invoicing Information Flow

In the Y-Scheme, companies create electronic invoices and accounting documents, sending them to the Certified Private Platform for validation. The CPP performs all relevant controls required by the DGFiP and, after the invoices are verified, delivers them to their recipients. The CPP will also report the necessary tax information to the DGFiP through Chorus Pro.

If one of the trading partners does not have a Certified Private Platform for receiving or sending invoices, they will have to report or consult the documents manually on the government platform.

The Y-Scheme contemplates various information flows depending on whether the companies have a Certified Private Platform.

The DGFiP has also created the Annuaire, a centralized register with the identification data of companies to facilitate the exchange of electronic invoices between private companies and government entities.

To speed up the process, EDICOM is preparing to offer a centralized and integrated e-invoicing solution to generate, receive, send, and store electronic invoices in line with the French government’s requirements.

Annuaire – Centralized Company Directorate

Among the latest measures announced by the ministry of economy and finance exists the new Annuaire. It is a centralized directory where all parties will be able to search for the necessary information to correctly route electronic invoices.

The Annuaire Includes:

• Information to identify invoice receiving companies, including details about their structure to more easily manage issuance for companies.
• Identification of dematerialization platforms (PDP) that companies use to receive electronic invoices.

The Annuaire will be available to PDP’s and the government.

Invoice Status Management

The flow of electronic invoice interchanges in France obligates companies to generate notifications regarding the status of the transaction, considering the entire life cycle of the issued documents. The goal is to have complete traceability over the document and to rapidly detect any possible issue during its life cycle.

This is a legacy system of the current B2G electronic invoicing process in which administrative units issue recurring information on the processing status of an invoice.

The objectives of DGFiP with the transmission of invoice life cycle statuses are:

• Provide a shared view of invoice processing for all stakeholders (issuer, receiver, administration).
• Determine a list and format for exchanging invoice processing statuses to ensure interoperability between stakeholders (companies, PDP and PDF).
• Detail the process of invoice rejections and cancellations.
• Facilitate the pre-filling of the VAT return.

French tax authority has defined a series of mandatory and recommended statements to be transmitted during the invoice flow. The mandatory statements of the Nominal Life Cycle of electronic invoices are:

• Déposée (Deposited on your platform).
• Rejetée (Rejected by the platform).
• Refusée (Rejected by the users).
• Encaissée (Collection made by the supplier).

Which Companies will be Affected?

All businesses subject to value-added tax.

e-Reporting

Besides electronic invoices, companies will have to report a series of digital tax reports, depending on their commercial transactions. Currently it has been stated that the following information must be reported:

• Information related to the payment
• Information related to B2C transactions
• Information related to international B2B transactions

The declaration system will be different depending on the type of data that need to be declared.

Electronic Invoice Format

The electronic invoice information will need to be issued in UBL, CII, or Factur-X formats.

Implementation Timeline

The implementation has been postponed from 2024 to 2026. The government has published a new compliance timeline for the new electronic invoicing and e-reporting system based on a company’s size:

• 07/01/2024:  Mandatory electronic invoice and e-reporting issuance for large companies and reception of e-invoices for all.
• 01/01/2025: Mandatory electronic invoice and e-reporting issuance for medium sized companies.
• 01/01/2026: Mandatory electronic invoice and e-reporting issuance for all other companies and taxpayers

Evolution of B2B e-Invoicing in France

• 1990: Article 27 of law n° 90-1169 grants the same legal validity to electronic invoices as to paper invoices.
• 2010: The European Union publishes Directive 2010/45/EU regulating the use of electronic invoicing in the private sector of the Member States.
• 2012: Transposition of the European Directive into French law n° 90-1169 De Finances Rectificatives.
• 2019: Law N° 2019-1479 De Finances for 2020 announces the intention to make e-invoicing between companies mandatory.
• 2020: e-Invoicing pilot project is conducted with 50 companies.
• 2020: French tax authority Direction Générale des Finances Publiques (DGFiP) publishes a report with general guidelines for the B2B e-invoicing system.
• 2021: Ordinance nº2021-1190 is the legal framework associated with the mandatory use of the electronic invoice for B2B transactions.
• 2022: La Decisión de ejecución (UE) 2021/0388, adoptada el 25 de enero de 2022 valida las derogaciones de la Directiva europea 2006/112/CE. Así se puede imponer que el formato de la factura sea electrónico y ya no aplica el principio de aceptación del destinatario para el uso de la facturación electrónica.

Moving Toward a B2B2G e-Invoicing Model

Electronic invoicing has existed in France since 1990. The culture of document dematerialization is deeply rooted in French companies, putting them ahead of European Union directives. France was among the first European countries to adopt electronic invoicing for public administrations.

Since 2020, both public administrations and their suppliers are required to exchange electronic invoices through the French state platform, Chorus Pro.

Given the positive results of B2G e-invoicing, the government decided to extend its mandatory use to private companies. However, unlike the Italian model, France has decided to delegate the validation of invoices to CPPs in their B2B e-invoicing model.

EDICOM - Global electronic invoicing technology provider 

EDICOM as a global e-invoicing provider and trusted third party has the technical and legal capacity to generate, receive, send and store e-invoices in any B2B, B2C and B2G environment, as well as to perform the e-Reporting invoice information reporting required by the DGFiP.

A centralized and comprehensive e-invoicing and vat compliance solution that will allow you not only to dematerialize your invoices and e-Reporting statement in France but anywhere in the world.