The French Ministry of Public Accounts and Action, which has authority over all tax matters, has launched discussions around initiatives aimed to curb VAT fraud, including a possible implementation of a countrywide e-invoicing mandate. Although these conversations have been happening for several years, there is a lack of certainty surrounding possible changes in compliance laws, posing a risk of companies being caught off guard or left behind should discussed initiatives progress.

What to expect

While it’s still too early to talk about when and how the B2B mandate could be implemented, there are a few important points businesses should keep in mind:

  • Implementation of real-time transaction controls, focused around invoices, is already a reality in Europe, with SII in Spain, RTIR in Hungary and SDI in Italy. Accordingly, the most likely outcome is that France will go ahead with the plans;
  • Like Italy, France would have to obtain derogation from the EU commission on certain provisions of the VAT Directive. France’s significant VAT gap and having a relatively high number of businesses already working with electronic documents means there is a high chance of the plan moving forward;

  • There are some questions around the functionality and scalability of Chorus Pro, so it is probable that the rules and infrastructure for B2B e-invoicing will be quite different compared to B2G e-invoices

  • A countrywide adoption of PEPPOL cannot be excluded as a possibility since it is already in place for suppliers who want to send EN-compliant e-invoices. This would include the benefit of cross-border e-document exchange.

Despite an official deadline for a nationwide French B2B e-invoicing mandate, developments suggest it is rather a question of when, not if, it will happen.

Moving toward mandatory B2B e-invoicing

  • In January 2019, small businesses were mandated to start sending invoices electronically to the governmental infrastructure called Chorus Pro;
  • As of January 2020, micro businesses will also be required to send e-invoices to Chorus Pro.

Inspired by Latin American countries, current President Emmanuel Macron tried to implement mandatory B2B e-invoicing in his role as Finance Minister. The proposal was rejected at the time due to non-conformity with the VAT Directive and a perceived increase in the administrative burden on companies, especially small and micro businesses.

The VAT gap in France

Although the VAT gap in France of 10% corresponds to the EU median, the size of its economy makes it one of the largest in absolute numbers among the Member States. Only Italy, Germany and the UK have larger VAT gaps.

If a mandate is in fact implemented, France will be on its way to a similar position as Italy, which began with mandatory nationwide e-invoicing on 1 January, 2019. Some of the main pre-requisites for this mandate are high VAT gap and the existence of an e-invoicing infrastructure.

Compliance solutions

Selected by the French government’s Agency for Financial Informatics of the State (AIFE) as it’s single PEPPOL Access Point, and as one of the first networks connected to and exchange e-documents with Chorus Pro, Pagero can help you become and remain locally-complaint, no matter how or where you do business.

Pagero Compliance

Learn how Pagero helps companies handle local e-invoicing and other requirements globally.

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