September was unusually eventful for French businesses. A new ordinance was published, specifying the different parts of the upcoming continuous transaction controls (CTC) regime and at the same time postponed the entry into force of the system by 18 months. On top of this, specifications of process flows, and document formats were released at the sunset of the month.
According to the revised calendar, the new timelines are:
- From 1 July 2024:
- All companies headquartered or established in France will have to accept e-invoices through the CTC system from their suppliers.
- Issuing e-invoices through the CTC system instead of paper, coupled with an e-reporting obligation, will become mandatory for the largest enterprises (some 300 entities).
- From 1 January 2025 the same e-invoice issuance and e-reporting obligation will apply to some 8,000 mid-sized companies – “Entreprises de taille intermédiaire”
- From 1 January 2026 the obligations will apply to the remaining four million medium and small companies.
While this development of course means that businesses will have more time to comply, it could also indicate that the French tax authorities expect all businesses to comply with the new regime on the date of entry into force rather than relying on grace periods.
The important question as to which companies will have to comply with the new obligations under the CTC scheme has been discussed. It’s now clear resident and/or established businesses in France will be in scope of the e-invoicing obligation. The periodical e-reporting obligation will also apply to these companies that are resident and/or established in France, but also to non-resident/non-established companies with VAT registration in the country.
Exchange of invoices: exclusivity of PPF and PDPs
In both the e-invoicing and the e-reporting process, data will be sent either directly to the Public Invoicing Portal (Fr: portail public de facturation – PPF, so far ChorusPro) or to Partner Dematerialization Platforms (Fr: plateformes de dématerialisation partenaires – PDP, which are platforms that will be accredited by the tax authorities).
The mandatory use of the PPF or PDPs for exchanging e-invoices eliminates the possibility for the transacting parties to exchange invoices without the participation of a third party. The exchange of invoices will be channeled to the buyers by either the PPF or PDPs using specific designation numbers (SIREN, SIRET, Service Code) registered in a central directory maintained by the tax authority with information fed by the PPD and PPF. Those numbers will be linked to the PPF or PDP platform that the buyer has appointed to receive its invoices.
Invoice lifecycle and central directory
The specifications detail that the full e-invoice lifecycle must be documented by trading parties and reported to the authorities. This includes several invoice statuses that will be reported throughout the invoice’s lifecycle, such as when the invoice has been issued, received, rejected, made available, etc. The directory will also gather payment statuses, which will be reported by the supplier.
The new updates have also clarified compliance obligations around payment data. Payment data associated with the supply of services or hybrid supplies of goods and services will be reported to the tax authorities through PPF or PDP platforms, either as part of the lifecycle statuses for e-invoices, or through specific reporting flows for transactions falling out of the scope of e-invoicing.
The road ahead
A derogation approval from the EU for the e-invoicing obligation is still required but is not expected to cause any delays. The French government has certainly tested the waters, and the message from many stakeholder groups that refusing such derogations can do more harm than good to business conditions in Member States appears to have been received loud and clear by the Commission.
Furthermore, the Ordinance needs to be formally endorsed by the Parliament. In the meantime, DGFIP workshops will continue, and an update of the specifications is expected. There are still many details (such as data, formats, periodicity, specifications around modalities etc.) that will need to be established by Decrees, and the tax authorities’ official bulletin (the BOFIP) will also be updated. The Partner Platform registration process will open, a test environment will be set up, and a pilot phase will begin; hopefully allowing businesses the necessary time to become compliant before the deadlines.
Register for our upcoming webinar, ‘Get ready for France’s e-invoicing mandate’ on Thursday 7 October 2021, hosted by Sovos’ VAT compliance experts.