Gwenaëlle Bernier – Partner & Avocate Associée G56, Tax Technology & Transformation at EY
As France’s ambitious e-invoicing mandate approaches, Gwenaëlle Bernier – speaker at the Tax Compliance Summit Sovos Always On: Paris (19 Nov.) – shares expert insights on how digital transformation is reshaping tax compliance and operational performance. This interview dives into the real-world challenges and opportunities facing finance and tax leaders, revealing why the intersection of technology, regulation, and data is the hottest topic in French business today.
The first challenge is organizational: companies need a truly cross-functional framework that continuously involves the finance and accounting department, the tax department, and IT. Today these three pillars exist but often operate in silos, whereas the reform requires a unified view of accounting, tax, and IT issues, with dedicated time and clear governance. Implementation cannot be entirely “outsourced” to a service provider — some decisions and trade-offs must remain within the company, as they relate directly to its data and processes.
In practice, we first help companies establish this governance framework: clear executive sponsorship, shared accountability, and regular coordination points among teams. In large groups and mid-caps, this is crucial — the scale, diversity of flows, and ERP history make fragmented approaches ineffective. For small businesses, on the other hand, the challenge is simpler and the reform can fit into a broader simplification process supported by accountants or certified platforms.
Finally, companies must build new skills: tax teams need to understand data, while IT must understand tax logic. Anticipating business impacts — data quality, timing, upstream controls, reconciliations — has become essential. Successful projects are those where companies stop opposing “IT project,” “accounting project,” and “tax project,” and instead treat the reform as a single transformation, driven by a mixed, long-term team aligned around common goals.
It’s important to remember that the e-invoicing reform is, first and foremost, a tax reform — it is written into the French General Tax Code under the VAT chapter. It is therefore part of a broader framework of compliance and tax control, which is often overlooked, though it is key to understanding why data quality is so central to its implementation.
The real shift today is that every tax department is becoming digital. It’s no longer just a few tech-curious tax professionals — it’s a broad transformation. Most tax departments are acquiring new skills, and tax professionals themselves are learning to understand systems, data flows, and formats, and to translate regulatory requirements into technical language. This allows them to apply the rules more intelligently and in closer alignment with business needs.
The best practice is to embrace this evolution toward a “tech-enabled” tax professional. Digital tools allow tax teams to collaborate with the rest of the company through a shared language: data. And this data — long used mainly for financial performance or marketing — has now become a core tool of tax compliance. That’s what makes this reform unique: though rooted in taxation, it impacts the entire company. It forces organizations to question the very nature of their ERP data — whether it’s structured, reliable, and truly usable.
The move to prefilled VAT returns will not affect all companies in the same way. For small and medium-sized enterprises, it’s primarily an administrative simplification. They will benefit from support through their accountants or simple tools, sometimes mobile applications offered by certified platforms. For them, prefilled returns will reduce administrative work without significantly changing their organization.
For large companies and mid-caps, however, the impact will be far more structural. Until now, VAT returns have been prepared mainly by accounting teams, with tax departments stepping in only later — during interactions with the tax authorities or audits. Prefilled returns will change that division of labor: tax teams will now need to monitor data continuously, as it will be transmitted to the authorities daily and may prompt immediate follow-up questions.
We are entering an era of reciprocal transparency: companies will reveal their VAT treatment of each transaction in real time, while the administration will send back a synthesized view in the form of a prefilled return. This will inevitably require companies to rethink their internal organization — particularly the split between accounting and tax functions — and to strengthen coordination with IT. It will also demand new skills and heightened vigilance on data quality. The goal will no longer be to produce an accurate return at month-end, but to ensure the reliability of information transmitted day by day. That means better mastering ERP configurations, which in France have often been defined without real tax input. The pace, granularity, and nature of the work will change: companies will need to anticipate, validate upstream, and reconcile accounting and tax data more precisely.
The French tax administration is already equipped with artificial intelligence tools, the most well-known being Galaxie. This data-mining and analytics system, whose early versions date back to 2017, was formally established by decree a few years ago. It now forms the core of the administration’s intelligent data-processing capabilities.
As the reform rolls out and companies begin transmitting their e-invoices and e-reporting data, the administration will have not only the necessary technical infrastructure but also the software capabilities to analyze this information on a massive scale. By 2027, once all businesses are connected, the tax authority will have an almost complete view of France’s economic activity — what each company buys, sells, and trades domestically and abroad.
With Galaxie and this immense volume of data, the State will be able to conduct highly detailed economic and fiscal analyses. It will also transform the way audits are carried out: by the time a tax inspection begins, auditors will already have a detailed profile of the company, its operations, and any anomalies or unusual patterns compared to its sector. This is no longer theoretical — the public administration is ready to use these tools, and their effects will become tangible as the reform is fully implemented.
Today, finance and tax departments are still poorly equipped when it comes to AI. We’re at an early, experimental stage. Most companies are only beginning to explore the subject — often through general-purpose tools like office suite copilots — but very rarely with solutions designed specifically for tax or finance functions. True AI tools for compliance, anomaly detection, or tax data analytics are still being built.
There’s also a simple economic reason for this: finance and tax are not the company’s core business. Investment naturally flows to operational functions — those that produce and sell — while support functions come later, which explains the current gap.
However, the e-invoicing reform will accelerate this transition. Once companies are connected to certified platforms and able to exchange structured invoices, the next question will inevitably be: how can we use this data intelligently? That’s where AI will come in — to automate controls, enhance reliability, and anticipate discrepancies. Some platforms already offer advanced data-analysis features powered by AI, but adoption remains limited. Over the next few years, we’ll likely see rapid growth in these applications as tax departments realize the value of the data they now possess.
AI is already legally regulated in the French tax sphere. The main framework stems from Article 154 of the 2020 Finance Law. When this law was adopted in December 2019, the Constitutional Council defined the conditions under which the administration could use AI tools, setting out eight criteria to ensure ethical, transparent, and compliant usage — particularly regarding personal data protection. These principles were further clarified by the French Data Protection Authority (CNIL) in its September 2019 report, which remains the reference for AI oversight today.
We therefore already have a clear legal framework: the State has set the guardrails. But risks still exist. With the generalization of e-invoicing, the tax administration will gain access to a vast amount of transactional data between companies. Over time, it could end up knowing an enterprise’s ecosystem better than the company itself — its suppliers, clients, and business relationships.
The challenge, therefore, extends beyond personal data protection to include trade secrecy. This is crucial: authorities must prevent even unintentional disclosure of sensitive business information that could weaken competition or expose strategic details. As long as our economic model is based on fair competition, protecting trade secrets must remain a fundamental safeguard.
France made a decisive political choice in the summer of 2019: to make e-invoicing a cornerstone of economic modernization and efficiency. This commitment took shape in Article 153 of the 2020 Finance Law, which integrated e-invoicing and e-reporting into the General Tax Code. The decision reflects a longstanding conviction. Studies conducted at the European level as early as 2007 had already highlighted the potential benefits of such reforms in terms of simplification, productivity, and transparency. But France chose an ambitious path — to move forward on a fixed timeline, making the reform mandatory for all actors to accelerate digital transition.
Another reason for France’s leadership is the scope of its model. While most European countries separated the steps — first mandating structured e-invoicing, then, later, real-time reporting — France decided to do both at once. That makes the project more complex but also more complete.
At the same time, the 2020 Finance Law introduced a separate provision authorizing data mining, which led to the creation of the Galaxie system. In other words, France simultaneously launched digitalized exchanges, large-scale data collection, and AI-based analysis capabilities. This strategic decision explains why France now appears to be leading in both digital taxation and economic data governance.
France’s influence within the ViDA project will depend largely on how its representatives engage in European discussions. Within the Fiscalis group — which brings together finance ministry representatives from all Member States and the European Commission — much will hinge on France’s ability to defend its approach and share its experience.
In practice, France is already implementing, more than three years ahead of schedule, one of ViDA’s core pillars: the Digital Reporting Requirements. Starting in September 2026, France will effectively apply the same principles set to take effect across the EU in 2030. As a result, when ViDA comes into force, little will actually change for French businesses. Having already gone through this transition, they will likely serve as pilots and references for their European counterparts.
To make this advantage meaningful, France will need to promote both its model and its methodology at the EU level. The country has done extensive work on complex use cases — such as expense notes, multi-vendor invoices, and subcontracting — and on technical standards through AFNOR commissions. These efforts produced a pragmatic, collaborative approach that should be championed in Brussels. If each Member State designs its own rules, the goal of ViDA — harmonization — will be lost. The more aligned the standards, the smoother cross-border exchanges will become, improving both efficiency and competitiveness for European companies.
We are witnessing a genuine paradigm shift in how the State conducts tax audits — and, consequently, in how companies behave as taxpayers. Until now, France has operated under a retrospective model: companies submitted highly aggregated VAT returns, and audits often took place two or three years later, with inspectors reviewing past decisions and requiring lengthy explanations.
With the combination of e-invoicing, e-reporting, and AI tools like Galaxie, we are entering an era of near real-time tax oversight. The administration will have an immediate view of economic activity and be able to target audits more precisely. This could be a positive evolution if it helps focus efforts on genuine non-compliance while easing the burden on companies acting in good faith.
However, this increased transparency also calls for a change in mindset. Instead of relying solely on ex-post enforcement, the goal could be to establish an ongoing, cooperative dialogue between companies and the tax administration — one in which businesses explain their choices and challenges as they arise. Tax law is rarely black-and-white; it often involves interpretation, especially when business innovation outpaces legislation. The challenge will be to build a relationship of trust, where the State supports companies in applying the rules rather than sanctioning them years later. In essence, this could mean moving from a “rear-view” audit model to a smarter, more collaborative approach that fosters both compliance and economic vitality.
Cyrille Sautereau – President FNFE-MPE & CEO Admarel Conseil
Ahead of the Tax Compliance Summit Sovos Always On: Paris on 19th November, we asked Cyrille Sautereau, Chair of the AFNOR “Electronic Invoice” Commission and President of the National Forum for Electronic Invoicing and Public eProcurement (FNFE-MPE), to discuss the evolving landscape of e-invoicing reform in France, the challenges of interoperability, and the country’s role in shaping European standards.
The National Forum for Electronic Invoicing was created in 2012 following the establishment of the European Multi-Stakeholder Forum on Electronic Invoicing (EMSFEI), which led several Member States, including France and Germany, to create their own mirror forums. From the outset, its mission has been to support the development of e-invoicing in France, across both public and private sectors, in alignment with EU initiatives. We became an association in 2016 and now have more than 280 members divided into three colleges: users, service providers, and independent experts and consultants.
Our role is both normative and educational. Normative, because we actively contribute to the development of European and national e-invoicing standards, in close collaboration with the AFNOR “Electronic Invoice” Commission, which I also chair; and educational, because we provide best practices and help the ecosystem understand the regulations, enabling companies to transition smoothly to e-invoicing.
Finally, we fully play our role as a bridge between public authorities and the market. The FNFE is regularly consulted by the tax administration and lawmakers, particularly on regulatory developments related to the reform. We bring field expertise — our knowledge of invoicing practices, tools, and the operational constraints businesses face. This ongoing dialogue helps fine-tune regulations and ensures a harmonized, effective implementation of the reform.
The FNFE-MPE brings together a wide range of stakeholders: businesses, vendors, service providers, accountants, professional federations, and even representatives of the public administration. Our mission is to facilitate dialogue among these groups, which don’t always share the same priorities. The key is transparency and co-construction: everyone can take part in our working groups and contribute to developing the standards.
We hold several plenary sessions each year, along with about ten thematic working groups covering topics such as e-invoicing reform, interoperability, standards and norms, communication, best practices, invoicing and payment, B2G invoicing, and factoring. These forums allow members to share feedback, identify practical challenges, and bring them to standardization bodies.
This collaborative approach has fostered a genuine common language between public and private actors. That’s the strength of the FNFE — its ability to unite the entire ecosystem around a shared vision, ensuring that both technical and regulatory choices remain realistic, effective, and business-oriented.
Interoperability is indeed one of the most sensitive aspects of the reform. Contrary to what people might think, the main challenge doesn’t lie in connecting private platforms to the Public Invoicing Portal — that interface is precisely defined by the DGFiP’s specifications — but rather in ensuring smooth communication among private players themselves.
The first challenge concerns certified platforms (formerly PDPs), which must be able to exchange data without multiplying bilateral integrations. That’s why we supported the rollout of the Peppol network in France — a model where one connection makes you interoperable with all other network participants. The second pillar is a shared addressing system based on the SIREN number and managed within a public directory. This ensures that every business is reachable through a stable e-invoicing address — one that remains unchanged when switching platforms.
Finally, there’s the “last mile”: connecting companies’ internal systems (so-called “compatible solutions”) to their certified platforms. Given the variety of software tools on the market, proprietary integrations must be avoided. That’s the goal of the AFNOR initiative to design a standardized API — a universal connector that ensures seamless transitions between platforms. Portability is essential for an open, sustainable ecosystem.
The French reform is closely aligned with the European ViDA project, which aims to harmonize e-invoicing and reporting practices across the EU. ViDA calls on Member States to establish systems for e-reporting and e-invoicing based on structured data and standardized formats — exactly what France has already implemented.
Our national model, based on the exchange of structured electronic invoices between French taxpayers and the automatic transmission of data to the tax administration, already mirrors ViDA’s intended architecture. The key difference is that France chose from the outset to combine mandatory e-invoicing with e-reporting to the tax authorities — whereas other countries limited their first phase to B2B e-invoicing, postponing e-reporting to a later stage. We also introduced two unique features: invoice status tracking — ensuring lifecycle traceability and giving suppliers the visibility and value they’re entitled to — and B2C e-reporting, which isn’t covered by the European scope. In short, France won’t need to adapt its system to ViDA; it already embodies it.
France can indeed become a European benchmark, provided the operational rollout succeeds. What sets us apart is the decision to tackle the issue holistically, integrating technical, regulatory, and business aspects from the beginning. While other countries proceeded step by step — first e-invoicing, then reporting — we decided to merge both dimensions right away.
Requiring VAT data to be transmitted to the tax administration from each invoice inherently assumes that, within each invoice, the seller is responsible for VAT collection and the buyer for deduction. This creates additional complexity in many cases where intermediaries — such as aggregators handling invoice consolidation or grouped payments — play a role without being the actual taxpayer.
Our approach builds on significant collaborative work within the AFNOR “Electronic Invoice” Commission, which I also chair. Over six months, more than 250 experts from all sectors took part in over sixty meetings. This work revealed the real complexity of use cases, often underestimated — for example, scenarios where several service providers appear on a single invoice for one buyer, such as in the water, leasing, insurance, or travel sectors. These configurations turned out to be far more common than expected. The AFNOR work also helped align French practices with the European semantic standard EN 16931 — ViDA’s foundation — while identifying its limitations and addressing them through data extensions or management rule updates.
Finally, this process confirmed the need for flexibility — allowing human-readable formats, like hybrid Factur-X invoices, which include operationally useful data that may not fit within the semantic standard or technical capabilities of some small businesses.
This ability to identify specific cases and address them within a shared normative framework is, in my view, France’s main strength. It helps anticipate complex situations, deliver standardized solutions (“the same problems, the same answers”), and maintain coherence between regulatory requirements and business realities. Many Member States will likely draw inspiration from this integrated approach when implementing ViDA.
Beyond compliance, the reform will fundamentally change how companies manage their operations. By generalizing e-invoicing, we’re introducing structured, reliable, and continuously available data — replacing the paper and PDF-based exchanges that still dominate today. This is transformative: data becomes instantly usable by management systems, without re-entry or manual processing.
In practical terms, this will allow all companies — including SMEs — to reach levels of automation and visibility previously reserved for large groups. Cash-flow reporting or monthly closings will no longer take days of reconciliation: invoices will be integrated in real time, and discrepancies will appear immediately. This responsiveness will enhance business leaders’ ability to manage performance, detect weak signals, and anticipate payment delays — in short, to shift toward predictive management.
In the long run, value-added services could emerge from aggregated, anonymized data analysis. For example, a platform could offer buyers average market price benchmarks based on peer transactions, helping them better position themselves competitively. These uses will need to be regulated to preserve confidentiality, but they open promising perspectives. Competitiveness will thus depend not only on compliance, but on data quality and intelligent exploitation.
We regularly take part in events like Always-On because they play an essential role in collective education around the reform. The more opportunities for dialogue, the better. For the FNFE-MPE, it’s a concrete way to fulfill our mission of supporting businesses. These meetings help clarify what the reform truly entails, demystify its implementation, and provide a neutral perspective that complements that of service providers.
That’s important, because many companies still have a fragmented understanding of the reform: some overestimate its complexity, while others haven’t yet grasped its full impact. In this context, direct exchanges among public authorities, experts, vendors, and users are key to building a shared culture and reliable reference points. Such events help reinforce a crucial message: the success of e-invoicing depends on adopting shared standards, ensuring consistency of practices, and rejecting unnecessary complexity.
For too long, everyone built their own processes, portals, and formats — often with limited success. One of the reform’s main goals, and one of the benefits of events like Always-On, is to move beyond this “each to their own” mindset and build a truly interoperable ecosystem.
The importance of AI will grow as data volumes increase. AI can first help companies better understand what the administration “sees” about them by comparing their internal data with prefilled information. This “mirror visibility” can help identify and explain discrepancies even before an audit is initiated.
That said, we must remain clear-eyed about technology’s limits. AI is an analytical support tool, not an arbiter of truth. Its effectiveness will always depend on the algorithms behind it and the quality of the data it processes. Used rigorously and transparently, AI can strengthen trust between companies and tax authorities by making processes more objective and efficient. Conversely, if poorly managed, it risks creating new areas of opacity or misunderstanding.
The challenge in the years ahead will be to strike the right balance: leveraging AI’s power to make compliance more reliable and streamlined while preserving human interpretation and dialogue. Only under these conditions can technology truly serve trust, rather than weaken it.
KSeF, or the National E-Invoicing System, is Poland’s approach to continuous transaction controls (CTC), a trend that sees tax authorities gaining real-time visibility of transactions. The ‘clearance’ model implemented in Poland demands that invoices be issued in a structured electronic format and undergo validity checks, ensuring compliance and accuracy of e-invoices before they are sent to recipients.
Operational on a voluntary basis since 2022, the KSeF e-invoicing system is set to become mandatory in phases starting February 2026. Poland’s e-invoicing requirements encompass both VAT active and exempt entities, covering B2B and B2G transactions, while B2C e-invoicing remains optional. Importantly, the system includes both domestic and cross-border transactions, although with specific rules for invoice exchange in cross-border scenarios.
KSeF 2.0 emerged as a direct response to stakeholder feedback during the voluntary implementation phase. After extensive public consultations, the Polish Ministry of Finance addressed several critical concerns raised by businesses. These included the need for offline invoicing capabilities during connectivity issues, support for B2C transactions, clearer rules for self-billing in cross-border scenarios, better handling of complex business structures like VAT groups, and many other concerns.
The resulting KSeF 2.0 framework includes both legislative changes (through the KSeF 2.0 Act and other implementing regulations) and technical enhancements (via the new FA3 schema and API). The new system adds support for optional B2C invoicing, previously unavailable in the voluntary phase, giving issuers the discretion to include such transactions within KSeF. It also introduces the KSeF certificates, which will be used for authentication in the system and for the generation of the QR code used in the offline modes. Special attention is given to offline modes, particularly the “offline 24” mode, which allows for invoice submission by the next business day in case of issues on the taxpayer’s side.
QR codes will be required when exchanging invoices outside of KSeF both in online or offline modes with the need to add a second QR code for invoices issued in offline mode and sent to the recipient before KSeF clearance.
As Poland advances towards the full implementation of KSeF 2.0, businesses must stay informed and prepared for these regulatory changes. The system’s phased rollout offers a window for adaptation, but early compliance will ensure smoother transitions and mitigate potential disruptions.
Sovos has created a number of resources to help businesses prepare for Poland’s KSEF 2.0 e-invoicing requirements:
Sovos’ team of regulatory tax experts answer some of the most frequently asked questions about KSEF 2.0, an upcoming update to Poland’s national electronic invoicing system.
KSeF 2.0 introduces several important features not available in the 1.0 system in use during the voluntary period. The most significant changes include:
The KSeF 2.0 implementation begins with open testing from September 30, 2025, followed by KSeF certificates availability on November 1, 2025. As confirmed by the KSeF 2.0 Act, mandatory structured e-invoicing starts February 1, 2026 for taxpayers with sales exceeding 200 million PLN in 2024, and April 1, 2026 for all other taxpayers.
An exemption allows taxpayers with monthly sales below 10,000 PLN to continue issuing paper or electronic invoices until December 31, 2026.
According to the Polish legislation, the mandatory e-invoicing obligation through KSeF will apply to:
Polish legislation states that the taxpayer must have either a registered office or a permanent establishment in Poland that participates in the transaction to fall under mandatory KSeF. VAT registration alone does not trigger the obligation.
Not all document types fall within the scope of the KSeF system. The system supports VAT invoices, corrective invoices, self-billing invoices, and VAT RR invoices (optional from April 2026). However, several documents are excluded from KSeF, including internal invoices, pro forma invoices, and traditional debit/credit notes.
Yes, Polish businesses must submit e-invoices to KSeF for sales to foreign customers. After submission, the Polish supplier must provide the invoice to the foreign customer in an agreed format, including a QR code for KSeF access. This applies to all cross-border sales by Polish taxpayers under KSeF.
Taxpayers have multiple options to receive their e-invoices from the KSeF platform:
Unlike KSeF 1.0, which did not support B2C e-invoicing, KSeF 2.0 allows voluntary B2C e-invoicing. Consumers must still request an invoice before one can be issued, but the issuer decides whether to fulfill this request via KSeF or through traditional methods without requiring consumer consent.
The KSeF 2.0 legislation establishes an “anonymous access” mechanism for consumers. When sellers issue e-invoices to consumers through KSeF, they must provide one of the following:
Consumers can use these methods to access their invoices without the need to log into the system.
Traditional credit and debit notes as separate document types (commonly used in many countries) won’t be part of the KSeF system. Instead, all corrections must be made through a “corrective invoice” document type that KSeF supports. Additionally, correction notes issued by buyers in Poland will also remain outside KSeF’s scope.
Authentication can be done via:
The Trusted Profile method will be eliminated from 1 April 2026. KSeF Certificates will be available for download from November 1, 2025 via the Certificates and Authorizations Module (MCU), which will be made available in the KSeF domain.
KSeF 2.0 offers four offline modes. Offline24 mode is designed for issues on the taxpayer’s side, such as connectivity problems and internet outages. Offline mode is for planned system maintenance periods when KSeF is temporarily unavailable. Failure mode is for unplanned system failures that are officially announced in the bulletin of the Ministry of Finance. Total failure mode is for extraordinary situations like threats to the country’s infrastructure, announced through media channels.
Offline24 mode is a solution created to address concerns about potential delays in invoice submission due to issues on the taxpayer’s side. It allows businesses to issue structured invoices outside the system, and to submit them to KSeF no later than the next business day following the FA(3) format.
Domestic business recipients with a NIP receive invoices exclusively through the KSeF system after their submission and clearance. Other recipients (consumers, foreign entities, or entities without a NIP) receive invoices in a manner agreed with the buyer outside of KSeF, with one or two QR codes.
When an invoice is sent to the recipient outside KSeF, it must include one or two QR codes. There are two types of QR codes: one for accessing the invoice and another for ensuring integrity and authenticity. If the invoice is provided to the recipient after KSeF clearance, only the access QR code is required. When providing the invoice to the recipient before KSeF clearance, the two QR codes are needed.
Access QR codes are mandatory on all invoices exchanged outside the KSeF system, including cross-border transactions. Polish companies must first submit the e-invoice to KSeF, then provide it to foreign partners in any agreed format along with a QR code. This allows foreign recipients to verify the invoice’s authenticity and access it in the Polish tax authority’s system when needed.
From February 1, 2026, KSeF 2.0 will exclusively use the FA(3) logical structure for all structured invoices. The FA(3) schema includes enhanced features like support for attachments, inclusion of new fields and other updates to code formats, schema variants, and data types.
Invoice attachments in KSeF 2.0 are an integral part of structured invoices designed specifically for entities who need to include complex detailed data in their invoices. Attachments can only contain mandatory invoice elements specified in the Polish VAT Act or closely related data, while including marketing information and advertising content is prohibited.
To include attachments with invoices in KSeF 2.0, businesses must submit a notification via the e-Tax Office to the National Tax Administration before using this feature. The attachment functionality, available from January 1, 2026, is valid for 2 years after approval and requires renewal to continue.
Yes. From February 1, 2026, to December 31, 2026, financial penalties for KSeF-related violations will not be enforced. This transitional period allows businesses time to adapt without facing fines.
Sovos has created a number of resources to help businesses prepare for Poland’s KSEF 2.0 e-invoicing requirements:
VAT in the Digital Age (ViDA) is one of the most significant regulation changes to EU VAT in recent years. Changes to requirements became effective on 12 March 2025 with the official adoption of the package, with further rules coming into effect in 2030.
This blog discusses the changes impacting businesses, including Digital Reporting Requirements, and when they take effect.
Under the previous VAT Directive, EU approval was required for Member States to introduce domestic mandatory B2B e-invoicing. Countries such as Italy, Poland, Germany, France, Belgium and Romania applied for derogations to mandate e-invoicing. With ViDA, Member States may impose domestic e-invoicing without needing EU approval, provided it applies only to established taxpayers.
The previous EU VAT Directive stated the use of e-invoices was subject to buyer acceptance. Under ViDA, Member States that have introduced mandatory domestic e-invoicing will no longer require buyer consent.
ViDA redefines electronic invoices. Under the proposal, electronic invoices are those issued, transmitted and received in a structured electronic format that allows its automated processing. This means that non-structured formats, such as pure PDFs or JPEG images, will no longer qualify as an e-invoice. Hybrid formats, such as ZUGFeRD and Factur-X, can remain due to their structured portion.
In principle, electronic invoices must comply with the European standard and the list of its syntaxes pursuant to Directive 2014/55/EU (the “EN” format). However, ViDA allows Member States to use other standards for domestic transactions upon meeting certain conditions.
From 2030, B2B e-invoices compliant with the European standard will be the default and no longer requiring buyer acceptance. However, if a Member State opts for a different mandatory domestic standard, they may either waive or require buyer acceptance for e-invoices using the European standard.
One of the most impactful updates in ViDA is the requirement for near-real-time digital reporting of cross-border transaction data.
Starting in 2030, taxpayers engaging in cross-border transactions within the EU must report invoice data electronically following the EN format. Such DRR will be a condition for taxpayers to exempt VAT in a cross-border transaction or claim input VAT. Each Member State will provide electronic mechanisms for submitting this data.
With ViDA, cross-border e-invoices within the EU must be issued in up to 10 days after the chargeable event. In these cases, DRR must happen at the same time the e-invoice is issued or should have been issued.
Invoices issued by the recipient on behalf of the seller (known as self-billing) and the invoices related to intra-community acquisitions must be reported no later than five days after the invoice is issued or should have been issued or received, respectively.
As expected, DRRs may be carried out by the taxpayers themselves or outsourced to a third party on their behalf.
ViDA grants Member States the option to mandate digital reporting for domestic B2B/B2C sales, purchase data, and self-supplies for VAT-registered taxpayers within their jurisdiction. Domestic reporting requirements must align with ViDA’s cross-border DRR standards, and Member States must permit submissions in the European standard format, although other interoperable formats may be allowed.
For Member States with domestic real-time reporting systems in place as of 1 January 2024, compliance with ViDA’s standards will be required by 2035. On the other hand, the package clarifies that other reporting obligations, such as SAF-T, can still exist. This alignment will ensure consistency across the EU in preparation for full ViDA implementation.
Member States have until 30 June 2030 to integrate ViDA’s e-invoicing and DRR provisions into their national legislation, making the Directive effective across the EU by 1 July 2030.
ViDA represents a significant shift for businesses operating within the EU, promising both opportunities and challenges. By introducing DRRs, ViDA aims to replace obsolete requirements, reduce administrative burdens, improve accuracy, and combat VAT fraud.
The move towards structured e-invoicing and near-real-time digital reporting will require businesses to update their invoicing and reporting systems, driving digital transformation across sectors. While the transition may entail initial adjustments, it is expected to increase efficiency, create a level playing field, and facilitate smoother interoperability between companies using different systems.
Find out more by reading our dedicated VAT in the Digital Age guide.
With the pilot phase of France’s e-invoicing reform fast approaching, we’re prepared to support businesses every step of the way. As a global provider of tax compliance solutions and a trusted technology partner, we’re ready to help companies navigate the upcoming transition with confidence.
The French B2B e-invoicing reform is set to begin its pilot phase in February 2026, and we’re fully prepared to support companies during this critical stage.
With less than a year to go before the phased implementation of the mandate, we’re anticipating the needs of both French and international businesses operating in France. Our solution is complete, interoperable, and aligned with the latest specifications published by the French tax authority (DGFiP) and the AFNOR Commission.
According to Article 91 of the 2024 Finance Law, the obligation to receive electronic invoices will apply to all VAT-registered businesses from 1 September 2026. The issuance of e-invoices and e-reporting data will be introduced progressively between 2026 and 2027.
To help companies prepare, the French tax authority has announced a pilot phase starting in February 2026. Participation will be voluntary and will involve testing all end-to-end flows, formats, and business scenarios set out in the reform. Companies and their Partner Dematerialisation Platforms (PDPs) will play a central role in ensuring everything is operational before the full mandate kicks in.
We’re committed and ready to support our clients and partners in this next crucial step. Our solution enables participation in the pilot while covering all 36 use cases identified by the DGFiP, including:
Our platform is fully compliant with the latest technical specifications issued by the DGFiP, and we plan to support our first voluntary clients from the very beginning of the pilot in early 2026.
As of August 2024, we’re officially registered as a Partner Dematerialisation Platform (PDP no. 0004). Thanks to our deep regulatory expertise, strong local presence, and robust global infrastructure, we’re uniquely positioned to support clients not only during the pilot, but all the way through full implementation.
This combination of technology, expertise, and trusted partnership makes Sovos a strategic ally in the transition to e-invoicing. We’re here to guide businesses of all sizes with confidence, ensuring full compliance with the evolving requirements in France, across Europe, and around the world.
The digital business landscape is forever changing, yet one thing is certain: electronic archiving is more than a convenience – it’s a matter of compliance.
As governments worldwide invest in digital tax transformation initiatives like e-invoicing and e-reporting, a complex web of e-archiving requirements that vary across borders is also developing.
Understanding your e-archiving requirements is essential for maintaining proper tax evidence, surviving audits, and preventing potential business disruptions.
E-invoicing refers to the issuance and exchange of digital invoice documents, often in structured formats, replacing traditional paper processes. As countries implement mandatory e-invoicing and other types of Continuous Transaction Controls (CTCs) to close tax gaps and reduce fraud, these electronic documents must adhere to increasingly complex country-specific requirements.
While e-invoicing addresses the transaction process, e-archiving focuses on the long-term storage and preservation of these electronic documents in their original format to allow subsequent audits. This means proving that an archived invoice is precisely the same as when it was originally issued or received, with no unauthorised alterations.
According to research conducted between 2024 and 2025 by the Digital Innovation Observatories, “document archiving and management is the most commonly adopted service as a consequence of the introduction of e-invoicing mandates.”
This trend reflects a broader shift: regulatory compliance is no longer just about issuing invoices correctly, but also about how those documents are managed and retained throughout their lifecycle. As such, understanding the fundamentals of both e-invoicing and e-archiving is critical for organisations aiming to remain compliant, efficient and prepared in an increasingly digital and regulated environment.
E-archiving requirements are frequently underestimated but are critical to tax compliance globally.
While CTC systems provide real time granular data to the authorities, the possibility to conduct audits persists after the e-invoicing process, i.e. during the storage period, when the authorities will access e-archives to verify compliance. This makes a robust e-archiving system essential for businesses operating across multiple jurisdictions, each with unique regulatory requirements.
Importantly, businesses must maintain their own e-archiving strategy even when tax authorities offer centralised archiving services as part of CTC frameworks. In the event of an audit or legal dispute, it is ultimately the taxpayer’s responsibility to disprove or challenge the data held by the authorities. Relying solely on tax authority systems – or worse, on a counterparty’s archive – could leave businesses vulnerable, with limited control over the integrity or availability of critical documentation.
Moreover, businesses should view e-archiving not merely as a compliance obligation but as an opportunity to improve document management, streamline operations and strengthen audit defence. Without proper archiving, companies risk substantial penalties during audits and may face difficulties demonstrating compliance with local tax laws.
While there are several varying requirements from country to country, the following represent some of the essential general elements businesses must keep in mind when implementing a compliant e-archiving system:
As mentioned before, businesses often overlook the fact that e-archiving regulations can be as diverse and specific as e-invoicing mandates themselves, with each jurisdiction imposing its own distinct set of requirements.
While general requirements are present in almost every country, there are also unique complexities. As requirements differ from country to country, companies will find that certain jurisdictions have more complex and stringent e-archiving rules
Some country-specific e-archiving complexities examples are listed below:
Developing and implementing an effective e-archiving strategy presents significant challenges for businesses operating across multiple jurisdictions. With varying retention periods, technical requirements and constantly evolving regulations, organisations often struggle to establish compliant archiving processes that scale efficiently while minimising risk. A well-designed e-archiving approach ensures compliance, optimises operational efficiency and supports business continuity.
To develop an effective e-archiving approach, businesses should:
Tax audits can occur unexpectedly, requiring immediate access to archived invoices. Businesses should regularly test the retrieval and readability of archived documents and ensure staff understand how to access and present them during audits.
Beyond meeting regulatory requirements, a well-designed e-archiving system delivers significant business advantages:
Implementing a globally compliant e-archiving solution requires careful planning across technical, legal and operational dimensions. Rather than treating e-archiving as an afterthought to e-invoicing, it should be part of the foundation of your compliance strategy.
Sovos eArchiving offers compliant storage across over 60 countries from a single platform, ensuring country-specific compliance and continuous regulatory updates. This approach allows businesses to maintain compliance with constantly evolving requirements via one universal compliant e-invoice archive, regardless of the number of service providers and e-invoicing software solutions a company uses.
As tax authorities worldwide continue embedding compliance into business transactions, a robust e-archiving system isn’t just good practice—it’s essential for business continuity and audit readiness in our increasingly digital tax environment.
In the first blog in our series, we introduced SAP Clean Core concept and how much is being made about its impact on business, specifically the ability to customize an ERP to meet operational needs.
In part two, we addressed how businesses can use the SAP Clean Core principles to create a system that better supports their business objectives and positively impacts their tax and compliance management.
For our third installment in this series, I’d like to spend time talking about your business’ path to Clean Core and what that means for your tax and compliance programs and initiatives.
As outlined in our first two posts, aligning with Clean Core holds a number of significant advantages for companies including making them more nimble, efficient and cost efficient. It is a move I would encourage any business using SAP to consider sooner than later.
With any large-scale update, migration or platform change, getting your business ready for Clean Core is a process that takes advanced planning, a sound strategy and buy in from the highest levels of the organization to execute effectively.
In assessing your business’ readiness to adapt to Clean Core, it is important to understand both the short and long-term goals of the project and outline the specific actions that you will need to take to get there. My recommendation is to determine what your ultimate goal is, and then work backwards from there. This will help to ensure that no important steps are missed in the planning process.
With a project of this size and scope, it’s also critical to detail which parts of the project will be assigned to which departments and determine a method of oversight to ensure that all areas of the business are making progress and on track to meet associated deadlines.
When you are dealing with large, multi-faceted organizations, it is not uncommon for departments to move at different paces. This is where having executive buy-in becomes critical as it ensures that the project remains an organizational priority.
No two organizations are exactly the same in terms of their makeup and infrastructure. Therefore, you will need to conduct a self-assessment of where you are before you can determine which transformation trajectory makes the most sense for your business.
It is important to realize that an ERP transformation journey is a commitment that will require change. Assessing your organization’s appetite for change and the pace at which these changes can be implemented are critical success factors.
For organizations with the ability and desire to move faster, they will accelerate their time to modernization and be in a position to reap the benefits more quickly. However, I will caution that moving faster than your organization can realistically support can have serious consequences as well, which makes your initial assessment such an important part of your transformation journey.
Embracing the tenets of Clean Core can ensure that critical Tax and Compliance functions and decisions are no longer driven by complex and often difficult to maintain customizations within core ERP functions. Moving to an infrastructure with reduced complexity will enable your organization to more easily integrate specific tax solutions that are automated and maintained by third parties. This is an issue of great importance as governments and tax authorities around the world embark on their own technology journey and implement systems that are far more complex than previous generations.
Many countries have moved towards the complete digitization of tax compliance which requires real-time transactional data and complete transparency into your end-to-end transaction processes. Meeting these requirements can be the determining factor in your ability to conduct business within certain regions. Aligning with Clean Core is an important step in enabling your technology to react to changing regulatory conditions faster and more efficiently.
This type of transformation project should always be supported by and aligned with a solid business strategy. Having a set criterion of what you are trying to achieve and how you will measure effectiveness should be established up front. And global tax compliance should be a foundational element of any transformation event.
Tax and compliance are a great place to start your journey to begin unlocking the full power of aligning Clean Core principles with best-in-class tax solutions.
For more guidance on your journey, please download our free ERP Transformation eBook.
The Inland Revenue Authority of Singapore (IRAS) has announced the implementation of a phased adoption of InvoiceNow, the national e-invoicing framework based on the Peppol network, for GST registered businesses starting voluntarily in May 2025. The mandate will cover B2B transactions only, as the government is expected to make B2G mandatory in the coming years.
InvoiceNow is a nationwide e-invoicing initiative by The Infocomm Media Development Authority (IMDA) for SMEs and large enterprises to streamline their invoicing for a faster and more sustainable way to transact, nationwide and worldwide.
Singapore’s nationwide e-invoicing network was first announced in 2019 and has recently been referred to as InvoiceNow. The mandate will require GST registered businesses to use InvoiceNow solutions to transmit invoice data to IRAS. The transmission of invoice data to IRAS will be done through Peppol Access Point (AP) service providers, extending the traditional four corner e-delivery model to a fifth corner model.
The mandate will be implemented in phases, as follows:
Even though an implementation timeline for all businesses has not been shared yet, further updates are expected in the future.
Saphety Level – Trusted Services, S.A is an IMDA-certified Peppol service provider in Singapore. Our regulatory experts can connect to the InvoiceNow network on your behalf.
Climate-related events are an issue that impacts all industries, and the insurance industry is certainly no exception.
Beyond the challenges that insurers face in assessing the likelihood of weather-related events and natural disasters, there are also difficulties affecting Insurance Premium Tax (IPT) as countries look at ways to ensure they can fund responses to the consequences of these events. Some of these are not direct IPT measures but inevitably impact IPT, whereas others are direct IPT-related measures.
Natural catastrophe coverage is often an optional add-on to property insurance. In some countries, however, that is not the case – such coverage is mandatory. France and Spain are examples of this, with regimes in place involving the Caisse Centrale de Réassurance (CCR) and Consorcio de Compensación de Seguros (CCS), respectively.
Against a background of increasing costs due to natural disasters, recent months have seen other European countries follow suit with similar laws or proposals. Italy, for example, passed a law in late 2023 which requires companies to take out insurance policies by the end of 2024 to cover natural disasters occurring in the country. The government has authorised an Italian insurer to provide reinsurance of such risks like CCR in France, up to certain limits.
Germany and Slovenia have also seen resolutions or proposals for similar laws. In Germany, the Federal Council has called on the government to introduce mandatory natural catastrophe insurance. This is in light of the insurance protection gap relating to such coverage of properties. It remains to be seen whether the government will act based on this.
The increasing costs of weather-related events have triggered Slovenia’s national programme for protecting against natural disasters in the coming years, and a discussion of mandatory state insurance was recommended.
Additional premium amounts paid for natural catastrophe insurance can be expected to attract IPT and any applicable parafiscal charges due in these countries.
Weather-related events have also been cited as a reason for various premium taxation changes. In France, the additional premium rates due on risks which trigger natural catastrophe coverage (property and fire, as well as certain motor coverage) are increasing. Most notably, for property and fire risks, the premium rate is increasing from 12% to 20%. As IPT is due on this additional premium, this will significantly increase the IPT due on these policies.
Climate-related issues have had a major impact on levies used to fund emergency services due on property insurance in some states in Australia, specifically New South Wales and Tasmania. There is increasing pressure to reform the levies (with mixed success) due to the spiraling costs of responding to natural disasters. The levies result in huge increases to premium values, so the Insurance Council of Australia, amongst others, has urged the states to find a more sustainable way to fund emergency services.
Sovos actively monitors changes that impact IPT and is best positioned to advise if you have any IPT queries. Contact our experts today for more information.
This blog was last updated on 22 April 2025
The taxation of insurance premiums in Hungary is unique, both in terms of the technique used to calculate the tax and how it is governed.
Regarding calculating Insurance Premium Tax (IPT), Hungary is the only country in the EU where the regime uses the so-called sliding scale rate model. It applies to both IPT and the extra profit tax on insurance premium amounts (EPTIPT), also known as the supplemental insurance tax.
The insurance premium tax law (Act of 102/2012) includes the rules of IPT. However, this law can be amended by a government decree. Government Decree of 197/2022 regulates the EPTIPT. The Hungarian Tax Office has issued guidance about the rules of insurance premium taxation, and both IPT and EPTIPT are declared on the same return template.
In Hungary, insurance premium tax (IPT) and extra profit tax (EPTIPT) are levied on the premium amounts collected by the insurance companies.
In Hungary, it is almost impossible to determine the rate and amount of the insurance premium tax for a single policy, because IPT and EPTIPT are levied on the aggregated amount of the collected insurance premium.
The sliding scale regime considers:
For IPT, the threshold is HUF 20 billion since April 2024. It was HUF 8 billion prior to that. EPTIPT has no such taxable premium threshold.
For IPT, the scale is:
For IPT, the only exception from the sliding scale regime is the Class 10 motor third party liability insurance (MTPL) premium. IPT on MTPL premium is calculated differently, hence MTPL premium amount is not part of the aggregated taxable premium. The tax rate for MTPL premium is 23%.
EPTIPT’s scale differs from those of the IPT. Although the EPTIPT computation for non-life and life policies differs, the same scales apply. The EPTIPT scale is (as of 01/01/2025):
The rates, as of 2025, are:
The taxable basis is the insurance premium. The insurance premium is defined by the IPT Law (point 1 article 7 of Act 102/2012) as:
“The gross premium accounted for by the insurer based on accounting regulations for insurance services, including values not accounted for as gross premiums but considered as the countervalue for insurance services as coverage for insurance services, excluding premium income received from reinsurance taken from another insurance company, which is accounted for as gross income.”
MTPL premium amounts should not be considered for IPT’s sliding scale. However, the premium collected for MTPL is included in the EPTIPT non-life aggregated premium amount.
Life policies are exempt from IPT, but EPTIPT is payable on premium amounts collected by insurance companies from life policies.
Sickness insurance is exempt from both IPT and EPTIPT.
Another notable exemption is the premium amount collected on certain agricultural policies.
Currently, the biggest challenge in Hungarian Premium Taxation is the legal environment. The Constitution and the law on special measurements in case of catastrophic environments allow the government to amend tax rules – including IPT – via governmental decrees, instead of actually changing the relevant tax law.
For example, in 2022, a governmental decree introduced a new tax: the extra profit tax on insurance premium amounts (known as supplemental IPT or EPTIPT). In 2024, the government published another decree to change the applicable brackets of the sliding scale for the IPT regime.
The Act on Insurance Premium Tax No 102/2023 was not changed in either of these cases.
Hungarian IPT regulation is regularly changing. To keep yourself in the know, subscribe to Sovos’ tax alerts.
Here’s a brief timeline of changes to IPT in Hungary:
These resources can help you navigate the intricacies of Insurance Premium Tax:
Sovos’ IPT Determination solution enables you to confidently calculate and apply IPT rates at quotation. Real-time tax updates ensure tax rates and tax applicability are always accurate.
Want to ease the burden on your tax teams? Sovos’ IPT Managed Services provides support from our team of local language regulatory specialists who monitor and interpret IPT regulations around the world, including in Hungary, so you don’t have to.
The convergence of traditional Value Added Tax (VAT) and transactional compliance regimes is creating new obligations and responsibilities for companies doing business around the world. When it comes to VAT, compliance is so much more than just reporting.
Here are six pitfalls you should avoid in the pursuit of VAT compliance:
Companies with multijurisdictional supply chains must ensure their VAT determination decisions are accurate every time. Managing the validation process with VAT Determination software that checks validity before invoices are cut can save time and improve data accuracy from the outset.
It’s also best practice to complete your buyer VAT ID checks at this point in the process to avoid nasty surprises later. Checking manually can be incredibly resource-intensive so using a solution that can automate this for you can save both time and hassle.
To be considered legal for VAT purposes, invoices need to meet a specific set of requirements which vary by jurisdiction. Without legally valid invoices, you may be presented with a host of problems when the time comes to reclaim input VAT. If you have accepted an invoice that doesn’t tick the boxes that make it legal for VAT purposes, you invite the scrutiny of the tax authorities.
Aside from possible fines, the delay while anomalies are reviewed can impact your cash flow and cause reputational damage. Even in a paper world, VAT deduction is not permitted for improperly formatted invoices.
With VAT obligations always growing and adapting, the pressure on internal tax teams is greater than ever. Each government has its own approach to penalties for late submissions or overdue payments. Manual processes can no longer be relied upon to meet the demands of the authorities on time, and with accuracy.
It’s possible to streamline the reporting process using software, outsourced services or a hybrid approach; what’s best for your business depends on how your tax team is organised.
With new requirements coming thick and fast, teams are working harder and faster. As a result, opportunities for manual error are at an all-time high.
Manually processing VAT invoices can be incredibly time-consuming and leaves room for oversight and human error. Even individual errors can lead to bigger problems down the line, attracting the attention of the authorities and impacting your ability to do business.
Extracting the right data from the appropriate system modules, and then processing and mapping it so that it can be summarised, is a complicated and detailed task. To complicate matters further, each jurisdiction has its own unique reporting requirements you must meet. Automating these processes can improve accuracy and your ability to comply.
Preparing VAT Returns, EC (European Commission) Sales Lists, Intrastat Declarations and other country-specific reports for regular submission can be demanding. Add in the need to prepare a SAF-T (Standard Audit File for Tax) report and the complexity intensifies. SAF-T requirements differ by country, including transactional data (about sales and purchases) and accounting data at a minimum, but often need information about assets and inventory as well.
Combining detailed data from different source systems with an exacting submission format means the report cannot be easily eyeballed to check for possible errors. Tax Authorities use software to analyse the SAF-T filings they receive and decide where to follow up with further auditing. To safeguard the quality of the submission and avoid a call from the tax authority, it’s essential that data is thoroughly analysed before it’s submitted – ideally using tools of the same calibre that each Tax Authority is using.
It’s never been more important to seek the right advice for VAT. Admitting you need help can be a daunting but crucial step, but the fear of non-compliance should be a bigger concern.
Simply put, there comes a time for every multinational organisation when managing complex tax obligations in-house just isn’t viable anymore. Consolidating your compliance with Sovos gives you access to industry-leading software, consulting services and regulatory experts, all of which are focused on ensuring you’re compliant now and will remain so in the future.
To find out more, get in touch today.
When it was announced recently that the introduction of a new French e-invoicing mandate had been delayed until September 2026 there was a collective sigh of relief amongst many in the tax and finance world. More time to adequately prepare, put systems and methodologies in place and have your business ready to be compliant from the get-go.
Sounds optimal, but let’s focus on reality. First, the reported delay is a bit deceiving. While it may not officially take effect until 2026, you only have a matter of months to get prepared to participate in the extended trial. Human nature may be to push it to the side and focus on more short-term deadlines. However, to not take advantage of the extra time provided would be shortsighted at best.
Here are five ways you can make this extra time work for you:
Note: portions of this section originally appeared in the Sovos blog, France: B2B E-Invoicing Mandate Postponed, updated 19 September 23.
Businesses will soon be able to register proactively for the pilot program, which has been designed to allow businesses to test the PDP platform. This program is intended to build knowledge and confidence and ensure businesses are on the path to readiness.
Therefore, it would be prudent to regard the delay as a mere six-month postponement, with the beginning of the pilot program acting as the de facto starting date. To understand the full impact on their business processes and data flows, companies will need to thoroughly test up to 36 use-cases.
The good news is that the many software vendors helping companies to streamline their purchase-to-pay and order-to-cash processes will be eager to test the compliance of their solutions as early as possible in what has become a completely new ecosystem.
We are proud to say that Sovos is one of the first 20 candidates for service provider (PDP) accreditation in France and as such, will be fully prepared to assist your organization through the trial process and beyond.
Looking for more information about how to comply with the French Mandate?
Download our French Mandate eBook or Contact our expert team.
Note: The Finance Law for 2024 has been officially adopted and published in the Official Gazette on 30 December 2023. Our blog, France: B2B E-Invoicing Mandate Postponed, is promptly updated whenever there are changes to the rollout of the French mandate.
Tax compliance in France is already complicated. New e-invoicing and e-reporting regulations being introduced by the DGFIP will mean companies doing business in the French Republic face some of the most onerous compliance obligations of all VAT jurisdictions.
One significant change for many businesses will be the need to use Partner Dematerialization Platforms, also known as PDPs. The role of a PDP is highly specialised. Indeed, strict legal requirements and technical specifications must be met to become a registered PDP.
The timeline affecting all businesses is clear. However, depending on your industry, you may need to rely on a PDP to ensure you’re fully compliant with the new requirements. Key industries include:
Companies that need to use a PDP to achieve compliance with the French mandate face an additional, critical decision in what is already a complex new process to navigate. The need for a PDP raises the stakes, making it crucial to have dependable answers to the following:
We’ve created a rundown of key questions to consider when choosing a PDP.
In addition to the existing requirement for B2G invoices (Public Procurement), the French Mandate reform will require B2B invoices to be exchanged electronically. As each B2B e-invoice is progressed, its status will shift. There are 14 status possibilities that need to be communicated between trading parties. Of these 14, 4 must also be automatically reported to the tax authority platform. The result will be a huge amount of additional data flowing in multiple directions.
Additionally, the transaction details of B2B cross-border sales and purchases – excluding non-EU imports of goods – and B2C sales and payment data for Services Sales must be reported electronically to the tax authority.
Meeting these processing and capacity demands will be a significant undertaking for solution providers. For context, 100 million B2G e-invoices are processed annually. With the addition of B2B e-invoicing to the French mandate, this number will now be in the billions.
Why does this matter?
You want to be able to trust that your PDP can cope with increased capacity and processing needs as well as evolving compliance requirements. You want to set yourself up for success for France as well as to deal with the growing obligations across Europe and beyond.
The French Mandate is part of a global trend towards tax digitization. E-invoicing mandates are constantly changing, being modified and updated.
Take Italy, for example. Since January 2019, the e-invoicing mandate has been revised over 40 times.
The French tax authority has already released four versions of the upcoming French Mandate specifications and these will continue to evolve. Will your chosen software solution be robust enough to handle these changes so they don’t negatively impact your business? By asking the right questions, you may find that some aspiring PDPs, who also happen to be existing e-invoicing providers, are out of their depth.
On top of this, there’s the EU-wide VAT in the Digital Age initiative and the changes it will bring. Your future PDP must have the bandwidth and agility to keep up with the inevitability of these future developments. You will also need to consider whether this PDP can take care of your compliance needs beyond France too.
Trust is everything. A seasoned partner with experience navigating and solutioning for diverse e-invoicing obligations is important for your business. As government interest in business data grows, it’s essential to avoid blind spots, often created by complex supply chains, across multiple countries, within and beyond the EU. You’ll need a holistic view of your data that’s broader than e-invoicing and CTCs (continuous transaction controls). Think SAF-T and the other domestic obligations you face, alongside compliance challenges like VAT determination and periodic reporting.
If you’re also doing business beyond France, these need your attention too.
Let’s be clear. Despite what you may have heard about France’s e-invoicing mandate, this is not more of the same.
Yes, electronic invoice requirements used to be relatively manageable. They needed to be readable and unalterable, providing clear proof of the original supplier’s identity.
The scheme that will be introduced with France’s mandate complicates matters, adding requirements for:
Failure to meet the exact stipulations of the reform will result in invalid invoices.
Without legally valid invoices, not just VAT collection and VAT recovery are jeopardised: This would impact your company revenues and your trading partners, creating cash flow and profitability risks.
Make no mistake, the commercial and reputational impact of not meeting these minimum requirements are even more significant than the potential penalties.
French companies may be used to correcting e-invoice errors at a later date, but soon that will no longer be an option. The mandate ushers in continuous transaction controls, so any data or syntax errors will be glaring. If problems arise with e-invoicing, it won’t be possible to revert to paper or PDFs producing a significant cash flow risk for suppliers. E-invoices must be correct and compliant first time, every time.
Reliance on an experienced and knowledgeable PDP for e-invoicing and associated compliance obligations doesn’t just join the dots in your data. It makes good business sense.
For traditional e-invoicing, a large business network has been a supply chain advantage. A large network allows any one business to connect with a multitude of suppliers and buyers that choose to automate billing and invoice payments.
However, the interoperability requirements of the upcoming mandate erode the power of network size. Every supplier and buyer will need to connect through France’s e-invoicing system (Portail public de facturation or PPF) either directly, or indirectly through a PDP. Giving you more freedom when selecting the right PDP for your business.
While each registered PDP is required to cover both inbound and outbound invoice flows, they’re not required to cover all 36 specific use cases mentioned in the official documentation so far. Each use case needs an adapted treatment, which creates complexity that PDPs must address.
It’s important to ask any PDP you’re considering about their plans to address these use cases and any future ones that could arise as requirements evolve.
Our experts remain close to the requirements of the French Mandate. Especially as these evolve. Make it easy for yourself; connect with us.
Speak to us about our future-proof tax compliance solution, for the French Mandate and beyond, or download our deep dive guide on preparing for France’s mandatory continuous transaction controls.
Note: The Finance Law for 2024 has been officially adopted and published in the Official Gazette on 30 December 2023. Our blog, France: B2B E-Invoicing Mandate Postponed, is promptly updated whenever there are changes to the rollout of the French mandate.
France will implement a mandatory B2B e-invoicing and an e-reporting obligation. Every company operating in France is affected.
Electronic invoicing in France requires using a (partner) dematerialization platform. The already enacted legislation leaves the choice of which platform up to companies.
Should you use the public platform (‘PPF – Portail Public de Facturation’, i.e. Public Invoicing Portal) or a third-party private platform (‘PDP – Plateforme de Dématérialisation Partenaire’, i.e. Partner Dematerialization Platform)? And which organisation registered as a PDP should you opt for?
There is a lot to consider – including the type of invoices, data management, customer/supplier relations, transmission, functionalities, and more – this blog will help you make a decision.
The electronic invoicing process includes formatting, controlling, reporting, routing tracking, transactions, whether between trading parties (domestic B2B e-invoices) or with the PPF (domestic B2B e-invoices, cross-border B2B sales and purchases, B2C sales, payments received on services). In this respect, PDPs are essential.
French legislation allows companies to choose their dematerialization platform for submitting and/or receiving domestic B2B invoices and reporting transactions. A public solution exists, the PPF, alongside which other PDPs position themselves.
What parameters should you consider when choosing a dematerialization platform? What are the conditions for becoming a PDP and when will they be operational?
This blog discusses the elements that enable companies to understand the role of dematerialization platforms in managing electronic invoicing. If you wonder how to choose the right PDP for your organization, read this blog about Choosing the right PDP – 5 Questions to ask Yourself.
The need to use a dematerialization platform is part of the electronic invoicing requirements, which come into force for business-to-business (B2B) transactions with go-live of the mandate.
An electronic invoice must be delivered in a structured format, leaving it to the trading parties and their PDPs to agree on the standard. By default, PDPs must be able to process the three core set formats, UBL, CII, or UNCEFACT, with the obligation for the platforms to produce a legible version of each invoice, or Factur-X hybrid format (XML+PDF/A-3).
PDPs may also offer to process any other structured formats (e.g. EDI formats such as EDIFACT), subject to acceptance by both the buyer and the seller. In both cases, PDPs will have to extract mandatory data from the issued e-invoice and map it into one of the core set formats – and then report them to the PPF within 24 hours of the e-invoice issuance.
The corresponding flows can be exchanged under various communication protocols (EDI, API, etc.)
Using a PDP isn’t mandatory from a legal point of view. However, using a PDP will be necessary for companies who want to exchange invoices in specific formats due to the specificities of the invoice flow (not supported by the PPF).
The PPF will be used for the obligatory transmission of invoice data to the tax authorities.
It will manage the following for companies:
The PPF performs other functions including management of the Central Directory (in which any registered company subject to VAT will be identified), data collection and transmission to the tax authorities, and retention of e-invoices.
Like the PPF, a Partner Dematerialization Platform (PDP) ensures the submission of invoices and conversion into one of the three core-set formats – CII, UBL or Factur-X.
But, contrary to the PPF, they will allow the exchange of invoices in any EDI format (other than the three core-set formats).
The PDPs will allow the following:
In addition to these mandatory functionalities, they may also offer the following:
A PDP is a platform registered and authorised by the French tax authorities. The official registration number will be issued based on an application file submitted by an operator. This file will have to document how the regulation requirements (decree and order published in October 2022) are met, particularly the ability to perform the functions expected of a PDP. These requirements are meant to be slightly revisited with a new decree/order to be published beginning of 2024 (more precisely, with the removal of connectivity tests with TA Platform as a PDP Registration Criteria)
In addition to the guarantee provided by this registration (mainly from the point of view of compliance with stringent security rules), what distinguishes a registered platform from a simple dematerialization operator is the possibility of transmitting invoices to other dematerialization platforms (PPF or other PDPs).
This registration is valid for three years and then must be renewed, based on audits to be regularly provided by the PDPs (first audit to be conducted no later than 12 months after the registration entering into force).
The first certified PDPs should be announced in the beginning of 2024 and will be published on the tax authority’s website.
Find out how Sovos can help you comply with e-invoicing regulations by speaking with one of our experts.
It’s essential to stay on top of your company’s VAT requirements. This requires sound knowledge of the rules and what authorities expect of businesses. This includes dealing with supplies of goods and services outside standard VAT obligations.
Not every product or service incurs VAT. This is VAT exemption.
Some goods and services are exempt from VAT. This depends on the sector and country you are selling within.
For more information on how to comply with European VAT, download our free eBook or read our comprehensive guide to the EU VAT e-commerce package.
If a supply is exempt from VAT, it may be because the EU considers the goods or services as essential. VAT exempt supplies include:
If your company only sells VAT exempt products or services, your business operates differently. It is a VAT exempt business and:
For example, if a company solely provides education and training services in the UK, the government would consider it an exempt business. The above rules would apply.
In some circumstances, a business might be partially exempt from VAT. Partial VAT exemption applies to VAT-registered companies that carry out both taxable and VAT exempt supplies of goods or services.
If your business is partially exempt from VAT, you can still reclaim any VAT incurred when producing or acquiring non-VAT exempt goods or services you sell to customers.
Additionally, partially exempt businesses need to keep separate records. These records should cover VAT-exempt sales and provide details on how VAT was calculated for reclamations.
VAT exemption is not the same as 0% VAT. No extra charges are added to the original sales price for either zero-rated or VAT-exempt supplies, but there are a few significant differences.
Unlike VAT-exempt supplies, zero-rated goods and services are part of your taxable turnover. Zero-rated supplies should be recorded in your VAT accounts – whereas, in some countries, businesses might only record non-taxable sales in regular company accounts.
Furthermore, in contrast to VAT exemption, you can reclaim the VAT on any purchases for zero-rated goods or services.
VAT rates and exemptions vary across the world, so we will use the UK as an example to illustrate the concept.
In the UK, most goods and services are subject to a standard VAT rate of 20%. However, some are subject to a reduced VAT rate of 5% or 0%.
Goods and supplies with a VAT rate of 5% include:
Goods and supplies with a VAT rate of 0% include:
These reduced rates may only apply to certain conditions, or in particular circumstances depending on the following:
Continuing with our UK example, if you sell, send or transfer goods out of the UK, UK VAT is often not included as they are considered an export.
You can send most exports to a destination outside the UK with a zero rating if you meet the necessary conditions:
VAT exemptions are always changing. Don’t get caught out. Contact our team for advice on how your business should manage its VAT obligations if it is exempt from VAT.
Did you know? Over 170 countries worldwide have implemented VAT or GST.
Despite how common VAT is, the tax is difficult at the best of times to understand. Knowing who pays VAT – the buyer or the seller – is straightforward, though, if you take the time to learn about the tax or have help.
That’s why we share plenty of knowledge on the topic, from an in-depth introduction to EU VAT to how VAT changes when trading between different EU countries.
With this specific blog, we explain who collects VAT and what governments expect of businesses. For questions around the EU VAT eCommerce package read this comprehensive guide.
Let’s start with the burning question, what is VAT?
VAT is a tax collected as goods and services move through a supply chain. In other words, manufacturers, distributors and retailers collect VAT as an item or service makes its way to a final consumer.
But wait. What’s GST?
Similar to VAT, GST sees tax authorities levy GST (Goods and Services Tax) on goods and services sold for domestic consumption. Consumers pay GST, and businesses remit it to the government.
Both GST and VAT share characteristics but have different names. How they work depends on the country and local legislation. For example, the EU has specific VAT compliance requirements as our free guide outlines.
Let’s start with a seller. Sellers collect VAT by adding the tax to the selling price.
The VAT charged by the seller is ‘output tax’. Sellers report this to the local tax authority on behalf of the buyer. The VAT paid by the buyer is ‘input tax’. The buyer can credit this against the VAT they charge.
Yes, we know this sounds complicated so here’s the concept in simpler terms.
In certain scenarios, VAT can be instead reported and remitted by the buyer. This is a ‘reverse charge’.
You are an eCommerce business? Read more about VAT compliance for eCommerce here.
The main differences between Sales Tax and VAT are who pays tax to the local governments and when.
VAT and Sales Tax occur at different stages in the production chain. As a tax authority, you levy Sales Tax on retail purchases of goods or services. You impose VAT on each step of the production process.
The challenge with Sales Tax is that tax authorities have no record of transactions to verify retailers’ tax payments. However, with VAT, the chain of transactions and credits creates a natural audit trail due to the cross-reporting between businesses.
The government can issue fines if tax authorities detect errors through an audit.
Usually, VAT is charged at the same flat rate across the board. This is set by a national government. However, other rates – such as a zero rate – can apply to specific supplies like children’s clothes and food.
Supplies such as financial and property transactions can also be exempt from VAT – in which case, no VAT is chargeable, nor can the related VAT be recovered by businesses.
The seller should issue a valid VAT invoice containing the following:
Local legislation defines whether additional information is required. Simplified and retailer invoices are allowed in some circumstances.
VAT encourages everyone in the production chain to maintain documentation for all transactions, making each subject accountable for their amount of revenue and compliance with tax laws.
This becomes particularly important when a business wants to reclaim VAT, as they will be required to produce evidence that the tax was incurred in the first place.
Businesses will document and report the VAT paid to their suppliers and the VAT collected on their sales. To claim a VAT credit, businesses must keep proof of the VAT incurred, such as purchase invoices and import documents.
Not all businesses may need to register for VAT. Some circumstances may trigger a VAT registration. These include:
In certain circumstances, it’s possible to register for VAT voluntarily, with the main benefit being the ability to recover the input VAT incurred on purchases.
Registered businesses file periodic VAT returns in respect of each prescribed accounting period. The format and frequency may vary from country to country.
Registered businesses also keep VAT records, charge the right amount of VAT to their supplies, submit VAT returns, and pay any VAT due in a timely manner.
There are specific triggers that could prompt queries from the tax office. Usually, these are changes in the company’s status – such as a new registration, a de-registration, or structural changes. VAT refund requests also fall into this category.
Due to their structure and business model, certain businesses are naturally subject to audits. Groups commonly selected for scrutiny include large companies, exporters, retailers, and dealers in high-volume goods.
Tax authorities, especially those trading with the European Union, often identify individual taxpayers based on past compliance and how their information compares with specific risk parameters.
Therefore, unusual trading patterns, discrepancies between input and output VAT reported, and many refund requests may appear unusual from the tax office and produce questions.
Finally, another common reason for the tax authorities to request further information from taxpayers is the so-called “cross-check of activities”. In this case, the tax office will contact their counterparts to verify that the information provided is consistent on both sides.
Whether a business decides to handle the audit in-house or request the support of an external advisor, it is essential to consider the consequences of the audit – especially if high amounts of recoverable VAT are at stake. In the case of an audit, the main objective should be a successful and fast resolution to limit any detrimental impact on the business.
Our explanation about who pays VAT, the buyer or the seller, has explained things but do ask our experienced team any extra questions you might have. They are here to help.
A seller collects VAT from sales and reports it to the local tax authority on behalf of the buyer. A buyer may also end up charging VAT if it is selling its own goods or services.
Yes, a buyer pays VAT to sellers and if a buyer sells goods or services to its own customer base and meets the threshold for VAT registration, it will charge VAT itself and pay this to the government.
Sellers do pay VAT, as it’s a consumption tax involved in every step of the supply chain.
This depends on the transaction, where the buyer or seller sits in the transaction supply chain, and whether the goods are exempt from VAT.
Sales Tax is different to VAT. The consumer only pays Sales Tax when buying the final product, whereas businesses collect VAT at every stage of production – meaning all purchasers pay VAT.
Speak to our sales team to find the right solution for you or take a look at our VAT solutions.
The European Union is a collective but its Member States have their own rules and nuances where VAT is involved. Knowing what rules are at play is essential when trading in the EU, and that’s where Sovos’ EU VAT Buster comes in.
Each Member State has its VAT threshold for sales. Though, collectively, things changed when the EU VAT Reform came into force. Bookmark this blog so you always have the key facts available when dealing with EU VAT.
For intra-EU B2C supplies, the VAT registration threshold in the EU changed on 1 July 2021. The EU introduced a new lower threshold of €10,000 for businesses established in the region, while a threshold does not govern those outside the region.
For European businesses, that threshold applies annually and is related to all sales in the EU. There is no revenue threshold for non-European companies, and they must be VAT registered in all Member States they sell within.
For other activities, many EU Member States have domestic supplies for established companies, whereas in most instances non-established companies do not benefit from any threshold.
The table below highlights a selection of EU Member States and the VAT number format for the country.
The below table shows VAT details for several countries. The VAT rates were last updated on 17 February 2023 and include the main reduced rates (countries may also have zero rates – read our blog to better understand how VAT works between European countries).
For more information, including relevant data on additional countries, speak to our expert team.
| Country | Current VAT Rate | VAT Number Format | |
| Standard | Reduced | ||
| Germany | 19% | 7 | Format: Nine characters.
Example: DE 123456789. |
| Hungary | 27% | 5, 18 | Format: Eight characters.
Example: HU 12345678. |
| Romania | 19% | 5, 9 | Format: From two to 10 characters.
Example: RO 12, 123, 1234, 12345, 123456, 1234567, 12345678, 123456789, 1234567890. |
| Spain | 21% | 4, 10 | ES X12345678, 12345678X, X1234567X
Format: Nine characters. Includes one or two alphabetical characters (first or last or first and last). |
| Switzerland (non-EU) | 7.7% | 2.5%, 3.7% | Format: Nine characters, ends with MWST/TVA/IVA.
Example: CHE 123.456.789 MWST. |
| United Kingdom (non-EU) | 20% | 5% | Format: Nine characters.
Example: GB 123 4567 89. |
EU VAT is a vast topic, especially considering each country within the union has its own nuances. As such, many questions are asked of us regarding it. Here are some of the most common phrases you may encounter, as well as some frequently asked questions – and the answers.
The Destination Principle is a concept which allows for VAT to be retained by the country where the taxed product is being consumed. It’s applied to the Goods and Services Tax in India, and on many EU supplies.
The VAT Origin Principle is a concept which requires that the applicable VAT rate for a transaction is determined by the Member State where the seller is based.
The Union OSS (One Stop Shop) is a scheme for intra-EU business-to-consumer supplies of goods and services. It was introduced in July 2021.
The Non-Union OSS (One Stop Shop) is a scheme for companies that are not established in the EU. It allows them to register and pay VAT for all business-to-consumer supplies of services in a single EU Member State. It was extended from the previous Mini One Stop Shop (MOSS) in July 2021.
All goods imported into the EU are subject to VAT. Businesses selling imported goods under EUR 150 can utilise IOSS (Import One Stop Shop) to simplify their VAT Compliance. To obtain an IOSS VAT registration, most non-EU companies need to appoint an intermediary – such as Sovos.
Marketplaces may become the deemed supplier of some business-to-consumer transactions when they cross borders, taking on VAT obligations. This means that a marketplace would gain responsibility for collecting and reporting VAT from the consumer.
To stay compliant with tax regulations, companies need to know the varying VAT thresholds of the EU Member States. In July 2021, the EU introduced a universal distance selling threshold of €10,000. For other activities, many EU Member States have domestic supplies for established companies, whereas in most instances non-established companies do not benefit from a threshold.
Cross-border supplies involve goods being transported from one country to another. In some cases, goods may cross multiple borders on the journey from the supplier to the final destination of sale. When dealing with cross-border supplies, you may create a requirement to register for VAT.
There are no customs charges when goods are transported from one EU Member State to another. There are customs charges for goods originating outside the EU. Such charges are generated from customs controls at borders and are dependent on a specific set of rules.
In the EU, Import duty is tax payable based on the value of imported goods and can include VAT and customs duties.
Hungary has the highest standard VAT rate of any European country, sitting at 27%. Croatia, Denmark, and Sweden are joint-second at 25%.
Luxembourg has the lowest standard VAT in the EU at 16% for 2023, though this will return to 17% in 2024. No country can charge a standard VAT rate below 15%.
No EU Member State can charge under 15% as a standard VAT rate. Luxembourg has the lowest standard rate among the Member States at 16% (albeit temporarily).
Although the European Union has somewhat created a uniform tax protocol, each EU Member State has its own VAT rates.
If you buy or receive goods for business purposes from another country in the EU, you must pay VAT on the transaction at the rate dictated by the type and place of supply.
Businesses need to know the unique VAT threshold of the EU Member States. As of July 2021, the VAT threshold for distance selling in countries in the EU is €10,000. For other activities, many Member States have domestic supplies for established companies – though, typically, a threshold is not applicable for non-established companies.
VAT registration is applicable for non-resident companies to trade in a country, with specific requirements outlined by the EU and individual tax authorities.
Interested in finding out more about VAT registration options and the various OSS schemes? Contact our sales team today. Refer to this page for our solutions around VAT compliance for eCommerce.