In order to reduce mistakes and fraud in the VAT system, France wants to increase the use of electronic invoicing.
Electronic invoicing has a promising future and is changing quickly. Indeed, it is now possible to digitize paper invoices and to issue electronic invoices, and it is now even mandatory for some kinds of transactions to use electronic invoicing as described below.
Digitization of paper invoices
Up to January 1, 2017, incoming “paper” invoices had to be kept and stored only in their original format (i.e. paper) in order to support the input VAT deduction right.
A Finance Bill for 2016, supplemented by a Decree dated March 22, 2017, set out conditions and processes that must be followed for digitization of invoices originally issued in paper form. If the process fulfills the requirements set out in the Decree, the taxpayer may rely solely on the digital invoices for VAT purposes.
Electronically issued invoices
Taxpayers have the option of sending their invoices in paper form or, subject to acceptance by the recipient, in any electronic form.
The origin’s authenticity, the content’s integrity and the invoice’s legibility must be ensured from the moment it is issued until the end of its storage period.
Mandatory mentions are the same for paper or electronic invoicing.
In order to be considered as original invoices, invoices transmitted electronically must meet technical conditions. Indeed, taxpayers may use one of the following processes:
- the advanced electronic signature procedure;
- or the structured data exchange system;
- or any other technical device. In this case, a reliable audit trail should be established between the invoice issued or received and the transaction on which it is based.
Mandatory electronic invoicing between the government and its suppliers
In order to increase the development of electronic invoices, France introduced an obligation to issue electronic invoices between the government and its suppliers.
The obligation to transmit electronic invoices applies to contracts that are in the course of being applied or are subsequently concluded with public sector suppliers. The date of enforcement of this mandatory obligation for suppliers varies according to the size of the company:
- As of January 1, 2017, for large companies (more than 5,000 employees and/or an annual turnover greater than EUR 1.5 billion or total balance sheet greater than EUR 2 billion) and public entities;
- As of January 1, 2018, for medium-sized companies (250 to 5,000 employees and up to EUR 1.5 billion in annual sales or EUR 2 billion in balance sheet total);
- As of January 1, 2019, for small and medium-sized companies (10 to 250 employees and up to EUR 50 million in annual sales or EUR 43 million in balance sheet total);
- As of January 1, 2020, for micro-enterprises (fewer than 10 employees and annual or total turnover of less than or equal to EUR 2 million).
Due to mandatory legislation concerning e-invoicing for relations between the government and its suppliers, a national unique invoicing portal called “Chorus Pro” has been developed.
With the exception of a few contracting authorities (such as SNCF, SNCF Réseau, SNCF Mobilités, and Caisse des dépôts et consignations), Chorus Pro supports all suppliers of the public sector in submitting their invoices, checking on their current status of the invoice and payments.
Today, there is a true desire by the French government to encourage taxpayers to use electronic invoicing. For now, there is no obligation on private companies to exchange invoices electronically but it is very likely that this obligation will extend to the private sector in the coming years.