How does French E-Reporting work? How does French E-Invoicing work?

From July 2024, E-invoicing and E-reporting will be mandatory. B2B and B2C businesses are conducted differently under this new mandate. Identify the differences between e-invoicing and e-reporting and how they affect your business.

E-invoicing will become mandatory in France on 1 July 2024. This process will be carried out in steps until 2026, according to the new mandate. Understanding the basics before it's too late is crucial to staying ahead of the compliance curve.

E-invoicing and e-reporting overview

Since January 2020, public administration transactions require electronic invoices (e-invoices)

The benefits of e-invoicing extend beyond going digital. Although everything is done electronically, there is also a mandated format. Businesses must include a minimum database and structure in this format. To ensure complete transparency, the data is shared in real-time with French authorities.

In the case of e-reporting, it is the responsibility of the provider to report any sales not covered by the e-invoicing rules to the French authorities. Among French businesses, e-invoices are mandatory, while e-reporting applies to imports, exports, sales to private individuals (B2C), and intra-community supplies (B2B).

Large Enterprises or large taxpayers that do not classify under any other sizes (1 July 2024).

Small and medium-sized enterprises (SMEs) with less than 5000 employees and an annual turnover that does not exceed € 1.5 million (1 January 2025).

Small and medium enterprises (SMEs) with less than 250 employees and an annual turnover that does not exceed € 50 000 (1 January 2026).

Specific transactions will be required to be invoiced electronically as part of the process. All taxable B2B transactions in France must be reported using an e-invoice. Furthermore, e-invoicing is required for domestic transactions between French companies and registered VAT taxpayers.

Compliance and e-invoice format

Electronic invoices must adhere to a specific format to be fully compliant. This will affect your domestic VAT recovery. The invoices must be technically correct. It is meaningless to have an "electronic invoice" if the invoice does not meet the required standard.

In France, who is affected by e-reporting?

When a taxable transaction occurs, foreign businesses must comply with e-reporting requirements. This is due to the fact that French VAT has been charged and may be refundable. This includes a few common situations for VAT-registered foreign companies, such as:

  1. Domestic sales between companies based in France.
  2. Domestic sales to foreign firms. If the supplier is not based in France, e-reporting is required.
  3. Customer sales in the United States (B2C). The supplier who is not based in France is also required to submit electronic reports.
The Advantages of E-Invoicing

Although many countries are gradually implementing e-invoicing, it is critical that businesses recognize the numerous benefits that come with this change.

E-invoicing reduces the cost of printing physical invoices for businesses.

Limits fraud and ensures transaction transparency.

It creates an accurate trail of each transaction, making filing and identifying accurate VAT refund amounts easier.

Assists businesses in their economic activity by displaying the business trends' inputs and demands.

Compliance with VAT IT and e-invoicing

A new FAQ published by the French Tax Authority on October 7 2022 elaborates on the mandate for your e-invoices and e-reporting:

https://www.impots.gouv.fr/sites/default/files/media/1_metier/2_professionnel/EV/2_gestion/290_facturation_electronique/faq_fe_v12102022.pdf

Alternatively, you can collaborate with industry experts like eBusiness eXpert to get audited and offered the solution needed to be completely compliant in a cost-effective way.

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