Obligation to send electronic invoices in France: where are we?
1) Mandatory electronic invoicing for B2G relationships
As part of the dematerialization of public procurement, the government has imposed electronic invoicing for public sector suppliers since 2017. Article 3 of the order of 26 June 2014 provided for a gradual switch to electronic invoicing for businesses:
- As of 1 January 2017 for large companies and public entities;
- As of 1 January 2018 for Intermediate-sized companies;
- From 1 January 2019 for small and medium-sized enterprises;
- January 1, 2020 for Very Small Businesses.
As a result, since 1 January 2020, all French companies must issue electronic invoices in order to address their payment requests for contracts concluded by the State, local authorities and public institutions. This procedure is done via the Chorus Pro portal.Read our article on this topic
2) Towards a generalization of electronic invoicing for B2B relations
The 2020 finance law provides for the end of paper invoices as from 2023. Therefore, the electronic invoice will be required for all B2B transactions subject to French VAT.
As of January 1, 2023, businesses of all sizes will be required to receive electronic invoices. Between 2023 and 2025, they will have to issue electronic invoices depending on their size.
The thresholds for the gradual introduction of electronic invoicing are not known at this time and will have to be defined by order. Nevertheless, by analogy with the existing rules on the obligation to provide electronic invoicing in the context of public procurement, it is possible to operate the same classification.
Will therefore probably be affected as soon as:
- 2023: Large Enterprises (more than 5,000 employees);
- 2024: Intermediate-sized companies (250 to 5,000 employees);
- 2025: Small and Medium-sized Enterprises (10 to 250 employees) and Very Small Enterprises (less than 10 employees).
3) What are the legal obligations related to electronic invoicing?
The billing rules
For an invoice to comply with the rules of electronic invoicing, it must be true to its origin, the integrity of its content and its legibility ensured from its issue until the end of its retention period (Article 289 V of the CGI).
To meet these conditions, the tax administration provides that taxable persons can issue or receive invoices using:
- The use of Electronic Data Interchange or EDI (Article 289 V 3° of the CGI)
- The implementation of an advanced electronic signature device with a qualified certificate (Article 289 V 2° of the CGI)
- The implementation of documented and permanent controls establishing a reliable audit trail between an invoice and a transaction when a technical solution other than those provided for above is used (Article 289 V 1° of the CGI)
In addition, the obligation to transmit billing data to the tax administration will apply for:
- International B2B and B2C sales;
- Intra-Community purchases of goods and services and international purchases of services;
- Payment data (between 2023 and 2025 depending on the size of the company).
Finally, the mandatory information to be provided on electronic invoices is the same as that expected for paper invoices.
The conservation rules
An electronic invoice must be kept for 6 years from the date of issue. For the first three years, it must be kept on a computer medium and in its original format (i.e. the format in which the invoices were issued). For the next three years, the company may keep it on any medium of its choice.
This obligation to retain also applies, depending on the choice made by the company, to:
- The complete structured message for invoices transmitted by EDI;
- The electronic signature to which invoices are linked and the electronic certificate attached to the verification data of this signature for invoices with an electronic signature;
- The control elements establishing a reliable audit trail when none of the previous modes of transmission has been chosen.
In addition, billing files must be stored:
- In a location where the company has immediate access to download and use of all data;
- In France, in a member country of the European Union (EU) or in another country with guarantees equivalent to those of the EU states in terms of access to data and administrative assistance. The latter case requires a declaration to the tax office of the taxpayer.
If the company cannot guarantee digital storage conditions in accordance with the applicable legal provisions, then it must keep its invoices in paper format.
To get back to the basics, it is important to know that electronic invoices must be kept for 6 years for tax law and 10 years for commercial law. In case of dispute, you can find your invoices.
4) The issues of electronic invoicing between private companies
The obligation of electronic invoicing involves four issues for the company:
Effectiveness:
- Simplifying the validation process and approval time; the internal approval process and document search process;
- Using a global solution that can interact with different ERPs.
Reliability:
- By providing regulatory compliant electronic invoicing (in accordance with the EU directive and local regulations);
- By complying with mandatory commercial and tax rules;
- Strengthening the internal control system by ensuring the reliability and traceability of data processing;
- Reducing litigation and payment delays by controlling cash flow.
Productivity:
- Improving its purchasing and sales processes to enable the company to automate its accounting processes and grow;
- Streamlining back office functions (administration, control and operations support) to promote efficiency and visibility;
- Reducing processing costs and time.
Security:
- By developing new applications capable of integrating security, data analysis and management features and artificial intelligence, the cornerstone of the digital transformation of the company’s back office functions;
- By securing communication with customers and suppliers and (cybersecurity) processes.
In addition, the challenges of electronic invoicing for the tax administration are manifold:
- Strengthen the prevention and fight against VAT fraud, in particular through automated cross-checks;
- Facilitate VAT returns in the medium or long term by pre-filling;
- Promote knowledge of all the activities of companies in order to facilitate a better management of government actions in terms of control and economic and fiscal policy.
In conclusion, given the constraints and issues involved, electronic invoicing is a topic to be closely monitored so that new obligations can be anticipated. These changes impact your invoicing processes and the exchange of invoices with your customers and suppliers. Artéva can support and advise you in this transition; whatever your technological problems and those of your partners. Our invoice dematerialization solutions are fully compliant with the next legal developments.
