France is witnessing a global move towards Continuous Transaction Controls (CTC), where Tax administration is demanding transactional data in real-time or near real-time, affecting e-invoicing and e-reporting obligations.
France will introduce a mandatory B2B e-invoicing clearance and e-reporting obligation
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France
Author: Kristina Dosen
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General information
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1106
Content accuracy validation date:
23.08.2021
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09:31h
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As such, from 2023, France will implement a mandatory B2B e-invoicing clearance and e-reporting obligation, to increase tax efficiency, cut costs and fight tax fraud. The pace toward this mandate has been accelerating lately with the adoption of the Finance law for 2021, followed by several workshops organized by the French Ministry of Finance.
The Finance Laws both for 2020 and 2021 introduced the CTC scheme from a legal perspective and both include a “person subject to VAT” in the scope. VAT registration is a strong indication that a company is subject to VAT, but classification as a VAT “taxable person” also depends on other factors. Therefore, it is not as simple as just looking at whether a company has a local VAT registration, to decide whether it is subject to VAT and therefore targeted by the mentioned budget laws. However, the scope cannot be unilaterally decided by France as the French CTC scheme is dependent on a derogation from the EU Council. French General Directorate for Taxation (DGFIP) has however suggested that companies that are non-established but VAT registered will be in the scope of this reporting obligation.
When it comes to formatting, it must be specified that the fact that the new regime creates a specific process for domestic B2B e-invoicing does not change the need for businesses to demonstrate the integrity and authenticity of each invoice. This can be done through one of the 3 legal methods defined by the existing regulations:
- EDI
- Qualified electronic signature / seal
- The Business Controls option using an Audit trail.
To ensure there is no impact of the reform on integrity and authenticity demonstration methods, one can still apply any of them. However, with this new regime, e-invoicing data sent to the DGFIP does need to be in a structured format.
Digital signatures are not strictly required today and will not be strictly required in the new scheme. Integrity and authenticity will still need to be ensured, irrespective of invoice format, as in the case today. The options remain the same – use of digital signatures, use of EDI with security measures, or the BCAT option whereby the audit trail should prove the transaction and its authenticity and integrity.
The legal invoice format can be anything, as long as the supplier and buyer agree on it, and the integrity and authenticity are guaranteed. Also, a human-readable version (normally a PDF) is required upon audit as part of the general EU requirements. Which e-invoicing formats are permitted is not fully defined yet, but DGFIP has indicated the following syntax, based on the EN16931 standard:
- Structured format: UBL invoice / CII D16B / XCBL
- Hybrid format: Minimum UBL invoice / CPP hybrid / FACTUR-X (PDF-A3) / Minimum CII
It will be mandatory to send the e-invoices in real-time, as it can be considered a “real-time clearance system”. As part of the e-invoicing obligation, the reporting of mandatory data to the tax authorities and the issuance of the original invoice to the buyer by the supplier’s partner platform should happen right after receiving the invoicing data from the supplier.
It will be mandatory to mention the SIRET number (ID) of the French trading parties; for non-French EU parties, the VAT intercom number will need to be mentioned, and for non-EU parties, some local ID will be expected. Also, the French version of the SAF-T (FEC) must still be available on-demand from the Tax Authorities.
When it comes to archiving, even though a tax authority’s archiving solution would be available for taxable persons, few larger companies choose to solely rely on it for evidence purposes and instead continue to use their compliant internal or third-party archiving solutions. This decision is ultimately based on the fact that the French Tax authority’s archiving solution poses a conflict of interest: it is maintained by the tax auth., which, from a legal perspective, is not an independent party but rather the counterparty in a fiscal claim. In fact, from discussions with many experts and customers over the past year, it is noticeable that the French market request for third-party archiving services is even stronger after the introduction of clearance, especially as customers see a need to store not only the invoice but also response messages from the CTC portal to further maintain evidence of compliance.
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