E-invoicing & e-reporting in France: a guide for SMEs, fintech & banks

E-invoicing and e-reporting have been on the horizon in France for some time. In fact, proposals for these regimes began back in 2014. 

Despite fits and starts — and postponed launch dates — these new regulations will (finally) kick in soon. Which means it’s time to understand the rules and what they mean for your business. 

This article explains what the e-invoicing and e-reporting rules will entail, and the likely benefits for companies and the State. Then we’ll see how banks and fintechs can contribute to this transition, for the good of their customers and the wider financial system.

But let’s start with the obvious:

What is e-invoicing? 

E-invoicing involves creating, exchanging, and storing electronic invoices for business transactions. This is different from invoice digitalization, where you convert an existing paper invoice to a digital format — typically by scanning it. 

As we’ll see, every invoice will soon be required in a standard format, and submitted, declared and VAT paid through a centralised system. The hope is that this will make B2B invoicing more transparent, more efficient, and more uniform.

What is e-reporting? 

E-reporting lets companies send specific financial data to the tax authorities, regulatory bodies, and the government. This could include the amount of VAT collected, the social charges paid, and your company’s total turnover in a given tax period. 

Again, the goal is to make fiscal reporting faster and more efficient for both companies and the government.

E-reporting rules apply to business-to-consumer (B2C) transactions, and transactions between a French company and buyers or sellers outside France.

E-invoicing rules in France

We’ll explore the full timeline shortly. But the most important dates to know are when it comes into force, so you can be ready.

When does e-invoicing become mandatory?

E-invoicing is scheduled to become mandatory in France from 2026. There are two key dates to be aware of: 

• 1 September 2026: Large and intermediate-sized companies are required to issue and start receiving electronic invoices.
• 1 September 2027: SMBs, medium-sized companies, and micro-enterprises must also use e-invoices.

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These e-invoicing rules already are in effect for B2G transactions in France. 

What are the e-invoicing obligations in France?

From the above dates, you need to send and receive B2B invoices electronically, using the prescribed format and platform. This applies to all transactions occurring in France between French businesses where VAT applies. 

Whereas businesses previously sent and received invoices directly with one another, they now must go through an intermediary platform that will connect to the State centralised platform "Chorus Pro." This ensures they’re submitted in the right format (see below), and that the administration has a record by default. 

In France, you have three options for sending and receiving invoices. 

• The Public Invoicing Portal (PPF) PPF is a public operator, the new B2B e-invoicing platform in France, linked to the government’s B2G e-invoicing hub, the Chorus Pro portal. It reports data to the Tax Administration (DGFIP) and manages the central directory for e-invoicing.
• Partner Dematerialisation Platforms (PDP) PDPs are government-certified service providers such as Pennylane that can issue and receive e-invoices directly with other PDPs, not having to pass by the PPF.
• Dematerialisation Operators (OD) ODs are service providers not certified by the government. They offer similar functions as PDPs but must use the PPF as an intermediary to issue or receive e-invoices. Spendesk is an example best suited for SMBs. 

Which electronic invoice formats to use?

Invoices must use one of the following formats:

• UBL
• CII
• Factur-X, which combines PDF with machine-readable XML language
• PDF, provided it meets the technical requirements

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Each of these formats can be read and analysed by software. Critically, it is not compliant to simply scan a paper invoice. 

When do e-invoicing rules not apply?

Some transactions are exempt from VAT in France due to their nature. These could include: 

• Transactions in health (Article 261, 4, 1°)
• Education and training services (Article 261, 4, 4°)
• Real estate purchases and sales (Article 261, 5)
• Transactions carried out by non-profit associations (Article 261,7)
• Banking and financial payments
• Insurance and reinsurance payments (Article 261 C)

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As a basic rule, any transaction not subject to VAT is not concerned by these rules. They will likely still have to comply with e-reporting rules, which we’ll see next. 

E-reporting rules

From the same dates, companies will also have to share certain financial information with the government. Most notable is a clear record of sales and purchases, including those outside metropolitan France. 

Companies on the standard tax regime will need to report three times per month with information related to each of the following periods: 

• 1st to 10th of the month
• 11th to 20th of the month
• 21st to last day of the month

Reports for each period must arrive within 10 days of the end of the period. 

That’s all quite technical, but the important thing is that financial reporting needs to be electronic and integrated with the government’s systems.

This is part of a larger effort to standardise taxes and VAT across Europe. So even if VAT is not relevant to transactions today, the administration needs to assess its potential impact should a Europe-wide VAT collection become the norm. There’s even ongoing discussion that this will become a global system.

A brief timeline of e-invoicing regulations in France

E-invoicing has been on the table in France for some time. Here’s a basic history.

Early discussions & initiatives

• 2014-17: E-invoicing began gaining traction in France as part of broader efforts to modernise tax administration and reduce VAT fraud.
• 2017: France implemented mandatory e-invoicing for Business-to-Government (B2G) transactions. The Chorus Pro platform lets public sector entities receive and process electronic invoices from suppliers.
• 2020: The French Parliament passed the Anti-Waste Law for a Circular Economy (AGEC Law), which included provisions aimed at reducing paper waste and promoting digitalization. Although the focus was primarily on environmental sustainability, it set the stage for further digital reforms.

Creating the legal framework

• September 16, 2021: Article 195 of the 2021 Finance Act passed. This set out the proposed rules and the initial deadlines for companies to comply.

Preparation phase

• 2021-23: The infrastructure and guidelines for businesses to comply with the new e-invoicing requirements were created. This included:
  
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  • Detailed regulations and technical specifications
  • Establishing platforms for e-invoicing, such as the Public Invoicing Portal (PPF) and certified partner dematerialization platforms (PDPs).
  • Consultations and guidance to businesses on how to transition to e-invoicing.

• 2022-23: Pilot testing was conducted to evaluate the readiness of the systems and processes.

Original launch date

• 1 July 2024: The original e-invoicing launch date for large businesses, with medium-sized companies and SMBs to roll out over the following year. This date was then postponed until September 2026 was chosen as the new launch date. 

The state of e-invoicing outside France

France is by no means the only country undergoing this transition. In fact, certain countries have had e-invoicing in place for some time. And others are in a similar state of pre-launch. 

• Italy: e-invoicing has been in place since 2019 for B2B and B2C companies with more than €65,000, and for transactions with public entities since 2015. Invoices must be sent through the country's official exchange system: Sistema di Interscambio. 
• Germany: B2B invoicing will become mandatory from 1 January 2027, but has been in place for B2G transactions since 2020.
• Spain: Spain introduced their SII system in 2017. This requires large companies to report VAT data in near real-time, which has improved VAT collection efficiency and reduced the VAT gap. Full e-invoicing rules (similar to France’s) are expected to roll out in 2025-26. 
• Portugal requires businesses to submit detailed transaction data electronically to the tax authorities, The result is more accurate tax reporting and compliance.
• United Kingdom: there are no e-invoicing requirements in the UK, except when dealing with the NHS. 
• United States: there is no e-invoicing mandate in the US, due to the large system and disparate rules between states. In April 2024, the US Trade and Technology Council and the European Union made a statement on electronic invoicing, and in particular to ensure interoperability between systems set up in the US and EU states.
• Brazil’s e-invoicing system, implemented in phases since 2006, has successfully reduced tax evasion and improved the overall efficiency of tax administration.

Connected to EU’s VAT fraud reduction strategy 

France's adoption of mandatory electronic invoicing and e-reporting aligns with the European Commission's proposed measures to modernise the EU's VAT system, aimed at combating fraud and simplifying business processes. The updated rules, which make operators responsible for VAT collection and introduce a single VAT registration across the EU, are estimated to reduce VAT fraud by €11 billion annually and increase VAT revenue collection by up to €18 billion annually.

Here’s the timeline of the "VAT in the Digital Age" (ViDA) initiative: 

For complete details on the VAT in the Digital Age initiative, visit the European Commission's official page.

The benefits of e-invoicing in France

We can divide the benefits of these new rules into two broad buckets: for the French State and for businesses themselves. Across the board this transition is estimated to make significant improvements that 90% of companies are enthusiastic for.

For the government

As with most widespread financial regulatory change, the government is the driving force. This initiative is taking place both at the state level and across the wider European Union.

E-invoicing lets the State: 

• Improve VAT collection: E-invoicing tracks transactions in real time, so all taxable events are recorded and reported accurately. This reduces the VAT gap, which is the difference between expected and actual VAT revenues.
• Curb fraud: A digital audit trail makes it more difficult for businesses (both real and fake) to manipulate invoices or under-report sales.
• Reduce administrative burden: Government audits and tax checkups are time- and resource-intensive. This process can be partially or fully automated, and sped up considerably. 
• Streamline tax season: E-invoicing and e-reporting enable tax authorities to automatically collect and process tax data, making tax administration more efficient and less prone to errors.
• Monitor in real time: The government can spot inconsistencies instantly, and work with businesses to rectify them right away. 

For businesses

Many companies will be wary of regulations and major changes being pushed by the government. But businesses themselves stand to gain in a few important ways: 

• Reduced administrative costs & time: Transitioning from paper to electronic invoices cuts down on printing, mailing, and storage costs.
• Faster tax filings: Tracking and claiming back VAT is often hard work. And many businesses lose out on VAT claims as a result. E-invoicing should automate the whole process. 
• Uniformity between companies: You might have great invoicing processes, but your suppliers or customers may be another story. When everyone’s on the same system, there’s no need to re-format or translate invoices. 
• Fewer errors: E-invoicing minimises human errors associated with manual data entry, so you have more accurate and reliable financial records. And no need to go back and redo work done months ago. 
• Better relationships between customers and suppliers: No more back and forth to check whether invoices were issued correctly or paid on time. Both sides use the same central portal, with more transparency for healthy supplier relationships. 
• Insights and efficiencies: The portal promises to provide analysis of your invoices. Just as vital, digital-first systems make it faster and more efficient to find data and process invoices. 

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There will undoubtedly be teething problems, and some companies have a significant amount of process upgrading to do. But the outcome should be a far more effective, efficient financial system across France. And eventually, across Europe, too. 

How banks & fintech providers should prepare

Banks and fintech companies have an important role in the transition to this new regime. Whether or not you specifically deal with invoicing, your tools are part of a finance toolstack and systems that are going through a major overhaul. 

As a result, you need to update your own products and processes, and help customers adapt. 

Ensure you meet regulatory requirements

Really, the most important step is to stay informed. Keep up-to-date with local and international e-invoicing regulations and standards. And even though we’re mostly concerned with the French rules, you can assume that major changes in other jurisdictions will make their way here, too. 

You also need to be technically compliant. Ensure that your systems comply with legal requirements and standards such as PEPPOL, GSTN in India, or other relevant frameworks.

And if you actually process and pay invoices, you may need to become authorised as a PDP.

Upgrade your tech & data infrastructure

A chief aim of the whole project is to make invoicing and reporting more efficient using automation. So even if you’re not directly involved in invoice processing, your systems will need to integrate and work well with the tools that are. 

• Upgrade or invest in e-invoicing software that can integrate seamlessly with your existing lending platforms.
• Develop or enhance APIs to facilitate smooth data exchange between your invoicing system and other financial systems.
• Integrate e-invoicing capabilities into existing systems. This may involve adopting certified electronic invoicing platforms (PDPs) or using the Public Invoicing Portal (PPF).
• Develop efficient systems for managing and storing electronic invoices, ensuring compliance with data protection regulations such as GDPR.
• Ensure systems are capable of transmitting required transactional data to tax authorities as part of the e-reporting obligations.

Invest in security & risk automation 

The upshot of more digital processes is the need for more digital security. You’ll need strong encryption and security measures to protect sensitive financial data during transmission and storage. Hopefully this is already a priority, but the sheer scale of digital data flow is about to grow immensely. 

And more automation in general will be required. Automate invoicing processes to reduce manual intervention, minimise errors, and increase efficiency.

This is the perfect opportunity to incorporate AI and machine learning into your operations. AI is particularly valuable in lending, for everything from risk assessments, to KYCs, to determining the right loan amount. But these tools will also improve data analysis and decision making across virtually all finance processes.

Speaking of risk assessments… With real-time e-invoice data, we should now be able to use this information for even more accurate, up-to-date credit checks and evaluations. 

Finally, this real-time invoicing data is a goldmine for cash flow management and forecasting. It must be fully incorporated into the fintech products that help businesses manage their finances and project ahead. 

Prepare proactive customer communications

Any regulatory change will naturally bring confusion. You may need to guide customers (including other businesses) through this transition, to ensure they’re not caught out. 

• Proactively communicate with customers about the transition to e-invoicing. Explain the benefits, changes in processes, and how they can access and use electronic invoices.
• Provide support and set up channels to lead customers through the transition, ensuring they understand how to receive and manage e-invoices.
• Establish mechanisms to collect feedback from employees and customers, and improve the e-invoicing process over time.

• Train staff on the new e-invoicing processes and systems. This includes technical training for IT staff and procedural training for accounting and compliance teams.

E-invoicing and e-reporting are cause for cautious optimism

It’s natural to be wary of major regulatory changes. Updating systems is never easy, and the French administration — or any government — isn’t known for creating clear, efficient processes.

But underneath this technical upheaval is reason to be excited: our finance systems are modernising. Soon, we’ll have a uniform system for B2B invoicing, and real-time transaction data. This creates better buyer-supplier relationships and a fairer playing field for all. 

And if nothing else, the company tax season will be faster and easier. For banks, fintechs, and SMBs, this can only be a good thing. 

*The information in this article is up to date as of August 2024. Check the official government website for further updates.