The new e-invoicing law will come into force in France from 2023. In future, this law will oblige all companies subject to VAT to issue invoices exclusively in electronic form and to transmit them to the French tax authorities and the relevant business partners as part of a reporting protocol. You can find out everything you need to know about the e-invoicing obligation in France in this article.
Definition: What is e-invoicing?
Generally, e-invoicing is simply the digitization of analog invoices. The papers are converted into digital documents for this purpose. However, the e-invoicing obligation adopted by France with Article 153 on December 28, 2019, includes another relevant point.
In the future, all companies which are registered for VAT in France have to pay the Value-Added-Tax there and should not only issue their invoices electronically, they should also make information from these invoices continuously available on a platform that is accessible to the tax authorities. The transfer of invoices from B2B (business to business) transactions to the customer will also be completely digital in the future.
To this end, France is setting up its own central, public platform that will process up to three billion invoices per year. Exactly how the data exchange will work is still up for debate. What is certain is that implementation is to start at the beginning of 2023, initially only for large companies. By the beginning of 2025, all other companies in France should have switched completely to e-invoicing.
How will e-invoicing work in concrete terms?
The basic theoretical principle of the system is relatively simple: invoice data, accounting records and address books of the company selling goods are uploaded to the central, public platform via the company's own software. This automatically forwards the corresponding invoice to the buyer and, after an automatic selection of the relevant information, to the tax office.
The following data is extracted from the invoices for the French Treasury:
- General status of the invoice and the associated payment; proforma invoices are actually not clear how they will be handled
- Data from B2C transactions (business to consumer)
- Data on transactions with foreign companies
- General payment status of invoices issued by the company
What sounds relatively simple in theory is somewhat more complicated in practice. In concrete terms, two different models have developed as to how e-invoicing can be implemented in practice.
In the V model, all invoices are uploaded directly to the central, public platform. This copies the information relevant for the tax office and passes it on to the French tax authorities. The buyer is also sent the invoice via the public platform set up by the state. The transmission of the data between the public platform and the company involved in the transaction can take place directly, or via a private online service provider, such as hellotax. However, this circumstance does not change the information that is uploaded to the public platform.
The Y model offers greater privacy for companies compared to the V model. In this model, the private online service provider where the company uploads its invoices extracts the information relevant for the tax office and only passes this on to the French tax authorities via the central, public site. The exchange of invoices between the two companies takes place separately via the private platforms of the two companies.
In initial surveys, the Y model enjoys greater popularity over the V model. In addition to the efficiency of information transfer, the model also offers greater data security and flexibility in comparison. Companies that already relied on digital accounting before the e-invoicing obligation can retain their system without any problems.
What are the benefits of e-invoicing?
Switching to e-invoicing involves initial effort and costs for both entrepreneurs and the state, but this change also brings some benefits for both sides.
For the state, the new regulation is mainly about combating VAT fraud by means of monitoring the transactions carried out by the various companies.
Above all, companies can increase their competitiveness thanks to the new system. Digitizing all accounting records may be a tour de force, but it can sustainably reduce the administrative burden and immensely simplify and speed up general accounting processes. In the long term, costs can be avoided and customer satisfaction can be increased through greater accuracy and speed of the company's internal processes.
Online accounting software: an investment for the future
There are now many platforms that support companies in accounting as well as in the areas of taxes and finance. Due to the e-invoicing obligation, these online service providers will become even more important in the future.
Online accounting programs such as hellotax, Debitoor or Easybill additionally act as interfaces between the company and the central public platform to which the tax office has access. In addition to the many features that make it easier for self-employed people to keep track of their books, assist them with their tax and VAT returns and remind them of important deadlines, in the future it will also be possible to use these online service providers to select and transmit the information that the French tax authorities require.
In the future, platforms like hellotax will automatically analyze the data of the invoices entered into the system, send the correct documents to the appropriate vendor, and separately upload the information relevant for the tax office to the central public platform. Since all your invoices are perfectly standardized in one place, tasks such as tax returns can be completed in a very short time.
Starting in 2023, mandatory electronic invoicing will be gradually introduced in France. Those who already choose a good online platform for accounting, such as hellotax, can look forward to immediate simplification and optimization of internal company processes, in addition to safeguarding for the future.