The obligation of electronic invoicing and e-reporting

With the introduction of the new law on electronic invoicing, many questions are raised about the application of e-invoicing and e-reporting.

In this article, we’ll guide you in preparing your company to meet the challenges of these new regulations.

France’s 2008 Law on the Modernization of the Economy (LME) marked the first step towards electronic invoicing, as all companies trading in the public sector were obliged to issue invoices in dematerialized format via the Chorus Pro platform from January 1, 2017.

With the Finance Act 2020 rectified in 2022, a new framework has been introduced to extend electronic invoicing, or e-invoicing, to all commercial exchanges taking place in the private sphere, whether B2B (Business-to-Business) or B2C (Business-to-Consumer).

By 2024, all companies subject to VAT in France, whatever their size, will have to be able to receive supplier invoices in dematerialized format. As for the issue, the tax authorities have drawn up a progressive timetable for implementation, extending from 2024 to 2026 depending on company size.

E-reporting is also becoming a corporate standard for certain transactions that fall outside the scope of e-invoicing.

These obligations naturally raise new questions within companies about: the scope of application of e-invoicing and e-reporting, the impact on their application environment, and the level of alignment required with the expectations of the reform.

The concepts of e-invoicing and e-reporting

Both e-invoicing and e-reporting are governed by Article 26 of the amended French Finance Act no. 2022-157, which clarifies their scope of application. In concrete terms, paper invoices or invoices in image format (PDF, JPEG, etc.) alone and/or sent by email will disappear.

E-invoicing corresponds to the dematerialization of an invoice in a structured data format, at every stage from creation to integration.
To secure the implementation of the reform, the DGFIP and theAIFE have standardized e-invoice exchange procedures, defining the specific features linked to :

semantics (list of data contained in the file sent);
syntax (file formats supported);
file transmission channels (API services, EDI, etc.).

For an electronic invoice to be considered compliant, it must respect one of the three formats imposed by European standard EN 16931, namely :

Universal Business Language version 2.1 – UBL 2.1 (most widely used XML format worldwide);
Electronic Data Interchange – CII (structured XML format used between inter-industry trading partners worldwide);
Factur-X: (structured XML file accompanied by a PDF document used in Europe).

The scope of e-invoicing covers all domestic B2B transactions between VAT-registered companies domiciled in France.

E-reporting is a structured electronic file that enables invoicing data to be transmitted directly to the tax authorities, outside the scope of e-invoicing. Its scope is defined by article 290 of the CGI, and concerns :

international B2B transactions;
domestic and international B2C transactions;
payment data only for transactions in the category of services covered by articles 289 bis and 290 of the General Tax Code.

How can you anticipate the issues and challenges of the new e-invoicing reform for your company? In a previous article, you’ll find all the information you need to know to prepare your company’s ecosystem for the e-billing reform.

New mandatory information for invoices

The tax authorities have defined categories of data that are mandatory in both e-invoices and e-reports. The aim is to standardize invoicing practices and ensure that data can be read by the various systems used by companies and tax authorities, through automaticrecognition.

In the context ofe-invoicing, the following information must be included in the invoice files A total of 26 mentions will be required in the “Start-up” phase (first wave of deployment), and 8 in the “Target” phase (final wave of deployment).

In addition to the information currently required on all invoices, the new reform will introduce 4 new items:

Source: https://www.impots.gouv.fr/

In addition, companies will have to report statuses related to the invoice life cycle, according to three transmission levels (Mandatory, Recommended and Free). A total of 14 statuses have been identified with responsibility for production shared between Buyer and Supplier.

The main obligations of e-reporting

Regarding the mandatory data fore-reporting, it is necessary to dissociate between B2C and B2B International operations. For the latter, they will be identical toe-invoicing, except that the SIREN number will be replaced by the intra-community VAT number or a foreign identification number.

For B2C operations, data may be sent in an aggregated form. If a company does not opt for aggregation, then the following compulsory information must be included on the invoice:

Source : https://www.impots.gouv.fr/

The tax authorities have also set a timetable specifying the frequency and deadlines for sending invoices to the Public Billing Portal (PPF). Please note that only Partner Dematerialization Platforms (PDP) will be authorized to transmit e-reports to the PPF.

Source : https://www.impots.gouv.fr/

Focus on e-invoicing and e-reporting flow controls

To ensure data security, the PPF will carry out checks not only on data flows, but also on invoices issued or received by companies. They have been identified on 4 levels:

• Technical control: antivirus on invoice and attachment, empty file, file type and extension, authentication and signature verification, uniqueness of flow (file name, etc.);
• Application control: syntax analysis (CII, UBL 2.1, Factur-X);
• Functional control: analysis of the semantic format (normative specificities), uniqueness of the file, data coherence (coding and reference systems), addressing (directory);
• Business control: verification of data by the recipient’s business teams.

Conclusion on mandatory electronic invoicing and e-reporting

In conclusion, with these new regulatory specificities, the implementation of compliance audits of application environments and processes is one of the key stages in the successful transition of companies to the application of the reform.

Planning them as far in advance as possible will make it possible to secure the alignments inherent in the challenges of the reform, and to calmly absorb both technical and organizational constraints. Given the globalization of trade and the growing number of countries opting fore-invoicing, the trend will undoubtedly be towards harmonizing standards between countries, as SWIFT has done for international bank transfers.

SQORUS, a Council specialized in the digital transformation of HR, Finance and IT functions, can help you with your e-invoicing issues. Do not hesitate to contact us to discuss this with our experts.

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