What are the upcoming rules on VAT reporting in France?

August 23, 2023

In many places worldwide, tax authorities are digitising value-added tax reporting. In this context, many countries are opting to introduce the CTC (Continuous Transaction Controls) model. CTC dictates that invoices must be submitted for approval through a platform managed by a public authority.

Currently, France employs a post-audit model where invoices are simply forwarded. However, starting from 2024, France plans to transition to the CTC model.

France loses substantial amounts annually due to uncollected value-added tax payments. To address this, France has decided to introduce mandatory e-invoices for business-to-business (B2B) transactions. The new requirements will affect all companies operating in France.

What dates should you be aware of?

In January 2024, France will initiate the pilot phase of the project, making it voluntary for businesses in France initially.

Phase 1 of the project is scheduled for six months after the pilot phase, starting from July 1, 2024. In this phase, the largest companies in France will be obligated to electronically exchange invoices. Companies included in the first phase only have limited time until theymust comply with the regulations (July 1, 2024), making it crucial for them to begin preparations now.

Phase 2 of the project is set for January 2025, mandating that affecting medium-sized businesses must comply with the electronic invoicing requirement.

In the final phase of the project, Phase 3, all remaining companies in France will be required to receive their invoices electronically.

Requirements for Formats

As part of the e-invoicing requirements there will also be specifications for the formats in which invoices are sent and received.

The formats that companies can choose from are:

  • UBL
  • CII
  • Factur-X

Both UBL and CII are based on XML. Factur-X is a hybrid format combining PDF and XML.

Additionally, there are new requirements for information that must be included in an invoice. Starting from July 1, 2024, an invoice must contain the following:

  • The SIREN number
  • The delivery address for the invoice recipient if different from the customer address
  • The invoice type (sale, service, or hybrid)
  • The value-added tax payment on the invoice

How can I keep track of the various requirements?

The aforementioned requirements are some of those that companies operating in France need to pay attention to. However, it’simportant to note that both the dates and requirements are provisional and subject to change. How can companies ensure they meet all these requirements? And how should they proceed if they also have subsidiaries in other European countries?

These are questions many companies are currently facing and the complexity involved in the regulations leads many companies to outsource this area. Many utilise a provider specialising in electronic invoicing who can assist with compliance to relevant local requirements.

Contact one of our specialists to learn how you ensure compliance in France by clicking here

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