Will electronic invoicing be mandatory in 2024? And what about the requirement to provide paperless invoices by 2023? Can you still issue digital invoices? Here you will find the answers to all of your questions regarding France’s new business-to-business invoicing reforms, a topic that is all the more confusing for businesses as implementation of the law has recently been postponed until 2026 and 2027. This article explains how the transition to electronic invoicing will affect your business in the years to come.
What’s in this article?
- What is paperless invoicing?
- What does the new invoicing reform involve?
- Who is affected by mandatory electronic invoicing?
- When will electronic invoicing become mandatory?
- What are the objectives behind the reform?
- How do you create an electronic invoice?
What is paperless invoicing?
Paperless invoicing refers to the transition from paper-based documentation to electronic formats. This transition marks the start of a fully digital invoicing process that complies with the regulations imposed by the tax office in Article 289 of the French General Tax Code. The new reform requires a gradual switch to electronic invoicing.
What does the new invoicing reform involve?
According to Article 26 of the 2022 French Amending Financing Law no. 2022-1157, all business-to-business (B2B) invoices subject to French value-added tax (VAT) will have to be issued electronically from 2026 onward. This electronic invoicing (e-invoicing) system has already been mandatory for suppliers to government entities since 2020.
The businesses concerned will also be required to submit additional information about their business operations to the tax office (such as their transaction and payment data). This process is known as e-reporting.
Who is affected by mandatory electronic invoicing?
Any business established in France and subject to French VAT that sells goods and services to another business also subject to French VAT will be under the obligation to abide by electonic invoicing. Government entities and their private vendors already submit their invoices electronically.
Businesses subject to French VAT that sell goods and services to an individual (B2C or “business to consumer” transactions) will have to submit information about their transactions online to the tax office. The same goes for French businesses selling goods and services internationally.
It should be noted that certain commercial operations will be completely exempt from electronic invoicing: these include health care services; education and training services; real estate; banking and financial operations; insurance and reinsurance services; as well as not-for-profit services.
When will electronic invoicing become mandatory?
Electronic invoicing will be mandatory from 2026 onward, depending on the size of the business and its annual sales revenues. Large businesses (with over 5,000 employees and annual sales revenues of over 1.5 billion euros) as well as medium-sized enterprises (that have between 250 and 5,000 employees and annual sales revenues between 50 million euros and 1.5 billion euros) will be required to issue their invoices electronically from September 1, 2026.
Microbusinesses (or sole traders) and very small businesses (with fewer than 10 employees and annual sales revenues of less than 2 million euros), as well as medium-sized enterprises (with fewer than 250 employees and annual sales revenues of between 2 million and 50 million euros), will be able to wait until September 1, 2027 before their invoicing operations will have to go paperless. It should be noted that the transition to electronic invoicing was originally scheduled for 2024 and 2025.
What are the objectives behind the reform?
The tax reform has several objectives (and benefits): first, paperless documentation will allow invoice management to be modernized and simplified. Second, switching to electronic invoicing will reduce the administrative burden of invoicing, as well as the overall cost of processing, through the elimination of any physical documentation.
VAT returns will also be easier to complete and transmit online thanks to advanced prefilling functions, simplifying end-to-end administrative operations for the business. Additionally, electronic invoicing will allow the tax office to identify VAT fraud more quickly.
How do you create an electronic invoice?
There are multiple options available for creating electronic invoices that comply with the new law, including using one of the paperless “dematerialization” platforms that is partnered with the tax office (there are several of these), or you can choose to send your invoices and your additional information via the public invoicing portal Chorus Pro.
Partner dematerialization platforms (PDPs) are intermediary services registered by the tax office that issue, transmit, and receive electronic invoices and their associated transaction and payment data.
The mandatory information on the invoice will generally remain the same. You will receive invoices from your suppliers in the same way (via a dematerialization platform or the Chorus Pro portal).
In addition to this, you can also use an invoicing solution such as Stripe Invoicing to optimize and automate your invoicing workflows and boost your productivity. This international invoicing software allows you to create, send, and customize invoices without writing any code. Contact a Stripe expert to find out how to get started.