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    Blog Image

    France’s E-Invoicing Law: Readiness of Companies and the Consequences of Non-Compliance

    • Beginning in 2024, France will require businesses, starting with large ones, to adopt e-invoicing to combat VAT fraud and improve business transparency.
    • Companies face different adoption deadlines up to 2026 and must choose between the public invoicing portal or a partner dematerialization platform to align with the mandate.
    • Unprepared businesses risk potential sanctions, inefficiencies, and losing a competitive edge in the evolving digital marketplace.

    August 25, 2023 | Accounts Payable

    The digital age is reshaping the way companies conduct business, and France is no exception.

    With the voting of the amending finance law (LFR) for 2022, France is moving towards the adoption of electronic invoicing. The e-invoicing mandate will be introduced in a three-phased approach over the coming three years. It will initially mean that selected large businesses in 2024 will be required to issue invoices in adherence with the law with an eventual roll-out to smaller businesses by 2026.

    As companies gear up for this change, it's crucial to understand how many are ready for this transition and the implications for those lagging.

    E-Invoicing in France: A Brief Overview

    The shift to electronic invoicing is not just a bid to modernize but is tied to specific goals. These objectives include combatting VAT fraud, enhancing knowledge of business activities in real-time, boosting competitiveness and simplifying VAT declarations. The anticipated annual gains from these objectives, as estimated in the LFR project for 2022, amount to an impressive 4.5 billion euros.

    This reform extends beyond just e-invoicing. It also introduces e-reporting, which pertains to the electronic transmission of data regarding transactions that aren't covered by e-invoicing, such as deals with foreign companies or with individual consumers.

    The Roadmap to Full Implementation

    Companies of varying sizes have different deadlines for adoption:

    1st July 2024 (Tentative): All enterprises must be equipped to receive electronic invoices. Moreover, large companies need to issue electronic invoices and e-reports.

    1st January 2025: Medium-sized enterprises – more than 5,000 employees with an annual turnover of at least 1.5 B Euros – need to issue electronic invoices and e-reports.

    1st January 2026: Small and very small enterprises – more than 250 employees with an annual turnover of at least 50M euros – must issue electronic invoices and e-reports.

    Despite the clearly defined timeline, the actual date for companies to issue and receive electronic invoices has been postponed from 1st July 2024, and the new date is still under consideration under the 2024 budget law.

    Technological Support & Challenges

    The reform doesn’t just bring in a mandate but calls for a transformation.

    Companies need an information system that can digitize the purchasing process end-to-end and guarantee data reliability. They can opt for either the public invoicing portal (PPF) or a partner dematerialization platform (PDP) for this transformation. PDPs will need to register with tax authorities with the registration process starting in September 2023.

    However, there are concerns among some business sectors, especially those using specific software solutions, around the preparedness for the new electronic invoicing mandates. These concerns raise questions about the readiness of significant sectors of the business community, especially when large companies are just a short time away from the initial deadline.

    How Companies Can Prepare for the Mandate

    Coordinating with Suppliers

    • Different suppliers will adapt to the PPF at different times
    • Establish contingency plans to address potential challenges and ensure an uninterrupted supply chain

    Adopting Acceptable Invoice Formats

    • Comply with mandated data formats
    • Ensure systems are in place for sending and receiving these formats

    Promoting Cross-Departmental Collaboration

    • Break down information silos, especially for global businesses
    • Foster a culture of seamless information sharing across departments

    Understanding E-Reporting for B2C and Cross-Border Invoices 

    • Prepare to send transactional reports in specified formats to the government platform

    Ensuring ERP System Compatibility

    • All ERP systems should be capable of processing the mandated invoice formats promptly
    • Maintain a stable connection between the PPF or the Private Dispatch Point (PDP) and these ERPs

    Communicating Invoice Lifecycle Updates

    • Companies must relay real-time invoice statuses
    • Report statuses such as submitted, refused, rejected, or received to the government platform, either directly or via a PDP

    What If Companies Aren’t Ready?

    The penalties for non-compliance haven’t been explicitly laid out in the provided information.

    However, given that the reform is geared towards combating VAT fraud and improving overall business transparency, non-compliance could result in sanctions. Companies also risk losing out on the competitive advantage and efficiency that e-invoicing promises.

    France's move towards electronic invoicing is not just a digitization drive but a comprehensive overhaul aimed at fostering transparency, combatting fraud, and increasing business competitiveness.

    While many businesses are gearing up for this shift, concerns remain, particularly among sectors dependent on specific software solutions.

    Companies need to understand the significance of this change, assess their readiness, and take appropriate action, understanding the benefits and potential penalties at stake.

    The clock is ticking, and the business community must rise to the occasion.

    Learn how GEP can help your organization automate invoice management.

     

    Tags: e-invoice , Accounts Payable

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