In general, the provisions contained in the new legislation (known in English as the “Third Corrective Finance Bill for 2012”) provide parity or equal treatment of paper and electronioices under French tax law.
Existing methods continue
The new law affirms the validity of two existing methods already allowed under French law—tax-compliant EDIs (electronic data interchange) and electronic signatures. These pre-existing e-invoicing solutions, thus, are unchanged.
New invoice opportunities
Businesses may use any other technical invoicing solution, provided that they set up documentation and controls and establish a “reliable audit trail” between the issued / received invoice and the underlying supply of goods or services.
Electronic invoices, thus, may be sent in any electronic form (e.g., word documents, PDFs, the contents of an email, non tax-compliant EDIs) provided that the invoice satisfies three basic conditions:
- Integrity (its contents cannot be altered)
- Authenticity (its issuer’s identity is guaranteed)
- Legibility
There are also rules for archiving and rules providing the tax authorities with complete access to the electronic invoicing system when stored abroad.
Future guidance anticipated
The French tax authorities have indicated that, in early 2013, they will issue draft guidelines concerning the format and conditions under which they would consider new electronic formats as compliant.
KPMG observation
Tax professionals with Fidal* have expressed a belief that such future guidelines would not be exhaustive in describing the necessary functionalities and controls for taxpayer systems to qualify as providing a satisfactory audit trail. Moreover, it has been pointed out that a company receiving the invoice must also be able to demonstrate that its system satisfies the three conditions of integrity, authenticity, and legibility.
Tax professionals with Fidal further point out that businesses now need to organize and document an audit trail whenever they issue paper invoices, non-EDI invoices, or non-electronically signed invoices. Thus, businesses may need to consider whether it is advisable to continue using paper invoices—especially with respect to intra-group transactions.
In conclusion, it has been observed that the new electronic invoicing rules provide an opportunity for businesses to end what may be considered certain risky practices commonly used by businesses (non tax-compliant EDIs, invoices sent by email, shared ERP without printouts of invoices, etc.).
For more information, contact a tax professional at Fidal Direction Internationale in Paris:
Philippe Breton, VAT Partner
+33 (0) 1 55 68 14 34
Laurent Chetcuti, VAT Director
+33 (0)1 55 68 14 17
* Fidal Direction International is a French law firm that is independent from KPMG and its member firms.