French E-Invoicing Mandate: A Quick Connectivity Compliance Guide

If your business sends invoices in France, then you need to know how to comply with new regulations including the Continuous Transaction Controls (CTC) model. Given the broad use of B2B e-invoicing across every major industry, these new mandates affect a strong majority of organizations operating in France.

What are the new electronic invoicing regulations?

New rules regarding electronic invoices developed by the Direction Générale des Finances Publiques (DGFiP) are scheduled to come into effect starting in July 2024. These rules mandate the issuance of electronic invoices and electronic reporting of cross-border transactions to ensure tax authorities have visibility into transaction data.

By requiring electronic invoicing and e-reporting of invoices, France aims to reduce VAT fraud and help businesses reduce payment processing costs. However, organizations are now also on the hook to implement technical infrastructure to automate the exchange of mandatory e-invoices with trading partners and French governmental authorities.

Depending on the size of your business, you may be subject to Continuous Transaction Controls (CTCs) that require reporting all transactions before or after the exchange. Governmental bodies must provide an authorization token – similar in concept to a stamp of approval – in order for the transactions to succeed.

The core of the mandate is digital B2B connectivity, either to your trading partners or to the authorities who provide regulatory oversight. The ability to automatically and securely exchange digital documents with external partners is key to maintaining compliance.

The next logical question, then, is what kind of connectivity standard is necessary to communicate with the relevant parties?

Updates to the French e-invoicing mandate

In July 2023, the French government announced that the B2B e-invoicing mandate timeline will be shifted back from its original enforcement date of July 2024. France’s push towards joining EU electronic invoicing will continue, however businesses were granted extra implementation time to ensure a smooth transition into a universal electronic invoicing format.

Under the new timeline, the enforcement date is split between large and small companies. Large enterprises must comply with the proposed electronic invoicing regulations by September 2026, while smaller companies benefit from an extra year before enforcement in September 2027.

The planned timeline also includes several earlier deadlines aimed at agencies working on behalf of the government, such as completed governmental licensing by 2024 and a large-scale testing phase in 2025.

How the French e-invoicing Y-shaped model works

France’s approach for implementing mandatory e-invoicing centers around something called the “Y” model. Visualize the bottom of the “Y” representing a single data delivery channel with the French government, and the split top of the “Y” representing the two options that businesses have for complying with regulations. The two options that organizations must choose between are called a Partner Dematerialization Platform (PDP) and the Public Invoicing Portal (PPF).

The Public Invoicing Portal provides a consolidated interface that receives electronic invoices and e-reporting documents and manages the directory of all companies to ensure compliance. Direct integration with the PPF allows for submission of all required documents so that regulatory mandates are fulfilled.

A Partner Dematerialization Platform is a platform managed by a private service provider that performs some of the regulatory compliance work on your behalf. Under the hood, PPFs submit the same sets of invoice and report data to the PPF so that regulatory compliance can be confirmed. However these platforms may perform other value-added functions like checking the conformity of invoices and transaction data, extracting relevant data sets from invoices, and more.

Once e-invoicing and e-reporting data is submitted via the Y-model, the full record of documents is held in the central directory called the Annuaire. This databank serves as the authoritative depository of invoicing records that demonstrate regulatory compliance. Interfacing with the Public Invoicing Portal either directly or through a Partner Dematerialization Platform is the only way to ensure that your organization’s data ends up in the Annuaire.

What kind of connectivity do I need?

Communicating digital invoices and invoice reports to authorities requires implementing technical communication protocols and e-invoice formats shared between you and your partners. In other words, your organization needs to implement what other organizations, including French governmental authorities, already have.

There are several dominant connectivity standards in Europe that serve as good candidates for shared connectivity between you and your partners. These standards are flexible enough to incorporate disparate sets of requirements from different external parties, while still maintaining a secure and reliable framework for exchanging critical business documents like invoices.

One such standard is PEPPOL. PEPPOL is a set of technical specifications that ensure multiple parties can communicate with each other using the same rules and expectations. PEPPOL is built on top of AS4 technology, which is a world-wide standard for secure and reliable data exchange between parties.

Communication with European partners can likely be achieved through AS4 alone, though the additional layer of PEPPOL implementation can help ensure interoperability with the largest possible number of partners.

PEPPOL and AS4 are the key to success

Digital communication with European organizations and authorities becomes much easier once your organization supports AS4 communication. AS4 is a standardized connectivity protocol that details how the technology infrastructure of document senders and receivers should behave in order to maintain security and reliability while exchanging electronic documents.

PEPPOL provides an additional layer of convenience and interoperability by enabling the import of partners’ AS4 profiles to ensure immediate protocol alignment. In other words, PEPPOL more tightly constrains what is possible in AS4 communication so there is less ambiguity in relation to how your B2B system should be configured in order to transfer data.

Together, PEPPOL and AS4 provide a framework for automated digital communication between parties like invoicing partners or tax authorities. Only once you have implemented standardized protocols like these in your B2B infrastructure will you assuredly be able to comply with the upcoming mandates.

How do AS4 and PEPPOL help?

AS4 handles every important variables that are relevant to secure data transfer between parties:

• Where data should be sent such that it is only received by the intended target
• How data should be encrypted so that it can only be read by the intended target
• How the data payload should be structured so that it can immediately be understood
• How partners should respond such that you are aware they received your message

PEPPOL, in turn, ensures AS4 interoperability by defining a strict set of constraints that all compliant parties should observe. In other words, PEPPOL guides the creation of AS4 profiles to ensure that every involved party can talk to each other.

Given its ability to provide these answers, AS4 has long enjoyed popularity among data infrastructure experts. AS4 implementation is made much simpler by leveraging B2B integration tools that streamline AS4 communication.

How to streamline PEPPOL and AS4 adoption

Adopting AS4 by building your own custom solution is likely to be a lengthy and expensive process. But there is no need to reinvent the wheel – modern B2B integration platforms have already done much of the work required to quickly begin sending AS4 messages and importing PEPPOL profiles.

Utilizing a B2B integration tool prevents your technical team from needing to learn the protocol specifics of AS4 and allows seamless onboarding of PEPPOL profiles. This enables your organization to leverage the benefits of interoperability while minimizing overhead. Given the upcoming 2024 deadline, it is important to prioritize B2B integration solutions that emphasize ease-of-use and time-to-value.

CData Arc was built on these two principles – making it an excellent choice for organizations looking to get ahead of the curve and implement AS4 protocols before time runs out.

How CData Arc simplifies B2B communication

CData Arc has been providing Drummond-certified AS4 integration technologies for over a decade, making it a trusted tool for AS4 implementation.

Arc makes AS4 as painless as possible to ensure that implementation overhead is minimized. The tool requires only a few simple connection parameters – like an identifier, a URL, and a digital certificate. This is all information that trading partners and tax authorities can provide. In addition, Arc supports automatic imports of PEPPOL profiles via a simple file upload. PEPPOL-compliant partners and entities can package up their profile details in a single file, and you can simply upload this file within Arc to deploy a fully configured AS4 connection.

Once connected, CData Arc provides no-code, drag-and-drop mapping tools to easily build data structures containing exactly the payment transaction data you need. Simply connecting these mapping tools to your AS4 connection in the Arc visual flow designer completes the process of communicating with French authorities.

Getting started with AS4 and PEPPOL in CData Arc

While there is plenty more you could learn about Arc’s robust AS4 capabilities, the easiest way to get started complying with electronic invoicing regulations may be to try out Arc for yourself. Get a free, fully-functional trial to see for yourself how Arc satisfies the technical specifications provided by the EU member states you work with.

For more personalized help, please feel free to reach out to [email protected] with specific questions related to your AS4 implementations.