Proposal for a COUNCIL IMPLEMENTING DECISION authorising France to introduce a special measure derogating from Articles 218 and 232 of Directive 2006/112/EC on the common system of value added tax
Date: 2021-12-01
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: France, Internet, VAT, derogation from EU law, establishment, invoicing, taxpayer

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   EUROPEAN COMMISSION  Brussels, 1.12.2021  COM(2021) 735 final 2021/0388 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION authorising France to introduce a special measure derogating from Articles 218 and 232 of Directive 2006/112/EC on the common system of value added tax  
 
EXPLANATORY MEMORANDUM 

Pursuant to Article 395(1) of Directive 2006/112/EC of 28 November 2006 on the common 
system  of  value  added  tax1  ('the  VAT  Directive'),  the  Council,  acting  unanimously  on  a 
proposal  from  the Commission,  may authorise any Member State to  apply special measures 
derogating  from  the  provisions  of  that  Directive  in  order  to  simplify  the  procedure  for 
collecting VAT or to prevent certain forms of tax evasion or avoidance. 

By letter registered with the Commission on 12 April 2021, France requested authorisation to 
derogate  from  Articles  218,  178  and  232  of  the  VAT  Directive  to  be  able  to  impose 
mandatory electronic invoicing  to  all taxable persons established in  the territory  of  France. 
The authorisation was requested from 1 December 2021 until 31 December 2028. 

Further, by letter registered with the Commission on 20 September 2021, France requested 
that  the  authorisation  to  derogate  would  only  extend  to  Articles  218  and  232  of  the  VAT 
Directive and that it would apply from 1 January 2024 to 31 December 2026. 

In  accordance  with  Article  395(2),  second  subparagraph,  of  the  VAT  Directive,  the 
Commission  informed  the  other  Member  States  by  letter  dated  29  September  2021  of  the 
request made by France. By letter dated 30 September 2021, the Commission notified France 
that it had all the information necessary to consider the request. 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

France submitted a request  for derogation based  on Article 395 of the VAT Directive to  be 
authorised  to  implement  an  obligation  to  issue  electronic  invoices  for  domestic  transactions 
between  VAT  taxable  persons  established  in  France  on  the  basis  of  Articles  153  of  the 
Finance  Law  for  2020  and  195  of  the  Finance  Law  for  2021.  This  obligation  will  be 
accompanied by the obligation for those taxable persons to send certain additional data to the 
tax authorities. 

France considers that the electronic invoicing obligation will improve the fight against fraud 
while  strengthening  the  competitiveness  of  businesses.  It  will  also  increase  real-time 
knowledge of business activity enabling economic policy to be steered as closely as possible 
to  the  economic  reality  of  the  players.  This  obligation  will  also  allow  the  simplification  of 
businesses’ VAT reporting obligations by introducing pre-completion of their returns. 

Article 218 of the VAT Directive provides for an obligation for Member States to accept as 
invoices all documents or messages both in paper or electronic form. France would therefore 
like  to  obtain  a  derogation  from  this  Article  of  the  VAT  Directive  so  that  only  electronic 
invoices  in  mixed  or  structured  format  can  be  considered  as  invoices  by  the  French  tax 
administration. 

Article 232 of the VAT Directive requires that the use of an electronic invoice shall be subject 
to  acceptance  by  the  recipient.  Therefore,  the  introduction  of  an  electronic  invoicing 
obligation in France requires a derogation from this Article so that the issuer no longer has to 
obtain the consent of the recipient to send an invoice in a paperless format. 

France  submits  that  the  introduction  of  a  generalized  electronic  invoicing  obligation  would 
provide  benefits  in  terms  of  combatting  fraud  and  evasion,  while  facilitating  voluntary 
compliance  with  tax  legislation.  Indeed,  the  obligation  to  issue  electronic  invoices,  coupled 

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OJ L 347, 11.12.2006, p. 1. 

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with  the  transmission  of  additional  transaction  data,  through  a  scheme  involving  certified 
private platforms and a centralised public platform, will enable the tax administration to check 
in real time the consistency between the VAT declared and collected and the invoices issued 
and received. Therefore, the capacity of the administration to prevent and counter VAT fraud 
will be significantly improved. 

The  electronic  invoicing  obligation  will  only  cover  transactions  between  taxable  persons 
(B2B). The data of transactions  involving final consumers (B2C) will be reported through a 
different mechanism.  In case of intra-Community acquisitions, taxable persons will maintain 
their  right  to  receive  paper  invoices.  It  should  be  noted  that  the  obligation  to  use  electronic 
invoicing  for  business  to  government  (B2G)  transactions  gradually  entered  into  force  in 
France between 1 January 2017 and 1 January 2020. Therefore, companies that have already 
issued electronic invoices via the B2G Chorus Pro electronic invoicing platform developed by 
the  State  Financial  Computing  Agency  (AIFE)  are  already  equipped  and  prepared  for  the 
extension  of  the  electronic  invoicing  obligation  to  B2B  relations.  France  submits  that  the 
majority of French VAT taxable persons already send or receive invoices in electronic format. 
According  to  France,  in  2017  only  31  per  cent  of  French  businesses  with  more  than  10 
persons  used  paper  invoicing,  this  proportion  probably  having  decreased  since  then.  The 
move  to  an  electronic  format  will  permanently  eliminate  paper  format  in  the  processing  of 
invoices, generating significant savings for businesses. 

France considers that electronic invoicing will provide advantages to taxable persons, such as 
the reduction of payment times for the supplier, reduction of printing costs and postal charges, 
reduction  of  costs  and  delays  in  processing  billing  data,  reduction  of  storage  costs  and  the 
reduction of training and system development costs. 

France envisages a gradual introduction of the obligation in order to allow for a transition and 
support  to  the  new  system,  adapted  to  each  type  of  company.  As  of  2024,  an  obligation  to 
receive the electronic invoice will apply to  all businesses. A progressive  introduction of the  
obligation to issue electronic invoices is planned according to the size of the companies: 2024 
for  large  enterprises,  2025  for  companies  between  250  and  4 999 employees  and  with  a 
turnover  below  EUR  1,5 billion  and  2026  for  small  and  medium-sized  enterprises  and  very 
small  enterprises,  including  taxable  persons  benefitting  from  the  exemption  for  small 
enterprises referred to in Article 282 of the VAT Directive. 

In order to ensure the interoperability of exchanges, platforms providing electronic invoicing 
services, both private and public, should offer to taxable persons a minimum set of structured 
or mixed formats, without prejudice to their freedom to offer alternative formats.  

Given  the  broad  scope  of  the  derogation,  it  is  important  to  ensure  the  necessary  follow-up 
within  the  framework  of  this  derogation  and  in  particular  the  impact  of  the  measure  on 
combatting  VAT  fraud  and  evasion  and  on  taxable  persons.  Should  France  wish  to  prolong 
the derogating measure, it is requested to provide a report on the functioning of the measure 
together  with  the  prolongation  request.  This  report  should  provide  the  assessment  of  the 
measure  on  its  effectiveness  in  fighting  VAT  fraud  and  evasion  and  in  simplifying  tax 
collection. The report should also include an evaluation of the measure on taxable persons and 
in particular what concerns the increase of their administrative burdens and compliance costs.  

It is proposed to authorise the derogation as from 1 January 2024 until 31 December 2026. 

• 

Consistency with existing policy provisions in the policy area 

Article  218  of  the  VAT  Directive  puts  paper  and  electronic  invoices  on  equal  footing  by 
providing that Member States shall accept documents or messages on paper or in electronic 
form as invoices. Following Article 232 of the VAT Directive, the use of an electronic invoice 

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shall  be  subject  to  acceptance  by  the  recipient.  The  obligatory  electronic  invoicing  as 
envisaged by France would indeed derogate from these two provisions.  

The  derogation  can  be  authorised  based  on  Article  395  of  the  VAT  Directive  in  order  to 
simplify  the  procedure  for  collecting  VAT  or  to  prevent  certain  forms  of  tax  evasion  or 
avoidance. France requested the derogating measure to fight tax fraud and evasion as well as 
to  simplify  the  tax  collection.  Based  on  the  elements  provided  by  France,  the  derogation  is 
consistent with the existing policy provisions. 

A  similar  authorisation  allowing  Italy  to  derogate  from  Articles  218  and  232  of  the  VAT 
Directive  in  order  to  implement  mandatory  electronic  invoicing,  was  granted  by  Council 
Implementing Decision (EU) 2018/5932. 

Finally,  the  Commission  adopted  in  2020  the  “Communication  from  the  Commission  to  the 
European Parliament and the Council: an Action Plan for fair and simple taxation supporting 
the recovery strategy”3. One of the actions envisaged in this action plan is the presentation by 
the  Commission  of  a  legislative  proposal  for  modernising  VAT  reporting  obligations.  The 
need to further expand e-invoicing will be examined in this context. Therefore, the derogating 
measure is aligned with the objectives pursued by the Commission’s action plan. One of the 
aims  of  the  future  Commission’s  proposal  will  be  to  streamline  the  existing  and  future 
reporting  mechanisms  for  domestic  transactions,  including  the  one  authorised  by  this 
derogating measure. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

Article 395 of the VAT Directive. 

• 

Subsidiarity (for non-exclusive competence)  

Considering the provision of the VAT Directive on which the proposal is based, subsidiarity 
principle does not apply. 

• 

Proportionality 

The proposal complies with the proportionality principle for the following reasons.  

The Decision concerns an authorisation granted to a Member State upon its own request and 
does not constitute any obligation.  

The  mandatory  electronic  invoicing  will  entail  a  number  of  changes  for  taxable  persons. 
These changes are however anticipated by France and the preparation has already started. The 
obligation  to  use  electronic  invoicing  for  B2G  transactions  resulted  in  many  companies 
already being equipped and prepared for the extension of the electronic invoicing obligation 
to B2B relations.  

Taxable persons benefiting from the exemption for SMEs are included under the scope of the 
measure. However, the gradual implementation of the measure will give them sufficient time 
to prepare. Further, these companies will be free to use either a private platform or the public 
invoicing  platform  operated  by  the  AIFE  (Chorus  Pro).  The  latter  will  propose  a  minimum 

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OJ L 99, 19.4.2018, p. 14. 
https://ec.europa.eu/taxation_customs/system/files/2020-07/2020_tax_package_tax_action_plan_en.pdf  

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service  for  free,  including  the  handling  of  PDF  formats  (with  data  retrieval  in  a  structured 
format) and a 10-year archiving offer (corresponding to the legal duration of the obligation to 
archiving for commercial purposes in France). According to the data submitted by France, the 
savings  and  advantages  that  these  taxable  persons  will  obtain  from  the  implementation  of 
electronic invoicing will  largely  absorb the initial  investment that they will  have to  incur to 
adapt their systems.  

The derogation is also limited in time and a report on the functioning and the effectiveness of 
the measure is to be prepared in case France wishes to prolong the derogating measure.  

Therefore, the special measure is proportionate to the aim pursued, i.e. to combat tax evasion 
and simplify tax collection. 

• 

Choice of the instrument 

Proposed instrument: Council Implementing Decision.  

Under  Article  395  of  the  VAT  Directive,  derogation  from  the  common  VAT  rules  is  only 
possible  upon  authorisation  of  the  Council  acting  unanimously  on  a  proposal  from  the 
Commission. A Council Implementing Decision is the most suitable instrument since it can be 
addressed to an individual Member State. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Impact assessment 

The  mandatory  electronic  invoicing  will  impact  both  the  tax  administration  and  taxable 
persons. 

France expects that mandatory electronic invoicing will help combating tax evasion, including 
unintended  tax  evasion  linked  to  non-declaration  or  under-declaration  and,  in  general,  non-
payment  of  VAT.  Beyond  the  fight  against  VAT  fraud,  the  availability  of  information  on 
commercial  transactions  will  allow  the  identification  of  the  intensity  of  commercial  links 
between  companies.  It  will  therefore  strengthen  the  analysis  of  transactions  concluded 
between  related  companies  in  order  to  detect  abnormal  transactions,  which  may  conceal 
possible  reductions  in  corporate  tax  bases  or  hidden  distributions  of  profits.  Further,  the 
scheme will allow the real-time collection of taxable persons’ transaction data. Such data may 
feed  into  economic  analyses  carried  out  by,  for  example,  the  INSEE  (National  Statistical 
Institute) or the Directorate-General  for the Treasury, in  order to  ensure  that public policies 
can be steered as closely as possible. 

France submits that electronic invoicing will lead to significant gains for companies in terms 
of digitalisation and reduction of administrative burdens, while securing business-to-business 
relations in order to make them more competitive. It would generate savings, with the full cost 
of issuing an electronic invoice estimated by the General Inspectorate of Finance at less than 
one euro, compared to more than ten euros for a paper invoice.  

The expected gains will be different in nature depending on whether or not businesses already 
use electronic invoicing. For businesses not yet using electronic invoicing, mainly small and 
medium  enterprises,  the  gains  will  be  approximately  of  EUR  10  per  invoice  received.  For 
those taxable persons  already making extensive use of them, mainly companies with 250 or 
more employees, the measure will improve the processing of their invoicing chain, since the 

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majority of the invoices currently exchanged electronically are still in PDF format, thus still 
entailing processing costs. 

Based on these elements, the minimum gain for companies would be around EUR 4,5 billion 
per year. Around 1,5 million small businesses only issue invoices in paper format. Given that 
these companies  issue fewer than 2000 invoices per  year  (65 % of  them issue less than 500 
invoices per year) the volume of invoices concerned would be estimated at 450 million. The 
removal  of  paper  invoices  would  generate  a  saving  in  the  processing  costs  of  EUR  10  per 
invoice, resulting in a total gain of EUR 4,5 billion for these companies. 

According to France, this evaluation does not take into account the gains in terms of securing 
transaction  flows  and  reducing  payment  times,  which,  according  to  the  Observatory  on 
payment deadlines, affect the cash flow of taxable persons around EUR 15 billion each year, 
particularly the smaller ones. 

Since the cost of acquiring the necessary software may be significant, the obligation to install 
billing software will not be imposed. France will leave the possibility for  taxable persons to 
forward their invoices either to the public platform directly, which will forward them to their 
recipients,  or  to  private  platforms  which  will  be responsible  for  transmitting  the  invoices  to 
the  tax  administration  and  to  the  receiving  company,  in  order  to  avoid  additional  costs.  In 
addition,  in  order  to  minimise  entry  costs  for  small  and  medium-sized  enterprises,  the  tax 
administration will offer the possibility to submit a PDF file to generate an electronic invoice 
for a period of time. 

4. 

BUDGETARY IMPLICATIONS 

The measure will have no adverse impact on the Union's own resources accruing from VAT. 

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2021/0388 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

authorising France to introduce a special measure derogating from Articles 218 and 232 
of Directive 2006/112/EC on the common system of value added tax 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Directive  2006/112/EC  of  28  November  2006  on  the  common 
system of valued added tax1, and in particular Article 395(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

By letters registered with the Commission on 12 April 2021 and 20 September 2021, 
France requested authorisation to introduce a special measure derogating from Articles 
218 and 232 of Directive 2006/112/EC (‘the special measure’) to introduce mandatory 
electronic invoicing to all taxable persons established in the territory of France. This 
obligation  would  cover  invoices  issued  in  transactions  between  taxable  persons.  The 
authorisation was requested for a period from 1 January 2024 to 31 December 2026. 

The Commission transmitted the request made by France to the other Member States 
by  letters  dated  29  September  2021.  By  letter  dated  30  September  2021,  the 
Commission  notified  France that it had  all the information  necessary  to  consider the 
request. 

France  submits  that  the  introduction  of  a  generalized  electronic  invoicing  obligation 
would provide benefits in combatting value added tax (VAT) fraud and evasion. The 
obligation  to  issue  electronic  invoices,  coupled  with  the  transmission  of  additional 
transaction  data,  would  enable  the  tax  administration  to  check  in  real  time  the 
consistency  between  the  VAT  declared  and  collected  and  the  invoices  issued  and 
received,  improving  the  capacity  of  the  administration  to  prevent  and  counter  VAT 
fraud.  It  would  also  increase  real-time  knowledge  of  business  activity  enabling 
economic  policy  to  be  steered  as  closely  as  possible  to  the  economic  reality  of  the 
players.  

France  considers  that  the  obligation  to  issue  electronic  invoices  would  facilitate 
voluntary compliance with tax legislation. It would allow the simplification of taxable 
persons’  VAT  reporting  obligations  by  introducing  pre-completion  of  their  returns. 
Electronic  invoicing  would  provide  other  advantages  to  taxable  persons,  such  as  the 
reduction of payment times, reduction of printing costs and postal charges, reduction 
of  costs  and  delays  in  processing  billing  data  or  the  reduction  of  storage  costs.  The 
savings and advantages that taxable persons would obtain from the implementation of 
electronic invoicing would largely absorb the initial investment that they will have to 
incur to adapt their systems. 

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OJ L 347, 11.12.2006, p. 1. 

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(5) 

(6) 

(7) 

(8) 

Given  the  broad  scope  and  the  novelty  of  the  special  measure,  it  is  important  to 
evaluate the impact of the special measure on combatting VAT fraud and evasion and 
on taxable persons. Therefore, where France considers that the extension of the special 
measure  is  necessary,  it  should  submit to  the  Commission,  together  with  the  request 
for extension, a report including the assessment of the special measure concerning its 
effectiveness in fighting VAT fraud and evasion and in simplifying tax collection. 

This  special  measure  should  not  affect  the  right  of  taxable  persons  to  receive  paper 
invoices in case of intra-Community acquisitions. 

The  special  measure  requested  should  be  limited  in  time  to  allow  an  assessment  of 
whether the special measure is appropriate and effective in light of its objectives. 

The  special  measure  is  therefore  proportionate  to  the  objectives  pursued  since  it  is 
limited  in  time  and  will  be  implemented  gradually.  As  of  2024,  an  obligation  to 
receive  electronic  invoices  is  to  apply  to  all  businesses.  The  obligation  to  issue 
electronic  invoices  is  to  apply  in  2024  to  large  enterprises,  in  2025  to  companies 
between 250 and 4 999 employees and with a turnover below EUR 1,5 billion  and in 
2026  to  small  and  medium-sized  enterprises,  including  taxable  persons  benefitting 
from  the  exemption  for  small  enterprises  referred  to  in  Article  282  of  Directive 
2006/112/EC. In addition, the special measure does not give rise to the risk that fraud 
would shift to other sectors or to other Member States. 

(9) 

The  special  measure  will  not  negatively  affect  the  overall  amount  of  tax  revenue 
collected  at  the  stage  of  final  consumption  and  will  have  no  adverse  impact  on  the 
Union’s own resources accruing from VAT, 

HAS ADOPTED THIS DECISION:  

Article 1 

By  way  of  derogation  from  Article  218  of  Directive  2006/112/EC,  France  is  authorised  to 
accept invoices which have been issued by taxable persons established in the French territory 
in the form of documents or messages only if those documents or messages are transferred in 
electronic format. 

By  way  of  derogation  from  Article  232  of  Directive  2006/112/EC,  France  is  authorised  to 
provide that the use of electronic invoices issued by taxable persons established in the French 
territory shall not be subject to the recipient accepting the use of electronic invoices. 

Article 2 

France shall notify the national measures implementing the special measures for derogations 
referred to in Articles 1 and 2 to the Commission. 

Article 3 

Article 4 

This Decision shall apply from 1 January 2024 until 31 December 2026. 

Where France considers that the extension of the special measures for derogations referred to 
in  Articles  1  and  2  is  necessary,  France  shall  submit  a  request  for  extension  to  the 
Commission,  together  with  a  report  assessing  the  extent  to  which  the  national  measures 
referred  to  in  Article  3  have  been  effective  in  combatting  VAT  fraud  and  evasion  and  in 

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simplifying tax collection. That report shall evaluate the impact of those measures on taxable 
persons  and  in  particular  whether  those  measures  increase  their  administrative  burdens  and 
costs. 

This Decision is addressed to the French Republic. 

Done at Brussels, 

Article 5 

For the Council 
The President 

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