France VAT & Tax Law Briefing Document (August 2025)
This briefing document summarizes key VAT and tax law developments in France as of August 2025, based on provided VATupdate sources.
I. E-Invoicing Mandate
- Overview: France is progressing with its comprehensive e-invoicing and e-reporting mandate, aiming to modernize administrative processes, reduce VAT fraud, and align with EU initiatives like ViDA. The mandate builds upon the existing Business-to-Government (B2G) system and extends to Business-to-Business (B2B) and Business-to-Consumer (B2C) transactions. “The mandate aims to “modernize administrative processes, reduce VAT fraud, and align with broader EU initiatives for digital invoicing, such as ViDA (VAT in the Digital Age).”
- Timeline:September 1, 2026: All companies must be able to receive e-invoices. Large and Intermediate-sized companies must be able to issue e-invoices. Potential postponement to December 1, 2027.
- September 1, 2027: Small, Medium, and Micro-sized companies must be able to issue e-invoices. Potential postponement to December 1, 2028.
- October 2025: Interoperability testing between businesses and their chosen Partner Dematerialisation Platforms (PDPs).
- February 2026: Full-scale testing with a sandbox environment for businesses and PDPs.
- Infrastructure:Five-Corner Model: France is transitioning to a five-corner model, requiring businesses to use accredited PDPs for invoice exchange. Businesses are required to “select and partner with a PDP”.
- Partner Dematerialisation Platforms (PDPs): PDPs are essential for secure transmission and exchange of e-invoices and e-reporting data. 87 PDPs registered as of April 2025, with full certification expected by Q2 2026. “PDPs are accredited private service providers essential for the secure transmission and exchange of e-invoices and e-reporting data between businesses.”
- Portail Public de Facturation (PPF): The PPF’s role has shifted to a “Business Directory” and “central data hub for transmitting information to the DGFiP (French tax authority)”, rather than handling direct invoice exchanges. The PPF will “primarily function as a Business Directory and a central data hub for transmitting information to the Direction Générale des Finances Publiques (DGFiP)”.
- Peppol Authority: The French tax authority (DGFiP) has been designated as the national Peppol Authority, ensuring standardized protocols and full certification for PDPs. Its purpose is to “align France’s e-invoicing framework with broader EU standards, particularly the Peppol network, to enable seamless and secure cross-border electronic document exchange”.
- Mandatory Formats: UBL 2.1, CII 3.0, and FacturX will be the mandatory formats for B2B e-invoices from September 1, 2026.
- XP Z12-014 Standard: Introduced in June 2025 to support the B2B e-invoicing reform. It provides clarity and operational guidance for businesses and PDPs, outlining roles, responsibilities, data formats, and processes for e-invoicing. Updated standards were published in July 2025.
- Chorus Pro: Chorus Pro remains the official e-invoicing platform for the French public sector (B2G) after 2026. It will also serve as an issuing platform for VAT-subjected entities in the public sector. “Chorus Pro will remain the official e-invoicing platform for the French public sector after 2026.”
- E-Reporting System: This system is required for “data related to international B2C and B2B transactions” and follows the same compliance schedule as the e-invoice mandate.
- Digital Transformation: France’s e-invoicing mandate is seen as a “strategic opportunity for digital transformation” beyond regulatory compliance. It aims to streamline invoice processing, reduce costs, accelerate cash flow, strengthen business relationships, and enhance compliance.
- Action Items: Businesses should “begin engaging with an accredited PDP immediately” and participate in interoperability testing (October 2025) and full functionality testing (February 2026).
II. Digital Services Tax (DST)
- Overview: France’s 3% DST, introduced in 2019, is under review by the Constitutional Court due to concerns about equality and potential discrimination. The DST applies to revenues from digital services such as targeted advertising and online marketplace services for large tech companies. “The 3 percent DST was introduced in 2019 and is argued to breach the principle of equality before the law”.
- Constitutional Review: A ruling is expected in September 2025 on the DST’s constitutionality. If ruled unconstitutional, DST liabilities may cease, and those who paid could seek reimbursement, though effects might be limited to future fiscal years.
- Temporary Measure: The DST is intended as a temporary measure and will be repealed once OECD Pillar 1 is in place.
III. VAT Rates & Exemptions
- Overseas Departments: Differentiated VAT exemptions apply to imports of raw materials and products in Guadeloupe, Martinique, and La Réunion, aimed at addressing local needs and combating high living costs. Product lists are subject to modification. “Exemption of VAT applies to imports of raw materials and products in Guadeloupe, Martinique, and La Réunion.”
- Agricultural Products: VAT rates for agricultural, fishing, aquaculture, and poultry products depend on their normal destination. The lowest applicable rate is used when products have multiple destinations.
- Restaurant Industry: VAT rules in the restaurant industry have shifted to focus on the product’s nature and intended consumption (immediate vs. deferred), with rates of 5.5%, 10%, and 20% depending on the product and consumption intent.
- Memorials for Attack Victims: VAT exemption has been extended to works on memorials for victims of attacks, effective from February 16, 2025.
- Agricultural Processing and Forestry Services: New guidelines and applications for reduced VAT rates have been issued for agricultural processing and forestry services under specific conditions.
IV. VAT Refunds
- Foreign Businesses: Foreign businesses seeking VAT refunds in France must follow specific procedures depending on whether they are EU-based or non-EU-based. Non-EU companies generally must appoint a French tax representative.
- Procedural Errors: The Paris Administrative Court of Appeal highlighted the risk of losing the right to reimbursement due to procedural errors, particularly concerning deadlines. The correct procedure for non-established foreign taxable persons involves applying through the tax authority of the Member State of establishment by September 30 of the following year.
V. Customs
- ECJ Case C-206/24: The ECJ delivered a judgment regarding the repayment of unlawfully levied customs duties. The case involved whether customs authorities must repay duties on their own initiative without an application from the economic operator.
- Cross-Border Communication: Ongoing disruptions in cross-border communication with France have been reported, with German export processes sometimes missing exit confirmations from France. Alternative completion through the investigation procedure is available.
- Customs Electronic Systems: The EU Commission initiated infringement procedures against France for failing to deploy the Automated Export System and the system for temporary storage for air transport and the National Import System.
- Energy Product Duties: French Customs updated duties and taxes on energy products, effective August 1, 2025.
VI. Other Key Developments
- Reverse Charge Mechanism: French-based recipients of services from foreign businesses must apply the reverse charge VAT mechanism, even if they are not ordinarily liable for VAT. “The court emphasizes the obligation to self-assess VAT for services received from providers outside France.”
- Research Tax Credit (CIR): A fiscal audit of the Research Tax Credit is intense. Companies should anticipate reasons for adjustments.
- VAT Deduction on Vehicles: Vehicles designed for transporting people or mixed use are excluded from VAT deduction rights, regardless of the vehicle’s nature or actual use. “Vehicles designed for transporting people or mixed use are excluded from VAT deduction rights.”
- VAT Exemption Threshold: The introduction of a uniform VAT exemption threshold of 25,000 euros has been postponed to January 2026.
- Holding Companies and VAT: An advanced training course on VAT rules applicable to holding companies will be held on November 18, 2025.
Disclaimer: This briefing document is based on excerpts from VATupdate and is intended for informational purposes only. It is not a substitute for professional legal or tax advice. Consult with qualified professionals for specific guidance related to your situation.
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