Transposition of ViDA EU Directive 2025/516 into French Law

2. Key Changes Introduced (Alignment with Directive 2025/516)

• Simplification of Electronic Invoicing Rules: The conversion removes prior bureaucratic hurdles and clarifies e-invoicing obligations, making it easier for businesses to use electronic invoices. Notably, the ordinance abolishes the requirement for prior authorization from the tax administration to implement certain e-invoicing processes. (Previously, under CGI art. 289 A, companies needed the tax authority’s approval for some e-invoice or archiving systems – this clause is now deleted.) In line with the directive’s push for digital reporting, businesses can adopt e-invoicing freely, accelerating the move away from paper.
• Strengthened Invoice Retention and Authenticity Controls: The ordinance embeds EU standards for secure invoice retention and auditability. It explicitly requires that invoices (whether paper or electronic) be stored with guaranteed authenticity of origin, integrity of content, and human readability for the full retention period. In practice, this means companies must maintain robust systems (or processes) to ensure each invoice is verifiable and tamper-proof from issuance until at least six years after its creation. The law even provides that a forthcoming decree will define approved technical procedures for compliance (e.g. use of certified e-invoice platforms or audit trail methods). If a business doesn’t use the “pre-approved” tech methods, it must implement documented continuous controls to establish a “piste d’audit fiable” – a reliable audit trail linking invoices to the underlying transactions. These provisions implement the directive’s digital reporting mandate, laying the groundwork for real-time or periodic electronic VAT reporting in France. In sum, French VAT payers are now compelled to manage invoices electronically in a controlled manner, which facilitates eventual transmission of invoice data to the tax authorities (a major goal of the EU reform). [legifrance.gouv.fr]
• Data Reporting to Tax Authority: To complement internal record-keeping, the ordinance introduces mechanisms for transmitting VAT-relevant data to tax authorities. A new rule in the Livre des Procédures Fiscales provides that when the law requires a business to keep VAT records (e.g. the new digital registers), those records must be presented or sent to the tax administration upon request. Moreover, the ordinance signals that certain registers will be routinely transmitted or made available to authorities under detailed rules set by regulation. This enables implementation of automatic digital reporting (for instance, France’s upcoming e-invoicing clearance system) once the decrees are in place. In effect, the legal basis for France’s compliance with the EU’s digital reporting requirement is now codified: businesses will have to electronically report transaction data (likely invoice details or VAT sales/purchases listings) to the tax administration in a manner and frequency that a decree will specify. This is a direct consequence of the directive’s objective to harness digital tools for VAT collection. [legifrance.gouv.fr], [legifrance.gouv.fr] [legifrance.gouv.fr]
• Platform Economy: New VAT Duties for Online Platforms – A significant innovation is the imposition of responsibilities on online marketplace/platform operators in VAT collection. Enterprises that, via an electronic platform, connect sellers and buyers for the sale of goods or services are now explicitly brought into the VAT enforcement framework. Under a newly inserted Article L.80 PA, if sellers who use a platform are suspected of evading VAT on those transactions, the tax administration can formally signal the non-compliant seller to the platform operator and require the platform’s cooperation. The platform must then take measures to help that seller regularize their VAT situation (for example, by reminding them of obligations, collecting missing data, or other corrective steps) and report back to the tax authorities on actions taken. If after a month the seller still hasn’t complied, the tax administration can order the platform to take stronger action, up to excluding the seller from the platform. This graduated system essentially makes platforms partners in VAT enforcement: they become responsible for policing VAT compliance among their users once notified of an issue. Such a mechanism transposes the directive’s measures aimed at the digital/platform economy, ensuring VAT on online sales (goods or services) doesn’t slip through the cracks. For instance, short-term accommodation rentals or ride-sharing services arranged via platforms – which the directive identifies as areas needing improved VAT coverage – are addressed by French law now. In practice, French platforms must keep better visibility on sellers’ VAT status, and non-compliant sellers risk losing access to those marketplaces. This is a new compliance burden on platform companies, but it is intended to combat fraud in sectors facilitated by digital intermediaries, aligning with EU policy. [legifrance.gouv.fr] [legifrance.gouv.fr], [legifrance.gouv.fr]
• Payment Service Providers’ Reporting Obligation: Another pillar of Directive 2025/516 is leveraging payment data to fight VAT fraud, especially in e-commerce. The ordinance introduces Articles L.80 PB and L.80 PC, which compel payment service providers (PSPs) – e.g. banks, payment institutions – to keep detailed records of cross-border payments and share them with tax authorities. Concretely, any PSP operating in France (by establishment or just by providing services) must maintain an electronic register of recipients (“bénéficiaires”) and payments for certain payment services it executes. This applies notably to credit transfers, direct debits, card payments and similar transactions (as per the referenced definitions from the Monetary and Financial Code) where the payment relates to a purchase of goods or services. The rule targets cross-border payments: if in a given calendar quarter a PSP processes more than 25 cross-border payments to the same payee, it is obligated to include that payee in the detailed register. “Cross-border” is defined here as where the payer is in one EU Member State and the payee is in another Member State or outside the EU. In other words, French PSPs must track when their customers send money to sellers abroad (e.g. an EU consumer buying from a foreign e-commerce seller). The information to be recorded includes the identities and locations of payers and payees (leveraging IBAN/bank identifiers to determine location) and the amount and dates of payments. Crucially, the ordinance **requires PSPs to report these payment records to the tax administration quarterly – “no later than the end of the month following the calendar quarter” for the payments in that quarter. This mirrors the EU’s envisioned Central Electronic System of Payment information (CESOP), where Member States will collect and exchange payment data to detect undeclared VAT on cross-border sales. Under French law, the data contents and transmission format will be set by a Council of State decree, but the obligation itself is now in place. For French tax policy, this means a new stream of data: beginning in 2026, the tax authorities will regularly receive information on cross-border payments involving French buyers or sellers, allowing them to identify potential VAT liabilities (e.g. if a French person made 30 payments to a given foreign seller in a quarter, the tax office can investigate whether that seller is properly charging VAT). This payment-data reporting requirement is a direct transposition of the directive’s anti-fraud measure and represents a significant compliance duty for banks and payment firms in France. [legifrance.gouv.fr] [legifrance.gouv.fr], [legifrance.gouv.fr]
• Recodification and Terminology Updates: As part of incorporating the directive, the ordinance restructures many VAT provisions into the new code and updates terminology. Legacy references to “taxes on turnover” (taxes sur le chiffre d’affaires) in various laws are replaced with the new language of “taxes on goods and services”, reflecting the modern scope. Definitions and fundamental concepts in VAT law have been clarified or redefined in the CIBS to match EU law’s wording. For example, the ordinance refines the definitions of what constitutes a taxable supply and an “economic activity” for VAT purposes in line with EU Directive 2006/112/EC (as amended by Directive 2025/516) – these appear in the new Articles L.211-9 through L.211-20. By recodifying, France ensured that all the innovations of Directive 2025/516 (and recent related EU directives) are coherently integrated, rather than patching the old Code Général des Impôts piecemeal. The Annex to the ordinance completely restates VAT rules (Articles L.200-1 to L.246-12 of the CIBS), effectively creating a comprehensive “VAT Code” that includes EU-harmonized rules (place of supply, deductions, exemptions, special schemes, etc.). This massive recodification exercise not only transposes the new EU provisions but also consolidates prior EU-driven VAT rules into one logical structure. For practitioners and businesses, the law’s form has changed (article numbers, code references), but substantively it should align more closely with the EU VAT Directive structure. This makes compliance more straightforward when operating across EU borders, since French law now uses concepts and categories directly parallel to those in the directive. [legifrance.gouv.fr] [legifrance.gouv.fr], [legifrance.gouv.fr]

3. Implications for French Tax Policy and Practice

• Enhanced VAT Fraud Prevention: French authorities will gain new tools to detect and prevent VAT evasion, especially in the digital economy. The mandatory payment data reporting is a game-changer: tax inspectors can leverage payment trails to identify under-reported sales, particularly in cross-border e-commerce. Similarly, the involvement of online platforms means tax authorities are no longer fighting VAT fraud alone; platforms are now legally obliged to help ensure their users collect and pay VAT. This collaborative enforcement approach is expected to improve VAT compliance in sectors like online retail, short-term rentals, ride-sharing, and other platform-mediated services (areas which traditionally saw leakage in tax collection). Over time, these measures should help increase VAT revenues and level the playing field between traditional businesses and digital economy players. [legifrance.gouv.fr], [legifrance.gouv.fr] [legifrance.gouv.fr]
• Digitalization and Efficiency: The ordinance’s measures push French VAT into a fully digital regime. The combination of real-time invoice data availability and quarterly payment reports lays the foundation for a more automated, data-driven tax system. In the near future, France can implement automated VAT cross-checks (e.g. matching invoice records with reported sales, or flagging unreported foreign suppliers). This will make VAT administration more efficient and reduce opportunities for fraud (like carousel fraud or missing-trader schemes) by catching them early. From a policy perspective, France is embracing the EU’s “VAT in the Digital Age” initiative wholeheartedly – reinforcing France’s reputation as an early adopter of e-invoicing and digital tax reporting. Businesses will need to invest in compliant IT systems (for e-invoicing, secure archiving, and transactional reporting), but in return may benefit from simpler compliance in the long run (e.g. pre-filled VAT returns or fewer audits, since the tax office already has much of the transaction data).
• Impact on Businesses and Intermediaries: French companies must adapt to stricter VAT compliance obligations. All taxable persons will face stronger invoice controls – ensuring every invoice is digitally stored in an acceptable format and potentially transmitted to the tax authority. Large businesses were already preparing for mandatory e-invoicing (under separate domestic reforms), but this ordinance extends a robust legal framework to all businesses for electronic record-keeping and audit trails. Payment service providers and digital platforms, in particular, now shoulder new regulatory burdens. Payment providers will need systems to compile and report transaction data every quarter, incurring compliance costs but effectively becoming partners in tax enforcement. Platforms might need to implement vetting and monitoring processes for sellers, and respond to government notices swiftly or face sanctions. These changes signal to the market that tax compliance is a shared responsibility in the digital era – not just the end-seller’s issue. In sum, while the ordinance increases compliance demands (more reporting, stricter data management), it also modernizes the law in a way that aligns with how digital businesses operate. [legifrance.gouv.fr]
• Legal Clarity and Coherence: By recodifying VAT law, France has improved the clarity of its tax legislation. Many outdated terms and fragmented provisions have been consolidated. The definitions and rules are now more directly aligned with EU law terminology (e.g. using the structure of the EU VAT Directive for defining taxable transactions, place-of-supply rules, exemptions, etc., as seen in the new CIBS articles). This coherence reduces confusion for businesses operating internationally, as the French rules mirror EU directives. It may also simplify future policy adjustments – since any further EU changes can be more readily mirrored in the national code. From a policy standpoint, France has positioned its VAT system to be flexible and up-to-date: the ordinance even includes provisions for future delegated decrees (for technical implementation details), ensuring that France can quickly adapt the enforcement specifics without needing another primary law change. All of this indicates a responsive tax policy framework going forward. [legifrance.gouv.fr], [legifrance.gouv.fr]
• Conclusion: The Ordonnance n° 2025-1247 demonstrates France’s proactive approach to implementing Directive 2025/516. By using an ordinance, France met the EU deadline and delivered a comprehensive transposition – not only copying the directive’s text into law, but fundamentally modernizing the VAT system in the process. The legal mechanism (government ordinance under parliamentary delegation) allowed swift conversion of EU law into national law, illustrating how France balances its national legislative process with EU obligations. The implications for French VAT policy are significant: the tax administration will become more data-centric, compliance will increasingly rely on digital systems, and private-sector intermediaries (like fintech and platform companies) are now integral to tax collection efforts. In summary, Directive 2025/516’s goals – adapting VAT for the digital age – are now largely achieved in French law: France’s VAT code has been updated to enable electronic invoicing, real-time reporting, platform accountability, and better oversight of cross-border commerce. These changes strengthen the French VAT system’s integrity and exemplify France’s commitment to EU-wide tax harmonization and innovation in tax policy. [legifrance.gouv.fr], [legifrance.gouv.fr]