The overlooked tax risk for foreign groups in France

For a foreign group, a French VAT number, a sale subject to value-added tax in France, or an intra-group re-invoicing transaction may give rise to new obligations. An error in analysis can lead to omissions in reporting or improper configuration of the enterprise resource planning (ERP) system used by the parent company.

E-invoicing or e-reporting?

E-invoicing primarily concerns sales of goods and services between businesses established in France and subject to VAT. As of 01 September 2026, all such businesses must be able to receive electronic invoices via a platform approved by the French authorities. Large enterprises and mid-sized companies must also issue them. Small and medium-sized enterprises (SMEs) and micro-enterprises will be required to do so as of 01 September 2027.

A PDF sent by email does not constitute a compliant electronic invoice: the invoice must contain structured data and be transmitted via an approved platform.

E-reporting involves submitting data on transactions excluded from e-invoicing to the French tax authorities; this includes international transactions and sales to consumers. The information reported includes, among other things, the date and amount of the transaction, the applicable VAT, and payment details for certain services. The foreign invoice is therefore not sent to the customer through the French system; only the required information is reported to the tax authorities.

A French VAT number is not sufficient

A French subsidiary is subject to the system. A foreign company may also be considered established in France if it has sufficiently permanent human and technical resources there. However, a French VAT number alone does not constitute such an establishment.

A foreign company not established in France is generally not subject to e-invoicing. It may, however, be required to file e-reports when it carries out a taxable transaction in France which is liable for VAT.

The foreign company’s size is assessed based on its global operations, not solely on its French operations. A limited presence in France may thus fall under the schedule applicable to large companies or mid-sized companies.

Two illustrative scenarios

A French subsidiary invoices its foreign parent company for technical or administrative services. The invoice generally does not qualify for e-invoicing, since the customer is not established in France. However, the transaction data may still need to be submitted via e-reporting.

Another scenario: A foreign company with no offices or employees in France holds a French VAT number and makes taxable sales in France. The lack of a permanent establishment generally excludes e-invoicing, but not necessarily e-reporting. The nature of the transaction, its place of taxation, and the party liable for VAT must be verified.

Penalties and grace period

Failure to issue an electronic invoice is subject to a penalty of EUR 50 per invoice, up to a maximum of EUR 15,000 per calendar year. Failure to file e-reports results in a fine of EUR 500 per missing submission, also capped at EUR 15,000 per year.

The first violation committed during the current year or any of the three preceding years is not penalised if it is corrected voluntarily, or within thirty days of an initial request from the tax authorities.

French tax authorities have also announced a grace period for businesses acting in good faith that encounter difficulties during the transition and are taking the necessary steps. This is neither a postponement of the reform nor an official four-month grace period. The requirements have been in effect since 01 September 2026, and proof of the steps taken must be retained.

Four checks for foreign groups:

1) Identify entities with a French identification number or a French VAT number;

2) Determine whether they are established in France for VAT purposes;

3) Classify each transaction as e-invoicing, e-reporting, or outside the system; and

4) Allocate responsibilities among the foreign headquarters, the French entity, the platform, and the French-certified public accountant.

A platform does not correct an incomplete tax analysis – it automates it. Each entity and each transaction must therefore be classified before configuration to avoid missing data.

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Claudine Heinrich is a highly skilled chartered accountant with a strong background in European tax law. With years of experience in financial management and accounting, she is dedicated to helping businesses, from startups to large corporations, navigate complex financial and tax regulations with confidence. Her expertise spans tax optimisation, regulatory compliance, financial analysis, and strategic business consulting.