France: DGFiP Signals Pragmatic Enforcement Approach
In a noteworthy development for businesses navigating France's evolving tax landscape, the Direction Générale des Finances Publiques (DGFiP) has announced a pragmatic enforcement approach regarding upcoming statutory penalties tied to the e-invoicing and e-reporting regime mandated by the Finance Law, set to commence on September 1, 2026.
The DGFiP has made it clear that, contrary to an immediate application of penalties, a focus on fostering compliance and supporting businesses during the implementation phase will take precedence.
A Lenient Onboarding Process
During the Annual E-Invoicing Day event on May 7, 2026, DGFiP Director General Amélie Verdier elucidated the agency's stance, emphasizing that penalties would not be imposed systematically from day one. Instead, businesses will be engaged directly to present their compliance strategies and progress in implementing the new requirements. This indicates a shift in the enforcement paradigm, allowing businesses to demonstrate their commitment and genuine efforts towards compliance before facing sanctions.
The administration has introduced a “right to make mistakes” paradigm during the initial phases of the rollout, reflecting a nuanced understanding of the complexities involved. Factors such as ERP integration challenges, onboarding with Principal Domain Providers (PDP), and configuring invoice data are anticipated hurdles. Accordingly, cases of genuine difficulty will be assessed on an individual basis, allowing for remediation periods and encouraging businesses to address issues as they arise.
Statutory Penalties and Compliance Obligations
Despite the accommodating approach for the initial phase, statutory penalties outlined in the Finance Law remain active and applicable to businesses that persistently fail to comply. Non-compliance could result in penalties of €50 per e-invoice issued outside the approved systems and €500 per incident of failed e-reporting. The framework is designed to incentivize businesses to proactively engage with the new requirements and ensure accurate integration into the operational ecosystem.
Encouraging a Culture of Continuous Improvement
The DGFiP's approach champions a "trial and error" methodology, encouraging businesses to embrace mistakes as opportunities for growth rather than fearing punitive actions that may disincentivize proactive engagement. This philosophy aligns with broader goals of fostering a flexible and adaptive regulatory environment during this transformative period.
Adjustments to the Enforcement Framework
The Finance Law enacted in February 2026, specifically Article 123, delineates the revised penalties concerning non-compliance with the e-invoicing and e-reporting mandates. Key elements include:
- Penalties for Non-Compliant E-Invoices: Businesses face a €50 penalty for invoices issued outside approved platforms or failing to adhere to structured invoicing mandates. While individually modest, the compliance risk could escalate significantly for firms processing large volumes of transactions.
- Failing to Receive E-Invoices: Non-compliance with platform connectivity will invoke a progressive penalty regime. Failure to comply post-notice will incur increasing fines, beginning with €500 after the first notice and escalating to €1,000 for each subsequent notice if issues remain unresolved.
- E-Reporting Transgressions: Separate sanctions include €500 per failure to transmit transaction or payment data to tax authorities, capped at €15,000 annually, highlighting the critical role of e-reporting in real-time VAT monitoring.
Early Compliance Tolerance
The legal framework also incorporates provisions designed to foster early compliance, allowing initial errors to attract no penalties if rectified promptly and if the business has not incurred similar penalties within the previous three years.
Preparing for Compliance
As businesses brace for the September 2026 rollout, it is imperative to prepare adequately. Firms must focus on:
- Developing structured invoice formats compatible with the mandated platforms.
- Mapping transaction and payment data in readiness for e-reporting.
- Testing end-to-end processes for both invoicing and VAT reporting to mitigate the risk of compliance breaches.
Conclusion
France's proactive approach in promoting compliance while maintaining statutory penalties underscores a balance between regulation and support. By encouraging businesses to engage earnestly during the transition to e-invoicing and e-reporting, the DGFiP aims to construct a robust and interoperable tax ecosystem. This evolution in enforcement strategy sets a significant precedent as France embarks on a journey toward continuous VAT monitoring and enhanced fiscal accountability, ensuring both the agency and businesses are better equipped to navigate the complexities ahead.
How Can KGT Support You?
KGT has created an SAP-integrated e-invoicing add-on solution for France, featuring outbound and inbound functionalities to meet tax reporting requirements. This add-on includes a data extractor and a cockpit for generating periodic electronic invoices in the legal format and controls before submission. When SAP DRC launched a French e-invoicing solution as part of its e-document offerings, KGT emerged as a leading consultancy firm for SAP DRC and tax services. Recognized as an SAP DRC partner for French e-invoicing services, KGT is one of SAP's recommended implementation partners for this solution. We provide comprehensive support, including installation, configuration, customization, and training, to help you maximize the long-term value of your SAP DRC investment.
KGT is an SAP partner for PE services and an SAP Build partner, and to become an SAP partner, strict due diligence requirements must be met, including having certified SAP consultants. You can find us at https://partnerfinder.sap.com/profile/0001925409
