France To Introduce Mandatory VAT Fraud Protection

A large proportion of French companies will be required to use VAT fraud protection software when calculating their tax obligations, under French laws taking effect next year.

An amendment to the French General Tax Code specifies that any business which records customers’ payments with accounting or management software, or through a cash register system, will be required to deploy anti-fraud measures.

Businesses will be required to have their payment and accounting systems certified by an authorised third party. This certificate must then be kept and presented to tax authorities if required.

The certified B2C software is designed to increase data security, ensuring that data is inalterable and safely stored. It will also assist authorities in the collection and processing of said data for VAT assessment.

Sellers may be required to upgrade to certified and secure point-of-sale (POS) systems, such as cash registers and card terminals. All foreign providers of accounting and payment solutions will be required to attain accreditation in future.

Only French resident businesses will initially be required to comply with the law. Failure to do so may lead to fines of up to 7000 euros per infringement.

The law is due to come into effect from January 1st 2018. The precise details, including the restrictions on changing payment details, security and means of storage, are all yet to be finalised.

The move comes amid a raft of changes designed to improve business efficiency in France, both in terms of reducing red tape and improving government effectiveness. France loses an estimated 14 billion euros each year to tax fraud.

We’ll endeavour to keep you updated on further developments in French law. For any information on VAT fraud protection and tax information across Europe, don’t hesitate to contact us.