Electronic Invoice in Construction: Subcontracting, VAT Reverse Charge and Work Progress Statements

Why Construction is a Special Sector in the Electronic Invoicing Reform

Since the entry into force of the obligation calendar for large enterprises in September 2026, electronic invoicing has been progressively imposed on the entire French economic landscape. However, the building and public works (construction) sector presents specific characteristics that make it one of the most complex cases to address. With multi-level subcontracting chains, monthly work progress statements, VAT reverse charge and public procurement subject to specific rules, construction companies must combine regulatory compliance with the operational reality of the job site.

According to the French Building Federation (FFB), more than 60% of construction projects involve at least one subcontractor. In this context, each invoicing flow — whether from the subcontractor to the main contractor or from the latter to the project owner — must now be transmitted through an approved Partner Dematerialisation Platform (PDP) or through the Public Invoicing Portal (PPF). Understanding the rules applicable at each level is therefore a priority to avoid tax disputes and payment blockages.

Obligation Calendar for Construction Enterprises

The calendar set out in Ordinance No. 2021-1190 of 15 September 2021 and clarified by the 2024 Finance Act applies to construction enterprises according to their size:

• Large enterprises and mid-caps: obligation to issue and receive from September 2026.
• SMEs and micro-enterprises: deferred obligation to issue, but obligation to receive from September 2026. These enterprises must therefore be capable of receiving electronic invoices in structured format (Factur-X, UBL or CII) even if they are not yet issuing them.

For subcontractors, often small craft enterprises, this obligation to receive is immediate and concrete: they must equip themselves with a compatible solution to avoid blocking the flows of their contracting authority.

Electronic Invoice Formats Accepted in Construction

Construction can use the three structured formats accepted by the tax authorities:

• Factur-X: a hybrid Franco-German format (PDF enriched with an XML file). This is often the most accessible for construction SMEs. You can consult our complete guide to the Factur-X format to understand the required conformity levels.
• UBL 2.1 (Universal Business Language): an international standard, used notably in public procurement via Chorus Pro.
• UN/CEFACT CII (Cross Industry Invoice): a pure structured format, oriented towards complex B2B exchanges.

The choice of format must be coordinated with the main contractor or project owner prior to the job site.

VAT Reverse Charge in Construction Subcontracting: Mechanism and Issues for Electronic Invoicing

VAT reverse charge is at the heart of relationships between main contractors and subcontractors in construction. This mechanism, provided for in Article 283, 2 nonies of the French General Tax Code (CGI), stipulates that VAT on immovable works carried out by a subcontractor must not be collected by the latter but must be paid directly by the main contractor (or the taxable recipient).

How Reverse Charge Modifies the Structure of the Electronic Invoice

In this scheme, the invoice issued by the subcontractor must not show VAT. It must mandatorily state:

• The legal mention: "Reverse Charge — Article 283-2 nonies of the CGI"
• The applicable VAT rate (even if the amount is zero on the invoice)
• The nature of the works and their connection to the job site
• References to the subcontracting contract and the project owner's acceptance

In the context of structured electronic invoicing, this information must be encoded in the corresponding XML fields. The VAT reason code AE (Reverse Charge) must appear in the `TaxCategory` node of the structured file. Any omission or error in this encoding may result in automatic rejection of the invoice by the recipient's PDP or even a tax audit.

It is strongly advised to test your files with a free Factur-X validator before any production deployment.

Strengthened Reporting Obligations through E-Reporting

VAT reverse charge in subcontracting generates information reporting obligations to the tax authorities through the e-reporting mechanism. The main contractor who operates reverse charge must declare this transaction in their VAT return (CA3) and, if applicable, transmit transaction data to the authorities via their PDP. This dual traceability — in the structured invoice and in the e-reporting flow — constitutes a major innovation for construction, accustomed to more manual reporting practices.

Work Progress Statements: Construction-Specific Feature and Electronic Processing

A work progress statement is a document specific to the construction sector. It is a periodic statement of progress (generally monthly) that records the work performed, determines the amount due for the period and serves as a request for intermediate payment. It is not an invoice in the conventional accounting sense, but within the framework of the electronic invoicing reform, its processing is crucial.

Work Progress Statement and Electronic Invoice: What Connection?

According to the French Public Finance Administration (DGFiP), the work progress statement can be assimilated to a periodic invoice provided it meets the criteria defined in Article 289 of the CGI: identification of the parties, description of services, amount before tax, VAT rate and amount (or mention of reverse charge), date and sequential number.

In construction practice, this means that each monthly progress statement issued by a subcontractor to the main contractor must:

1. Be issued in structured format (Factur-X, UBL or CII) via a PDP.
2. Include the reverse charge mention if the subcontractor is subject to the mechanism under Article 283-2 nonies.
3. Be accompanied by the final general statement (DGD) at the end of the job site, which settles all intermediate statements.

Managing Retention of Guaranty in Electronic Construction Invoices

Law No. 71-584 of 16 July 1971 authorises the project owner to retain 5% of the amount of each work progress statement as a guarantee of proper execution. This retention must appear in the electronic invoice explicitly.

In the Factur-X format, the retention of guaranty is encoded in the deduction elements (`AllowanceCharge` with a deduction type indicator). Forgetting this encoding in the XML file — even if the surface PDF is correct — constitutes a non-conformity that may trigger rejection by the contracting authority's PDP. Accounting software editors for construction (EBP, Sage, Chorus Pro) are progressively integrating these fields, but human verification remains essential during the transition phase.

Choosing Your PDP and Tools: Specific Issues for Construction Enterprises

The choice of Partner Dematerialisation Platform is a strategic decision for any construction enterprise. Unlike other sectors, construction companies often manage several job sites simultaneously, with multi-level invoicing flows (project owner → general contractor → subcontractors → sub-subcontractors).

Selection Criteria for a PDP Suited to Construction

For a building enterprise, the differentiating criteria are as follows:

• Native management of work codes: the PDP must allow for the entry of NACR codes (Nomenclature of Construction Activities) in structured invoices.
• Support for VAT reverse charge: the PDP must automatically manage VAT rules specific to construction (10% reduced rate for renovation, reverse charge, 20% VAT).
• ERP/construction accounting connectors: interoperability with software such as Sage 100 Construction, EBP Bâtiment or Onaya is essential.
• Archiving with probative value: job site documents must be retained for 10 years under the Civil Code (ten-year guarantee). The PDP must offer archiving compliant with the NF Z42-013 standard.

For craft micro-enterprises, the free Factur-X electronic invoice generator can be a first step before migrating to a complete solution.

Integration of Electronic Signature into Construction Flows

The electronic invoicing reform must not be separated from electronic signature, which secures the entire documentary chain of the job site: subcontracting contracts, service orders, change orders, reception minutes. The legal value of electronic signature is fully recognised for these documents provided it complies with the eIDAS regulation. In construction, where disputes related to the performance of works are frequent, qualified electronic signature provides irrefutable proof of acceptance of contractual conditions.

Legal Framework Applicable to Electronic Invoicing in Construction

Compliance with electronic invoicing in the construction sector relies on a stack of legislative and regulatory texts that must be mastered.

French General Tax Code (CGI)

• Article 289: defines the mandatory mentions for any invoice issued by a taxable person, now applicable to structured electronic invoices.
• Article 283, 2 nonies: establishes the VAT reverse charge mechanism for immovable construction works carried out by subcontractors. The taxable recipient is liable for VAT in place of the subcontractor.
• Article 289 bis: sets the conditions for resorting to electronic invoicing and the accepted formats.

Ordinance No. 2021-1190 of 15 September 2021: empowers the government to generalise electronic invoicing between taxable persons. Clarified by Decree No. 2022-1299 of 7 October 2022.

2024 Finance Act (Article 91): adjusts the deployment calendar and confirms the obligation to receive universally from September 2026.

Law No. 71-584 of 16 July 1971: governs the 5% retention of guaranty applicable to private works contracts. Its application in structured electronic invoices must comply with dedicated XML fields.

eIDAS Regulation No. 910/2014 and eIDAS 2.0 (EU Regulation 2024/1183): frame electronic signature and electronic seals used to authenticate invoices. Qualified signatures (QES) provide the irrefutable presumption of integrity required for probative archiving.

VAT Directive 2006/112/EC as amended: harmonises VAT reverse charge rules at European level in high fraud-risk sectors, including construction. Article 199 of the directive grounds Article 283-2 nonies of the French CGI.

ETSI EN 319 132 Standard: defines advanced signature profiles XAdES, CAdES and PAdES, applicable to electronic invoice formats to guarantee their integrity and non-repudiation over time.

GDPR No. 2016/679: personal data contained in invoices (name of signatory, contact details of sole proprietorships) must be processed and archived in conditions compliant with GDPR, with limitation of retention periods to strict legal and accounting needs.

Risks in Case of Non-Compliance: an invoice not issued in the regulatory format may be rejected by the recipient, resulting in payment delays and exposing the issuer to a tax fine of €15 per non-compliant invoice (capped at €15,000 per financial year for issuers, under Article 1737 of the CGI). For construction subcontractors, an error in encoding VAT reverse charge may trigger a VAT recovery at the charge of the main contractor, accompanied by surcharges of 10% to 40% depending on the nature of the breach.

Use Cases: Electronic Invoice in Construction in Practice

Scenario 1 — A Mid-Cap Civil Works Enterprise with Multiple Levels of Subcontracting

A public works company achieving approximately €80 million in annual turnover operates as the main contractor on road contracts for local authorities. It uses about twenty specialised subcontractors (earthworks, signalling, asphalt) of which the majority are SMEs with fewer than 50 employees.

Before the reform, the management of monthly work progress statements was done via non-structured PDFs and paper purchase orders. Since September 2026, the mid-cap has been subject to the issuing obligation. It has implemented a PDP connected to its construction ERP to issue invoices to public project owners (via Chorus Pro) and private ones. It has also contractually required its subcontractors to equip themselves with a compatible solution for sending their monthly statements in Factur-X.

Result after 4 months of deployment: 35% reduction in work statement validation time (from 12 days to 8 days on average), elimination of disputes related to VAT errors (reverse charge automatically encoded by the ERP) and estimated savings of 1,200 accounting entry hours annually.

Scenario 2 — An Electrician Craft Subcontractor Facing the Receiving Obligation

A small electrical contracting company with 8 employees works exclusively as a subcontractor for two regional main contractors. Its turnover is €900,000 excl. VAT annually, composed 100% of works subject to VAT reverse charge.

Although its obligation to issue is deferred (micro-enterprise), it has been subject to the obligation to receive from September 2026. Its contracting authorities now issue their service orders and purchase orders in structured format. The electrician has subscribed to a lightweight SaaS electronic invoicing solution (approximately €30 per month) allowing them to:

• Receive and archive incoming flows from their contracting authorities.
• Generate their own monthly statements in Factur-X with pre-configured VAT reverse charge.
• Automatically transmit data to their accountant.

The estimated time saving is 3 to 4 hours per month on invoicing, with near-total reduction of VAT errors.

Scenario 3 — A Real Estate Developer as Job Site Coordinator

A real estate developer managing annually 5 to 8 new construction projects (residential buildings) coordinates on average 30 intervening companies per job site. They are the project owner and, as such, must receive electronic invoices from all their general contractors, who themselves receive the statements from their subcontractors.

The developer has deployed a PDP with a works contract management module allowing them to automatically reconcile each received invoice with the initial contract, verify the conformity of the retention of guaranty (5%) and detect attempts to invoice outside the contractual scope. It has reduced its disputed payment instances by 40% in 6 months thanks to the automated traceability of flows.

Conclusion

The electronic invoicing reform represents a structuring turning point for the construction sector. Between VAT reverse charge, the management of work progress statements, retention of guaranty and multi-level subcontracting chains, construction enterprises face one of the most demanding compliance transitions of this reform. Anticipating now — by choosing an appropriate PDP, by training accounting teams and by imposing standards on subcontractors — is the only way to avoid invoice rejections and costly tax disputes.

Certyneo supports construction enterprises in their transition to compliant electronic invoicing, combining qualified electronic signature, Factur-X generation and archiving with probative value. Discover our offers and get started with no commitment by consulting our pricing or by testing our compliance audit.