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

Why Construction is a Special Sector in the Electronic Invoicing Reform

Since the implementation of the mandatory timeline for large enterprises in September 2026, electronic invoicing is being progressively imposed across the entire French economic landscape. However, the construction 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 statements, VAT reverse charge and public procurement governed by specific rules, construction companies must combine regulatory compliance with the operational reality of the job site.

According to the French Federation of Building (FFB), more than 60% of construction projects involve at least one subcontractor. In this context, each invoicing flow — whether it flows from the subcontractor to the main contractor or from the main contractor to the project owner — must now pass through an certified Partner Dematerialization 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.

The mandatory timeline for construction companies

The timeline defined by Ordinance no. 2021-1190 of 15 September 2021 and clarified by the 2024 Finance Act applies to construction companies according to their size:

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

For subcontractors, often craft-based micro-enterprises, this receiving obligation is immediate and concrete: they must equip themselves with a compatible solution to avoid blocking the flows of their principal contractor.

Electronic invoice formats accepted in construction

Construction can use the three structured formats accepted by the administration:

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

The choice of format must be coordinated with the main enterprise or the project owner before the project begins.

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

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

How VAT Reverse Charge Modifies the Structure of Electronic Invoicing

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

• The legal mention: "Reverse Charge — Article 283-2 nonies of the CGI"
• The applicable VAT rate (even if the amount is nil 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

Within 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 can 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 rollout.

Strengthened Declarative Obligations Through E-Reporting

VAT reverse charge in subcontracting creates obligations to transmit information to the tax authorities via the e-reporting mechanism. The main contractor who applies reverse charge must declare this transaction in their VAT return (CA3) and, if applicable, transmit transaction data to the administration 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 declarative practices.

Work Statements: Construction Specificity and Electronic Processing

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

Work Statement and Electronic Invoice: How Are They Related?

According to the Directorate General of Public Finance (DGFiP), a work statement can be treated as a periodic invoice as long as it meets the criteria defined in Article 289 of the CGI: identification of the parties, description of services, amount excluding VAT, VAT rate and amount (or mention of reverse charge), date and sequential number.

In construction practice, this means that each monthly 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 mention of reverse charge if the subcontractor is subject to the mechanism of Article 283-2 nonies.
3. Be accompanied by the final general statement (DGD) at the end of the project, which settles all intermediate statements.

Managing Retention Guarantees in Construction Electronic Invoices

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

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

Choosing Your PDP and Tools: Specific Issues for Construction Companies

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

Selection Criteria for a PDP Suited to Construction

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

• Native support for construction activity codes: the PDP must allow for entry of NACR codes (Construction Activities Classification) in structured invoices.
• VAT reverse charge support: the PDP must automatically manage construction-specific VAT rules (reduced rate of 10% 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 warranty). The PDP must offer archiving compliant with NF Z42-013 standard.

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

Integrating Electronic Signature into Construction Workflows

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, amendments, acceptance reports. The legal value of electronic signature is fully recognized for these documents as long as it complies with the eIDAS regulation. In construction, where disputes over work execution 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 rests on a stack of legislative and regulatory texts that must be mastered.

French General Tax Code (CGI)

• Article 289: defines the mandatory information for any invoice issued by a VAT-taxable person, now applicable to structured electronic invoices.
• Article 283, 2 nonies: establishes the VAT reverse charge mechanism for real estate construction work performed by subcontractors. The taxable recipient is liable for VAT in place of the subcontractor.
• Article 289 bis: sets the conditions for using electronic invoicing and the accepted formats.

Ordinance no. 2021-1190 of 15 September 2021: authorizes the government to generalize electronic invoicing between VAT-taxable persons. Clarified by Decree no. 2022-1299 of 7 October 2022.

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

Law no. 71-584 of 16 July 1971: governs the 5% retention guarantee 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): govern electronic signature and electronic seals used to authenticate invoices. Qualified signatures (QES) provide the irrefutable presumption of integrity required for probative archiving.

Modified VAT Directive 2006/112/EC: harmonizes at European level the rules for VAT reverse charge in sectors at risk of fraud, including construction. Article 199 of the directive is the basis for Article 283-2 nonies of the French CGI.

Standard ETSI EN 319 132: 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 compliance 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, result in payment delay and expose the issuer to a tax penalty of 15 € per non-compliant invoice (capped at 15,000 € per fiscal year for issuers, per Article 1737 of the CGI). For construction subcontractors, an error in encoding VAT reverse charge can trigger a VAT reassessment charge to the main contractor, with increases of 10% to 40% depending on the nature of the breach.

Usage Scenarios: Electronic Invoicing in Construction in Practice

Scenario 1 — A mid-market civil engineering company with multiple levels of subcontracting

A public works company generating approximately 80 million euros in annual revenue serves as principal contractor on road projects for local authorities. It works with approximately twenty specialized subcontractors (earthworks, signage, asphalt) of which the majority are SMEs with fewer than 50 employees.

Before the reform, management of monthly work statements was handled by non-structured PDFs and paper purchase orders. Since September 2026, the mid-market company is subject to the issuance 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 rollout: 35% reduction in work statement validation times (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 — A craft-based electrical subcontractor facing the receiving obligation

A craft electrical company with 8 employees works exclusively as a subcontractor for two regional general contractors. Its annual revenue is 900,000 € excluding VAT, composed 100% of work subject to VAT reverse charge.

Although its obligation to issue is deferred (micro-enterprise), it has been subject to the receiving obligation since September 2026. Its principal contractors now issue their service orders and purchase orders in structured format. The craftsperson has subscribed to a lightweight SaaS electronic invoicing solution (approximately 30 €/month) allowing them to:

• Receive and archive incoming flows from principal contractors.
• Generate their own monthly statements in Factur-X with pre-configured VAT reverse charge.
• Automatically transmit data to their accounting professional.

The estimated time savings is 3 to 4 hours per month on invoicing, with an almost complete elimination of VAT errors.

Scenario 3 — A real estate developer coordinating job sites

A real estate developer managing 5 to 8 new construction projects (multifamily residential) annually coordinates an average of 30 service providers per job site. It is the project owner and, as such, must receive electronic invoices from all its general contractors, who themselves receive statements from their subcontractors.

The developer has deployed a PDP with a work contract management module allowing automatic reconciliation of each invoice received with the initial contract, verification of compliance with the retention guarantee (5%) and detection of attempts to invoice outside the contractual scope. It has reduced its disputed payment instances by 40% in 6 months thanks to the automatic traceability of flows.

Conclusion

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

Certyneo supports construction companies in their transition to compliant electronic invoicing by combining qualified electronic signature, Factur-X generation and archiving with probative value. Discover our offers and get started without obligation by consulting our pricing or by testing our compliance diagnostic.