France, which has a deeply rooted democracy tradition, is the second-largest economy in the European Union after Germany. In 2020, with 31 companies, it ranked France 5th among the 500 largest companies in the world.
1. The role of the state in the economy
The government of France actively influences the French economy, which is why it is often referred to as a managed economy. In particular, the program of direct control (dirigisme) was extensively implemented by governments between 1944 and 1983. The economy is considered to be relatively broad and dependent on foreign trade and financial markets on average; it got through the financial and economic crisis around 2009 somewhat better than other industrialized countries.
2. A brief overview of the inequality between capital and labor
As the French economist Thomas Piketty notes in his magnum opus Capital in the 21st Century, capital is always more unevenly distributed than labor. Total income inequality decreased in France in the 20th century, but wage inequality remained unchanged.
The main reason for this is an obvious decrease in capital income, according to Piketty. In this context, Piketty follows the inequalities in France in three steps: While income inequality increased sharply from 1945 to 1966-1967, there was a notable decrease between 1968 and 1982-1983. Since 1983 inequalities have increased steadily.
3. Public capital and the transition to E-Invoicing in France
According to Piketty, national wealth is the sum of private and public wealth. Public wealth is determined by subtracting debt from the sum of financial and non-financial assets of the state and/or public institutions. In this regard, the total public capital in France is just under 30 percent of national income. In England, however, it is almost zero.
Despite the presence of the state in the economy, the net wealth of the public sector is very small compared to the wealth of the private sector. On the other hand, the informal economy in France is under the EU average. If we compare Germany and France in the context of the informal economy, the informal economy is declining in Germany while it is increasing in France.
One of the reasons for the growth of the informal economy in France is the delay in the transition to e-Invoicing. In 1998 the practice of e-Invoice was made more obvious and in 2001 the PDF format was introduced in accordance with the EU directive. After these phases, France added obligatory e-Invoicing measures to its 2020 budget in order to combat VAT (Value Added Tax) fraud.
France has been taking some legal measures since 2012 to publicize e-Invoicing. With the Business Modernization Act, the government began receiving electronic invoices for some of its services. The Chorus Factures portal for suppliers was developed for this purpose. The obligation to issue e-invoices for large companies with more than 5000 employees began in 2017 with the B2G approach. From January 1, 2020, the scope of the obligation has expanded to include companies with fewer than 10 employees.
As the obligation to issue e-invoice increased, the Chorus Pro solution, which is mandatory for companies, was introduced. And then public institutions started receiving e-invoices from their suppliers through the Chorus Pro platform. France, which aims to switch from the B2G to the B2B approach in 2023, will require e-reports alongside e-invoices. This commitment will begin in 2023 for large companies, in 2024 for medium-sized companies, and in 2025 for small companies.
4. Melasoft and Compliance Solutions
Melasoft is a global and dynamic company that offers compliance solutions to customers in different regions. Melasoft offers localized compliance solutions to its customers from different countries, such as XRechnung and ZUGFeRD solutions in Germany and Virtual Warehouse and IS ESF systems suitable solutions in Kazakhstan. We also support French taxpayers with Melasoft SAP e-Invoice and e-Report Solution, which is completely integrated with the Chorus Pro portal.