VAT exemption
Verified 28 February 2025 - Legal and Administrative Information Directorate (Prime Minister), Ministry of Finance
Introduction of the single VAT exemption threshold
The 2025 budget introduced a single VAT-based exemption threshold of €25,000 of turnover from 1er March 2025. The Ministry of Economy has suspended this measure up to 1er june 2025 to work with professional federations and parliamentarians and propose adaptations.
The exemption from VAT is a system which exempts companies from the declaration and payment of VAT on supplies or sales they make. This tax regime applies to all companies established in France or in another EU Member State whose turnover (turnover) for the previous year does not exceed certain thresholds.
Company established in France
The VAT-based exemption reduces tax obligations: under this system, no VAT declaration is required. In return, it is not possible to deduct VAT on business purchases made for the purpose of the activity.
In order to benefit from the VAT exemption system, the company's turnover must not exceed certain thresholds.
These thresholds differ according to the activity carried out.
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Commercial and accommodation activity
In order to benefit from the VAT exemption, the company must be in one of the following situations:
- The turnover of thecalendar year preceding (N-1) is less than or equal to €85,000.
- Turnover in the current calendar year (N) is less than or equal to €93,500.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company has just started its activity, it must adjust its turnover in the year in which it was created in proportion to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
A company has a turnover of €82,000 in 2024. The turnover threshold not to be exceeded is €85,000, it may therefore benefit from the exemption on a VAT basis.
The following year, it achieved a turnover of €90,500. The tolerance threshold not to be exceeded in 2025 shall be €93,500. For the year 2025, it exceeds the basic threshold for exemption from VAT (€85,000) but it remains below the tolerance threshold of €93,500. As the company’s turnover in the previous year was below the basic threshold, it continues to benefit from the VAT exemption.
If the company had started its business on 14 May 2024 and had achieved a turnover of €82,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated on a pro rata basis of operating time is equal to the company's CA multiplied by the number of days in a year and divided by the number of days between the company's creation date and the end of the year: (€82,000 x 365)/232 = €129,009.
The pro-rated turnover of the company is greater than €93,500. Thus, it cannot benefit from the VAT exemption for the year 2025.
Service Delivery Activity
To be eligible for the VAT exemption, it must be in one of the following situations:
- The turnover of thecalendar year preceding (N-1) is less than or equal to €37,500.
- Turnover in the current calendar year (N) is less than or equal to €41,250.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day
If the company comes from start business, it must adjust its turnover in the year in which it was created in proportion to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
A company has a turnover of €24,000 in 2024. The basic turnover threshold not to be exceeded is €37,500 thus, it can benefit from the exemption on a VAT basis.
The following year, it achieved a turnover of €38,500. The tolerance threshold not to be exceeded in 2025 shall be €41,250. For the year 2025, it exceeds the basic threshold for exemption from VAT (€37,500 ) but it remains below the tolerance threshold €41,250. As the company’s turnover in the previous year was below the basic threshold, it continues to benefit from the VAT exemption.
If the company had started its business on 14 May 2024 and had achieved a turnover of €27,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated pro rata to the operating time is equal to the company's CA multiplied by the number of days in 1 year and divided by the number of days between the company's creation date and the end of the year: (€27,000 x 365)/232 = €42,478.
The pro-rated turnover of the company is greater than €41,250. Thus, it cannot benefit from the VAT exemption for the year 2025.
Liberal activity (except lawyer)
In order to benefit from the VAT exemption, the company must be in one of the following situations:
- The turnover of thecalendar year preceding (N-1) is less than or equal to €37,500
- Turnover in the current calendar year (N) is less than or equal to €41,250.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
A company has a turnover of €24,000 in 2024. The basic turnover threshold not to be exceeded is €37,500 thus, it can benefit from the exemption on a VAT basis.
The following year, it achieved a turnover of €38,500. The tolerance threshold not to be exceeded in 2025 shall be €41,250. For the year 2025, it exceeds the basic threshold for exemption from VAT (€37,500 ) but it remains below the tolerance threshold €41,250. As the company’s turnover in the previous year was below the basic threshold, it continues to benefit from the VAT exemption.
If the company had started its business on 14 May 2024 and had achieved a turnover of €27,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated pro rata to the operating time is equal to the company's CA multiplied by the number of days in 1 year and divided by the number of days between the company's creation date and the end of the year: (€27,000 x 365)/232 = €42,478.
The pro-rated turnover of the company is greater than €41,250. Thus, it cannot benefit from the VAT exemption for the year 2025.
Lawyer
The legal profession is a regulated profession. Thus, there are special conditions of access and exercise. Most of the activities carried out by the lawyer are regulated (postulation, pleadings, consultations, drafting of legal acts). It may also carry out ancillary activities which are not regulated (e.g. courses in training centers).
Thresholds for exemption from VAT differ if the activity is regulated or not. It is important to keep accounts showing the different categories of revenue in order to identify the turnover generated by each category.
For regulated activities
In order to benefit from the VAT exemption, the company must be in one of the following situations:
- The turnover of thecalendar year previous (N-1) less than or equal to €50,000
- Turnover in the current calendar year (N) is less than or equal to €55,000.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
For non-regulated activities
To be eligible for the VAT exemption, it must be in one of the following situations:
- Turnover in the previous calendar year (N-1) is less than or equal to €35,000.
- Turnover in the current calendar year (N) is less than or equal to €38,500. If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
The company has a turnover of €13,000 for its regulated activities in 2024. The basic turnover threshold not to be exceeded is €35,000. Thus, it can benefit from the exemption on a VAT basis.
If the company had started its business on 14 May 2024 and had achieved a turnover of €13,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated pro rata to the operating time is equal to the company's CA multiplied by the number of days in 1 year and divided by the number of days between the company's creation date and the end of the year: (€13,000 x 365)/232 = €20,453.
The pro-rated turnover of the company is less than €35,000, so it can benefit from the VAT exemption in 2025.
Author of a work of the mind or performer (and his successors in title)
The author of a work of the mind or the performer may have different types of income. The thresholds for the exemption on a base are different in the case of activities involving the supply of works and the assignment of copyright or other activities.
It is important to keep accounts showing the different categories of income in order to identify the turnover generated by each category.
For the supply of works and assignment of copyright:
In order to benefit from the VAT exemption, one must be in one of the following situations:
- The turnover of thecalendar year preceding (N-1) is less than or equal to €50,000.
- Turnover in the current calendar year (N) is less than or equal to €55,000.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
For other activities:
In order to benefit from the VAT exemption, one must be in one of the following situations:
- Turnover in the previous calendar year (N-1) is less than or equal to €35,000.
- Turnover in the current calendar year (N) is less than or equal to €38,500.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
The company has a turnover of €13,000 for its regulated activities in 2024. The basic turnover threshold not to be exceeded is €35,000it can thus benefit from the exemption on a VAT basis.
If the company had started its business on 14 May 2024 and had achieved a turnover of €13,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated pro rata to the operating time is equal to the company's CA multiplied by the number of days in 1 year and divided by the number of days between the company's creation date and the end of the year: (€13,000 x 365)/232 = €20,453.
The pro-rated turnover of the company is less than €35,000, so it can benefit from the VAT exemption in 2025.
Warning
The 2025 budget introduced a single VAT-based exemption threshold of €25,000 of turnover from 1er March 2025. The Ministry of Economy has suspended this measure up to 1er june 2025 to work with professional federations and parliamentarians and propose adaptations.
VAT exemption: what developments in 2025?
Directorate of Legal and Administrative Information (Dila) - Prime Minister
Pour en savoir plus
The exemption from VAT applies to sales and services where the company does not exceed certain turnover thresholds. However, there are a few transactions for which VAT exemption is granted does not apply.
These operations are as follows:
- Real estate transaction for the purpose of producing or delivering buildings (this does not concern real estate works)
- Real estate transaction intended to carry out on its own the rehabilitation of rental housing renovated by landlords (this does not concern real estate works)
- Transaction carried out by a farmer or a landlord of rural goods who has opted for his transactions to be subject to VAT
- Transaction subject to VAT because of an option or authorization (removal and treatment of waste, transaction connected with a banking activity, etc.
- Intra-Community supply of new means of transport.
To learn more about these operations, you can visit the Official Fiscal Bulletin page - Bofip dedicated to the subject.
The consequences of the exemption from VAT vary according to whether trade takes place in France, within or outside the EUEU (EU).
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Exchanges in France
As a professional who French base franchise, the company must invoice its services or sales made in France without VAT, in other words excluding tax (HT).
The mention VAT not applicable - Article 293b of CGI: titleContent must appear on each invoice. If this is not indicated, the company is liable to a tax adjustment for non-compliance with administrative formality in the event of a tax inspection.
By benefiting from the VAT exemption scheme, the company is exempted from monthly or quarterly VAT returns.
On the other hand, it cannot deduct VAT from its purchases (goods or services) made in the course of its professional activity. To be able to deduct VAT on business purchases, the company must opt for the actual VAT system.
Trade in the European Union
Prior notification to the administration
As a company established in France, it is possible to apply for exemption from VAT in one or more Member States of the European Union.
To do this, prior notification must be sent to the French administration. This prior notification shall specify the following information:
- Name, activity, legal form, postal and e-mail addresses
- Individual identification numbers in each EU Member State
- The Member State(s) of the European Union in which the trader intends to make use of the exemption
- Total amount of services provided in France and in each of the other EU Member States since 1 January of the current year, in the previous calendar year and in the penultimate calendar year.
Such prior notification shall be updating in case of change of this information. For example, to use a State other than those indicated in the prior notification or, conversely, to stop applying the duty-free regime in one or more of those Member States.
Company The French administration shall communicate its individual identification number for the duty-free arrangements within 35 days which follow the notification or update of the notification except in specific cases (suspicion of fraud or tax evasion) or it is necessary to extend this period.
Declarations to the administration
A company which is exempt from VAT in another Member State of the European Union must carry out a statement containing the following information:
- Individual identification number for the exemption scheme
- Total amount of sales of goods and services made in France during the calendar quarter. If no sale or service has been made in France, please indicate 0
- Total amount of sales of goods and services made in each Member State of the European Union during the calendar quarter. If no sale or supply has been made in one of these States, the following must be indicated: 0. Sales made in a Member State where the company does not benefit from the exemption from VAT must also be indicated.
This information must be forwarded to the French administration in the one-month period from the end of the calendar quarter.
FYI
Where the taxable trader does not comply with that one-month period from the end of the calendar quarter, he must register for VAT in France and submit VAT returns there.
When the French company has a annual turnover in the European Union which exceeds €100,000, she has 15 days to inform her EIS. It shall also provide the following information:
- The total amount of sales of goods and services made in France between the beginning of the current calendar quarter and the date on which they were exceeded.
- The total amount of sales of goods and services made in each Member State of the European Union between the beginning of the current calendar quarter and the date on which they were exceeded. Sales made in a Member State where the company does not benefit from the exemption from VAT must also be indicated.
In this case, the French administration disables the company identification number.
The company must also inform the administration and to amend its prior declaration in the following situations:
- The Member State in which the relief is granted has notified her that she can no longer benefit from the relief or that the relief no longer applies in that State.
- It wishes to withdraw from the VAT exemption system.
- It has ceased operations.
Consequences of the VAT exemption system
In case of sales within the European Union, the company does not charge VAT to its clients (professional or private).
When it makes purchases of goods, it shall not be subject to VAT as long as the total amount of its acquisitions does not exceed €10,000 year round. As soon as this threshold is exceeded, the company is subject to payment of VAT.
On the other hand, when it purchases provision of services, it must to pay VAT it doesn't matter how much.
As the company is subject to the exemption from VAT, it cannot deduct VAT on its purchases. To be able to deduct VAT on her business purchases, she must opt for the actual VAT system.
For more information on VAT applicable to trade within the European Union, see the corresponding card).
Trade outside the European Union
As a professional who carries out exports, the company does not invoice no VAT whether or not it is exempt from VAT.
When performing imports, it must to pay VAT whether or not it is exempt from VAT. On the other hand, it cannot deduct the VAT it paid on its imports free of VAT. To be able to deduct VAT on her business purchases, she must waive the franchise VAT-based.
For more information on the VAT applicable to imports and exports, see the corresponding card.
FYI
We must be vigilant about compulsory particulars of invoices that the company sends and receives. In the event of non-conformity of the invoice, the company may be penalized in the event of a tax inspection.
A company that meets the turnover thresholds (CA) to benefit from the VAT exemption at the possibility of opting to be subject to VAT.
Under the VAT exemption system, the company does not have the possibility to deduct VAT on its business purchases and payments. The option to pay VAT may be an advantageous option for those considering investments, for example.
The option to pay VAT must be made in writing to the tax office (SIE) of the company's registered office.
The option takes effect immediately on 1er day of the month in which it is declared.
It shall be valid for a period of 2 calendar years and is tacit renewal.
For give up in the case of the option, the company must denounce it at the end of a two-year period. However, if the option has been granted a VAT credit refund, it must be extended for two years and it cannot be waived during those two years.
The option must be taken from the company Tax Office (SIE) on which the company depends:
Online tax account for professionals (EFI mode)
Example :
A company opts to be subject to VAT on July 4, 2024. It will then be subject to VAT on 1er July 2024 to December 31, 2025.
When the company exceeds certain turnover thresholds (turnover thresholds), it can no longer benefit from the VAT exemption scheme. These turnover thresholds depend on the activity carried out:
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Commercial and accommodation activity
Since 1er January 2025, when turnover exceeds basic threshold of €85,000, the company is subject to VAT as of 1er January of the following year.
But if the 2025 turnover exceeds tolerance threshold of €93,500, the exemption from VAT shall cease to apply from 1er overshoot day (no longer on the first day of the month in which the excess occurs).
FYI
When turnover in 2024 exceeded €85,000, the exemption from VAT shall cease to apply from 1er January 2025.
Service Delivery Activity
When turnover exceeds basic threshold of €37,500, the company is subject to VAT as of 1er January of the following year.
But if the 2025 turnover exceeds tolerance threshold of €41,250, the exemption from VAT shall cease to apply from 1er overshoot day (no longer on the first day of the month in which the excess occurs).
FYI
When turnover in 2024 exceeded €37,500, the exemption from VAT shall cease to apply from 1er January 2025.
Liberal activity (except lawyer)
If the base threshold is exceeded €37,500, the company is subject to VAT as of 1er January of the following year.
If the turnover exceeds tolerance threshold of €41,250, the company may no longer benefit from the exemption from VAT as from 1er day of the month of overrun (and no longer on the first day of the month in which the excess occurs).
Lawyers
Where the company's turnover for its regulated activities exceeds the threshold of €50,000, it may no longer benefit from the exemption on a VAT basis as from 1er January of the following year. However, if its turnover exceeds the tolerance threshold of €55,000, it may no longer benefit from the exemption from VAT as from 1er overtaking day.
Exceeding the turnover threshold for its unregulated activities of lawyers (e.g. asset management and administration, debt recovery) does not affect the application of the VAT exemption scheme on its regulated activities.
Authors of works of the mind and performers
When the company realizes a turnover for the activities of delivery of your works (authors) and assignment of your rights (performers) that exceeds the threshold of €50,000, she can no longer benefit from the VAT exemption in the following year. However, if its turnover exceeds the tolerance threshold of €55,000, it may no longer benefit from the exemption from VAT as from 1er overtaking day.
Exceeding the turnover threshold for other activities does not affect the application of the VAT exemption regime on the activities of supply of his works (authors) and assignment of his rights (performers).
The exit from the regime the exemption from VAT has the following effects:
- VAT assessment of transactions carried out starting on 1er overshoot day. Thus, it has to charge VAT to its customers. Invoices issued after this date must indicate the amount of VAT that has been charged to customers
- The company is now entitled to deduction of VAT on his business purchases. It can ask the tax authorities to deduct the VAT paid on its business purchases at the time of its VAT return on 1er month of overrun.
- The company must apply for intra-Community VAT number and indicate it on his invoices. To obtain her intra-Community VAT number, she must contact the company Tax Office (SIE) on her business account at impots.gouv.fr. It must inform him of its withdrawal from the VAT exemption scheme:
Company established in Europe (excluding France)
A company established outside France in a Member State of the European Union may benefit from exemption from VAT in respect of transactions which it carries out in France if it fulfills the following conditions:
- Have a turnover within the European Union of less than or equal to €100,000 the previous year and the current year
- Notify the Member State in which it is established of its intention to make use of the French franchise by means of a prior notification or an update of that notification
- Meet the VAT exemption thresholds. These thresholds differ according to the activity carried out.
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Commercial and accommodation activity
In order to benefit from the VAT exemption, the company must be in one of the following situations:
- The turnover of thecalendar year preceding (N-1) is less than or equal to €85,000
- Turnover in the current calendar year (N) is less than or equal to €93,500.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company has just started its activity, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
A company has a turnover of €82,000 in 2024. The turnover threshold not to be exceeded is €85,000, it may therefore benefit from the exemption on a VAT basis.
The following year, it achieved a turnover of €95,500. The tolerance threshold not to be exceeded in 2025 shall be €93,500. For the year 2025, it exceeds the basic threshold for exemption from VAT (€85,000) but it remains below the tolerance threshold of €93,500. As the company’s turnover in the previous year was below the basic threshold, it continues to benefit from the VAT exemption.
If the company had started its business on 14 May 2024 and had achieved a turnover of €82,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated on a pro rata basis of operating time is equal to the company's CA multiplied by the number of days in a year and divided by the number of days between the company's creation date and the end of the year: (€82,000 x 365)/232 = €129,009.
The pro-rated turnover of the company is greater than €93,500. Thus, it cannot benefit from the VAT exemption for the year 2025.
Service Delivery Activity
To be eligible for the VAT exemption, it must be in one of the following situations:
- The turnover of thecalendar year preceding (N-1) is less than or equal to €37,500
- Turnover in the current calendar year (N) is less than or equal to €41,250.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
A company has a turnover of €24,000 in 2024. The basic turnover threshold not to be exceeded is €37,500 thus, it can benefit from the exemption on a VAT basis.
The following year, it achieved a turnover of €38,500. The tolerance threshold not to be exceeded in 2025 shall be €41,250. For the year 2025, it exceeds the basic threshold for exemption from VAT (€37,500 ) but it remains below the tolerance threshold €41,250. As the company’s turnover in the previous year was below the basic threshold, it continues to benefit from the VAT exemption.
If the company had started its business on 14 May 2024 and had achieved a turnover of €27,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated pro rata to the operating time is equal to the company's CA multiplied by the number of days in 1 year and divided by the number of days between the company's creation date and the end of the year: (€27,000 x 365)/232 = €42,478.
The pro-rated turnover of the company is greater than €41,250. Thus, it cannot benefit from the VAT exemption for the year 2025.
Liberal activity (except lawyer)
In order to benefit from the VAT exemption, the company must be in one of the following situations:
- The turnover of thecalendar year preceding (N-1) is less than or equal to €37,500.
- Turnover in the current calendar year (N) is less than or equal to €41,250.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
A company has a turnover of €24,000 in 2024. The basic turnover threshold not to be exceeded is €37,500 thus, it can benefit from the exemption on a VAT basis.
The following year, it achieved a turnover of €38,500. The tolerance threshold not to be exceeded in 2025 shall be €41,250. For the year 2025, it exceeds the basic threshold for exemption from VAT (€37,500 ) but it remains below the tolerance threshold €41,250. As the company’s turnover in the previous year was below the basic threshold, it continues to benefit from the VAT exemption.
If the company had started its business on 14 May 2024 and had achieved a turnover of €27,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated pro rata to the operating time is equal to the company's CA multiplied by the number of days in 1 year and divided by the number of days between the company's creation date and the end of the year: (€27,000 x 365)/232 = €42,478.
The pro-rated turnover of the company is greater than €41,250. Thus, it cannot benefit from the VAT exemption for the year 2025.
Lawyer
The legal profession is a regulated profession. Thus, there are special conditions of access and exercise. Most of the activities carried out by the lawyer are regulated (postulation, pleadings, consultations, drafting of legal acts). It may also carry out ancillary activities which are not regulated (e.g. courses in training centers).
Thresholds for exemption from VAT differ if the activity is regulated or not. It is important to keep accounts showing the different categories of revenue in order to identify the turnover generated by each category.
For regulated activities
In order to benefit from the VAT exemption, the company must be in one of the following situations:
- The turnover of thecalendar year preceding (N-1) is less than or equal to €50,000.
- Turnover in the current calendar year (N) is less than or equal to €55,000.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
For non-regulated activities
To be eligible for the VAT exemption, it must be in one of the following situations:
- Turnover in the previous calendar year (N-1) is less than or equal to €35,000.
- Your current calendar year (N) revenue is less than or equal to €38,500.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
The company has a turnover of €13,000 for its regulated activities in 2024. The basic turnover threshold not to be exceeded is €35,000. Thus, it can benefit from the exemption on a VAT basis.
If the company had started its business on 14 May 2024 and had achieved a turnover of €13,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated pro rata to the operating time is equal to the company's CA multiplied by the number of days in 1 year and divided by the number of days between the company's creation date and the end of the year: (€13,000 x 365)/232 = €20,453.
The pro-rated turnover of the company is less than €35,000, so it can benefit from the VAT exemption in 2025.
Author of a work of the mind or performer (and his successors in title)
The author of a work of the mind or the performer may have different types of income. The thresholds for the exemption on a base are different in the case of activities involving the supply of works and the assignment of copyright or other activities.
It is important to keep accounts showing the different categories of income in order to identify the turnover generated by each category.
For the supply of works and assignment of copyright:
In order to benefit from the VAT exemption, one must be in one of the following situations:
- The turnover of thecalendar year preceding (N-1) is less than or equal to €50,000.
- Turnover in the current calendar year (N) is less than or equal to €55,000.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
For other activities:
In order to benefit from the VAT exemption, one must be in one of the following situations:
- Turnover in the previous calendar year (N-1) is less than or equal to €35,000.
- Turnover in the current calendar year (N) is less than or equal to €38,500.
If the company exceeds the threshold, it is subject to VAT on 1er overtaking day.
If the company comes from start business, it must adjust its turnover in the year in which it was created according to its operating time to determine whether it is eligible for the VAT exemption in the following year.
Example :
The company has a turnover of €13,000 for its regulated activities in 2024. The basic turnover threshold not to be exceeded is €35,000it can thus benefit from the exemption on a VAT basis.
If the company had started its business on 14 May 2024 and had achieved a turnover of €13,000 between may 14, 2024, and december 31, 2024, the company's 2024 revenue should have been prorated based on its operating time. Thus, for the year 2024, the CA calculated pro rata to the operating time is equal to the company's CA multiplied by the number of days in 1 year and divided by the number of days between the company's creation date and the end of the year: (€13,000 x 365)/232 = €20,453.
The pro-rated turnover of the company is less than €35,000, so it can benefit from the VAT exemption in 2025.
Depending on how the company indicates that it wishes to benefit from the French exemption, the VAT-based exemption scheme applies at one of the following times:
- Prior notification : From date of communication its individual identification number by the competent authorities of the State in which it is established
- Pre-notification update : From confirmation date its individual identification number for updating the prior notification.
The exemption from VAT applies to sales and services where the company does not exceed certain turnover thresholds. However, there are a few transactions for which VAT exemption is granted does not apply.
These operations are as follows:
- Real estate transaction for the purpose of producing or delivering buildings (this does not concern real estate works)
- Real estate transaction for the purpose of carrying out on your own renovation work on rental housing renovated by landlords (this does not concern real estate work)
- Transaction carried out by a farmer or a landlord of rural goods who has opted for his transactions to be subject to VAT
- Transaction subject to VAT because of an option or authorization (removal and treatment of waste, transaction connected with a banking activity, etc.)
- Intra-Community supply of new means of transport.
To learn more about these operations, you can visit the Bofip dedicated to the subject.
The consequences of the exemption from VAT vary according to whether trade takes place in France, within or outside the EUEuropean Union.
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Exchanges in France
As a professional who basic deductible, the company must invoice its services or sales without VAT, in other words excluding tax (HT).
The mention VAT not applicable - Article 293b of CGI: titleContent must appear on each invoice. If this is not indicated, the company is liable to a tax adjustment for non-compliance with administrative formality in the event of a tax inspection.
By benefiting from the VAT exemption scheme, the company is exempted from monthly or quarterly VAT returns.
On the other hand, it cannot deduct VAT from its purchases (goods or services) made in the course of its professional activity. To be able to deduct VAT on business purchases, the company must opt for the actual VAT system.
FYI
We must be vigilant about compulsory particulars of invoices that the company sends and receives. In the event of non-conformity of the invoice, the company may be penalized in the event of a tax inspection.
Trade in the European Union
The French VAT exemption is not applicable to trade within the European Union. To find out which rules apply, you have to ask the Member companies of the European Union with which you wish to trade.
Trade outside the European Union
France's VAT exemption does not apply to imports and exports made by a company established within an EU Member State with a country outside the EU. To find out the applicable VAT rules, you must ask your country of establishment.
A company may opt to be subject to VAT even though it meets the turnover thresholds (CA) to benefit from the VAT exemption scheme. This option for VAT allows him in particular to deduct VAT from business purchases.
The option to pay VAT is made with the company Tax Office (SIE) on which the company depends. In particular, she can contact him by email on her business account on the website impots.gouv.fr:
Online tax account for professionals (EFI mode)
The option takes effect immediately on 1er day of the month in which it is declared.
It shall be valid for a period of 2 calendar years and is tacit renewal.
For give up in the case of the option, the company must denounce it at the end of a two-year period. However, if the option has been granted a VAT credit refund, it must be extended for two years and it cannot be waived during those two years.
The option must be taken from the company Tax Office (SIE) on which the company depends:
Online tax account for professionals (EFI mode)
Example :
A company opts to be subject to VAT on July 4, 2024. It will then be subject to VAT on 1er July 2024 to December 31, 2025.
The turnover threshold (turnover threshold) above which the company is no longer subject to the VAT exemption scheme differs according to the activity carried on:
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Commercial and accommodation activity
The company established within the European Union no longer qualifies for exemption from VAT if one of its turnover exceeds the following thresholds:
- Turnover from operations in France : if the base threshold is exceeded €85,000, the company is subject to VAT from 1er January of the following year. If its turnover exceeds the tolerance of €93,500, the company shall cease to benefit from the exemption from VAT as from 1er day of overtaking.
- Turnover from transactions within the European Union (including in France): if the turnover within the European Union exceeds the threshold of €100,000, it shall no longer benefit from the exemption from VAT starting on 1er overtaking day.
Service Delivery Activity
The company established within the European Union no longer qualifies for exemption from VAT if one of its turnover exceeds the following thresholds:
- Turnover from operations in France : if the base threshold is exceeded €37,500, the company is subject to VAT from 1er January of the following year. If its turnover exceeds the tolerance of €41,250, the company shall cease to benefit from the exemption from VAT as from 1er day of overtaking.
- Turnover from transactions within the European Union (including in France): if the turnover within the European Union exceeds the threshold of €100,000, it shall no longer benefit from the exemption from VAT as from 1er day of overtaking.
Liberal activity (except lawyer)
The company established within the European Union no longer qualifies for exemption from VAT if one of its turnover exceeds the following thresholds:
- Turnover from operations in France : if the base threshold is exceeded €37,500, the company is subject to VAT from 1er January of the following year. If its turnover exceeds the tolerance of €41,250, the company shall cease to benefit from the exemption from VAT as from 1er day of overtaking.
- Turnover from transactions within the European Union (including in France): if the company's turnover within the European Union exceeds the threshold of €100,000, it shall no longer benefit from the exemption from VAT starting on 1er overtaking day.
Lawyers
The company established within the European Union no longer qualifies for exemption from VAT if one of its turnover exceeds the following thresholds:
- Turnover from operations in France : if the base threshold is exceeded €50,000, the company is subject to VAT from 1er January of the following year. If its turnover exceeds the tolerance of €55,000, the company shall cease to benefit from the exemption from VAT as from 1er day of overtaking.
- Turnover from transactions within the European Union (including in France): if the company's turnover in the European Union exceeds the threshold of €100,000, it shall no longer benefit from the exemption from VAT as from 1er day of overtaking.
Authors of works of the mind and performers
When the company realizes a turnover for activities of delivery of his works (authors) and assignment of his rights (performers) exceeding the threshold of €50,000, the company is subject to VAT from 1er January of the following year. However, if its turnover exceeds €55,000, the company shall cease to benefit from the exemption from VAT as from 1er day of overtaking.
Exceeding the turnover threshold for other activities has no effect on the application of the VAT exemption regime on the activities of supply of his works (authors) and assignment of his rights (performers).
The withdrawal of the exemption from VAT shall have the following effects:
- VAT assessment of transactions carried out starting on 1er overshoot day. Thus, it has to charge VAT to its customers. Invoices issued after this date must indicate the amount of VAT that has been charged to customers
- The company is now subject to the rules applicable to intra-Community VAT. For more information on the subject, you can consult our corresponding sheets (trade in goods or exchange of services)
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Suspension scheme: imports and exports
VAT exemption