Micro-Enterprise VAT in France: Understanding Thresholds and the VAT Exemption Scheme

The VAT exemption scheme ("franchise en base de TVA") is the default regime that applies when you create your micro-enterprise. In practical terms, as long as your turnover remains below certain thresholds, you do not charge VAT to your customers. This means you do not collect VAT on behalf of the French tax authorities, you do not need to file VAT returns, and your accounting remains relatively simple.

On the other hand, you cannot recover the VAT paid on your business expenses. If you invest in equipment or software, you pay VAT just like a private individual, without the possibility of deducting it. This is an important consideration if your business requires significant investments.

Your invoices must also include a mandatory statement indicating that you benefit from this VAT exemption regime. Failing to include this information may result in a penalty, so it is worth checking now that your invoice templates are fully compliant.

For service activities, the thresholds are different. The standard threshold is €37,500, while the higher threshold is €41,250. Many freelancers, consultants, and professional service providers operate around these figures, making careful monitoring especially important.

Keep in mind that these VAT exemption thresholds are completely separate from the turnover limits applicable to the micro-tax regime, which are set at much higher levels. You can exceed the VAT threshold while still remaining a micro-entrepreneur.

Once the higher threshold has been exceeded, several actions will be required.

• Inform the Business Tax Department (Service des Impôts des Entreprises) responsible for your business, generally through your online professional account.
• Apply for an intra-community VAT number, which is required for issuing your new invoices.
• Update your quotation and invoice templates to include all mandatory VAT information.
• Notify your customers of the change, particularly private individuals who may see your prices increase.

These VAT-related procedures for micro-enterprises require some organization, but they remain manageable without specialist support if you address them in the proper order.

Yes. You do not have to wait until you exceed a threshold. You can opt into VAT voluntarily as a micro-entrepreneur, which may be beneficial if the majority of your clients are VAT-registered businesses. In that case, they can recover the VAT charged on your invoices, and you can deduct the VAT paid on your own business purchases.

This option deserves careful consideration based on your client base and business expenses. For businesses that primarily serve private consumers, the VAT exemption scheme often remains the more attractive option because it allows you to offer more competitive prices.

Keeping track of your turnover thresholds and identifying the right time to switch to VAT requires constant attention, something that is not always compatible with the day-to-day demands of running a business. This is exactly what 2iCS offers through its Micro-Enterprise Management service.

You remain fully in control of your business while 2iCS handles the monitoring of your thresholds, your monthly declarations, and your interactions with URSSAF regarding VAT and the Business Property Tax (CFE).

This service is particularly suited to micro-entrepreneurs who prefer to focus their energy on their core business rather than administrative paperwork. It becomes especially valuable as soon as administrative tasks begin taking up too much of your time.