The French Finance Act 2025 reformed the VAT exemption scheme by creating a unique threshold of €25,000 on turnover.
The aim of this reform is to reduce distortions of competition between businesses operating on a VAT-free basis and those subject to VAT for the same services or work.
To take account of the diversity of positions expressed, the French Government will propose adjustments to the measure in the 2025 Finance Act.
While waiting for these adjustments, the Government has decided to suspend the reform until the 2026 Budget is examined, so that it can work with the stakeholders and members of parliament to find appropriate responses to the concerns expressed during the consultation.
In any event, entrepreneurs who become newly liable for VAT because of this new threshold should, as soon as it is implemented:
- Issue invoices including VAT;
- Account for this VAT where applicable;
- Carry out any VAT adjustments.
