Reduction of the French VAT Exemption Threshold: What Lies Ahead?

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The 2025 French Finance Act introduced a significant change by setting a single VAT exemption threshold at €25,000 in turnover. This reform aims to level the playing field between businesses operating without VAT and those required to charge VAT for similar services or work, thereby addressing competitive imbalances.

Due to varied feedback from stakeholders, the government plans to propose modifications to this measure within the 2025 Finance Act. Meanwhile, the implementation of the reform has been put on hold until the 2026 Budget review. This pause allows for further discussions with industry representatives and lawmakers to develop suitable solutions to the concerns raised.

Once the revised threshold is enforced, affected businesses will be required to:

  • Include VAT on their invoices;

  • Properly declare and account for the VAT collected;

  • Perform any necessary VAT-related adjustments.