Driving school: prepaid packages, deferred income and VAT

Quick answer. A package paid in advance (for example 20 driving hours, the theory test and the exam presentation) is not revenue on the day it is cashed: the undelivered part must be deferred to deferred income (account 487) and recognised as the services are delivered. VAT applies at the standard 20% rate to car-licence (Group B) lessons, with no professional-training exemption, including under CPF funding. And since 20 February 2026, CPF funding for light-group licences is reserved for jobseekers and co-financed employees.

This article is a technical note on the accounting mechanics of packages and VAT. For the full picture (operating registers, software, instructor payroll, subcontracting), see our complete guide to driving-school accounting and our driving-school sector page.

Driving-school accounting rests on three pillars: recognising revenue as services are delivered, applying the right VAT rate, and anticipating the CPF reform's impact on cash flow. All three tightened in 2026.

Recently, a Paris driving-school director asked us to review his bookkeeping. His mistake: recording a full EUR 2,500 package as revenue on the payment day, with no spreading over the services delivered. The result was overstated first-month revenue and a hidden operational liability (hours still to teach, exams to present, vehicles and instructors to fund).

Why deferred income is mandatory#

The matching principle (French chart of accounts, ANC Regulation 2014-03) requires revenue to be recognised when the service is delivered, not when cash is received. A EUR 2,500 package cashed in January is revenue only for the part actually delivered in January; the rest — often 90 to 95% — has not been earned. At year-end, the undelivered part is credited to account 487 "Deferred income", on the liabilities side of the balance sheet.

It is exactly the logic applied to prepaid memberships and to package-based revenue recognition: cash precedes the service rendered.

Typical entries: a EUR 2,500 net package#

1. Package cashed (January) — the whole amount is first an advance:

2. At year-end, deferring the undelivered part (example: only 2 of about 27 invoiced services delivered):

The delivered part (≈ EUR 185 net) stays as revenue for the year; the rest is deferred. VAT is not part of the deferred-income calculation: it falls due under its own rules and sits in account 44571. The following year, account 487 is reversed as hours are actually taught.

Pitfalls to avoid#

• Including VAT in deferred income: deferred income is on the net amount only.
• Ignoring cancellations and credit notes: a cancelled lesson or abandoned package must be tracked (recognition proportional to hours delivered, credit note for the balance).
• Overlooking package top-ups: if a student adds hours, a new advance is created and follows the same logic.

Driving lessons and theory teaching for the car licence (Group B) are subject to VAT at the standard 20% rate. The ruling BOI-RES-TVA-000151 of 24 July 2024 confirmed it: following a decision of the Court of Justice of the European Union, driving a Group B vehicle is a common skill, not a professional competence. The VAT exemption for professional training (Tax Code art. 261, 4) therefore does not apply.

In practice, holding Qualiopi certification or training-provider status changes nothing for the car licence. A school that had exempted its lessons must stop, on pain of a VAT reassessment. Conversely, heavy-vehicle and transport licences (C, CE, D…) may qualify for the professional-training exemption where a genuine professional purpose is established: this is assessed case by case.

On an invoice, 20% VAT is added to the net price: a EUR 2,500 net package becomes EUR 3,000 including VAT. Advance payments follow the same grammar. Under the VAT franchise (self-employed, below the EUR 37,500 services threshold), no VAT is charged or remitted, but input VAT is not deductible.

Who can fund what#

Since 20 February 2026, CPF funding for light-group licences (A1, A2, B1, B) is reserved for two audiences; heavy-vehicle licences remain open to all.

In all cases, the car licence remains subject to 20% VAT, whether the funding comes from the customer or from the CPF.

Accounting and cash-flow impact#

CPF funding is paid by the National Savings Bank (via the My Training Account platform). In accounting terms, it is not a liability account: it is payment for a service, hence revenue, subject to 20% VAT, recognised on delivery like any package. The reform nonetheless sharply reduces the CPF volume of a typical "general public" Group B school, which calls for a revised forecast and instructor utilisation rate.

• Micro-enterprise (self-employed): cash-basis accounting, no deferred income; the cashed package counts fully as the month's receipts, which distorts monthly analysis. VAT franchise below the services threshold.
• Company (SARL, SAS, EURL): réel regime, deferred income mandatory, 20% VAT above the threshold, profit computed after deferred income.
• School offering heavy-vehicle licences: same deferred-income and VAT rules (20%), but CPF open to all for those licences.

• Recording the package as immediate revenue: the most common error, and the first one reassessed.
• Mixing VAT and net amount in deferred income: deferred income is net of VAT.
• Ignoring the February 2026 CPF reform: the forecast must factor in the drop in Group B CPF volume.
• Poorly tracking cancellations and abandonments: without hour tracking, revenue recognition becomes unmanageable.
• Applying a reduced rate to the car licence: only the standard 20% rate is correct.

Driving-school accounting looks simple — the customer pays, the lesson happens — but three points make it tricky. First, deferred income: a cashed package is not revenue of the day, and neglecting it exposes you to heavy restatements in an audit; we have supported directors forced to rebuild several financial years. Second, VAT: despite Qualiopi, the car licence stays at 20%, and the authorities apply the rule strictly since the 2024 ruling. Third, the February 2026 CPF reform, which drains part of the funding of "general public" schools and forces a revised forecast.

Hayot Expertise guidance. From the outset, set up a package register (hours sold, hours delivered, net amount, VAT, CPF status) and an automated monthly reversal of account 487, for instance in Pennylane or Tiime. Document the 20% rate on every invoice and update your 2026 forecast for the CPF restriction. For the setup, see our bookkeeping and review and tax support services.