French VAT base exemption: 2026 thresholds and decisions

Up to date as of 12 May 2026. The French VAT base exemption — franchise en base de TVA — is governed by Article 293 B of the General Tax Code (CGI). It allows a business whose prior-year turnover falls below statutory thresholds to neither charge VAT to clients nor recover input VAT on purchases. At Hayot Expertise in Paris, threshold breaches and missing mandatory invoice wording remain among the most common audit triggers in small business files. This article covers applicable thresholds, the exit mechanism, voluntary opt-in, the EU cross-border reform, and when the exemption is actually disadvantageous.

Figures from the triennial threshold revision — 2026 values to be confirmed upon official BOFiP publication.

The dual-threshold logic works as follows: if your prior-year (N-1) turnover exceeds the lower threshold but stays below the upper threshold, you remain exempt for the current year. If your current-year turnover exceeds the upper threshold mid-year, you lose the exemption immediately from the first day of the month in which the breach occurs.

The exemption is codified in Article 293 B CGI. The right to waive it — voluntary opt-in for VAT — is set out in Article 293 D CGI. Administrative commentary is published under BOFiP reference BOI-TVA-DECLA-40, which details calculation rules, mixed-activity situations, and the first year of trading.

What tax authorities examine in audits:

• Consistency between declared turnover (tax return, CA12) and the VAT regime applied.
• Presence of the mandatory invoice statement on every outgoing invoice.
• Correct treatment of the month in which the upper threshold is breached.
• Cases where VAT was invoiced in error without being remitted to the tax authority.

Breaching the lower threshold (N-1 > exemption threshold)#

If your prior-year turnover exceeds the lower threshold (e.g. €36,800 for services) but stays below the upper threshold (€39,100), you remain exempt for the full current year — but you are in a surveillance zone. If your prior-year turnover directly exceeds the upper threshold, you exit the exemption from 1 January of the current year.

Breaching the upper threshold mid-year#

This is the most sensitive scenario. If your current-year turnover exceeds the upper threshold during the year, exit is immediate: you must charge VAT from the first day of the month in which the breach is recorded. Invoices already issued earlier in that same month without VAT are not retroactively corrected — this technical point generates frequent errors in practice.

Practical steps#

Track your cumulative turnover month by month. A billing system with alerts at 80 % and 95 % of the upper threshold is the minimum good practice. For Paris-based sole traders and micro-entrepreneurs with irregular revenue, Hayot Expertise recommends a quarterly cumulative revenue check built into the monthly accounting review.

While you remain under the exemption, every invoice you issue must carry the following exact wording:

TVA non applicable — article 293 B du CGI

This statement protects both issuer and recipient. It signals that the billed amount is a VAT-inclusive net price, that no VAT has been collected, and that no input VAT deduction is available to the B2B client.

Common errors#

• Charging VAT while still under the exemption: VAT invoiced in error must be remitted to the state (CGI Art. 283-3), even if it should not have been charged. Recovering it from the client is contractually complex.
• Omitting the statement on some invoices but not others: creates inconsistency in an audit.
• Using alternative wording ("VAT exempt", "sans TVA") without explicitly citing Article 293 B: technically insufficient per BOFiP commentary.
• Failing to update invoice templates in the month of transition to a standard VAT regime.

Under the exemption, you do not collect VAT — but you also cannot recover VAT on your own purchases, rent, equipment, professional fees, software, or subscriptions. This input VAT is permanently lost: it becomes an expense in your accounts and directly reduces your net result.

Worked example: artisan under exemption vs standard regime#

Consider a Paris-based electrical contractor: turnover €80,000, materials and supplies €25,000 net (VAT 20% = €5,000), tools €3,000 net (VAT 20% = €600), other VAT-bearing costs €2,000 net (VAT 20% = €400).

Under exemption:

• No VAT charged to private clients — apparent price advantage.
• €6,000 of input VAT unrecoverable — direct net cost.
• Accounting result: €80,000 − €25,000 − €3,000 − €2,000 − €6,000 (lost VAT) = €44,000.

Under simplified standard regime (100% private clients):

• Invoices: €80,000 + 20% VAT = €96,000 inclusive; net VAT remitted €16,000 − €6,000 = €10,000.
• Accounting result on a net basis: €80,000 − €25,000 − €3,000 − €2,000 = €50,000.
• But the all-inclusive price is €96,000: if clients are non-registered private individuals, the higher price may affect competitiveness.

The arbitrage conclusion: for an artisan working exclusively with private clients, the exemption protects price competitiveness but costs €6,000 of unrecoverable input VAT. For a B2B artisan whose clients recover VAT, the inclusive price is commercially irrelevant and the standard regime is almost always more advantageous when input VAT is material.

Article 293 D CGI allows any business under the exemption to opt into VAT at any time, without waiting to breach a threshold. The option is filed with the local tax office (SIE). In practice it is noted in the business registration form (M0 for companies, P0 for sole traders) or communicated subsequently via the secure messaging service on impots.gouv.fr. The option takes effect from the first day of the following month and is binding for a minimum of two years.

When the opt-in is the right decision#

• Significant early-stage investment (fitout, equipment, commercial vehicle): recovering input VAT generates an immediate cash-flow benefit.
• Predominantly B2B registered client base: the inclusive price you charge is commercially irrelevant — your clients recover VAT anyway.
• Growth trajectory will reach the threshold within 12 to 18 months: anticipating avoids a disorganised mid-year transition.
• Mixed activity with high variable VAT-bearing costs: input deductions can rebalance monthly cash flow.

Micro-entrepreneur / auto-entrepreneur#

Micro-entrepreneurs remain under the VAT exemption as long as they stay below the VAT thresholds — independently of the micro-regime turnover caps (€77,700 for services in 2026, value to confirm). The two regimes are distinct. Exceeding the micro turnover cap does not trigger exit from the VAT exemption. Exceeding the VAT upper threshold (€39,100 for services) forces exit from the exemption even if the business stays within the micro regime for tax and social purposes.

Self-employed BNC (consultant, trainer, coach)#

The pivotal question is client type. A Paris-based consultant billing 100% to VAT-registered businesses mechanically loses 20% of his margin on input VAT (software, travel, subcontracting) by staying under the exemption. Opting for VAT is often profitable from around €15,000–20,000 in annual VAT-bearing costs.

Doctor, healthcare practitioner#

Medical and paramedical care provided to natural persons is VAT-exempt under CGI Art. 261-4-1°, regardless of the franchise en base regime. The exemption regime is only relevant for ancillary activities (training, consultancy, expert reports) that carry a different VAT status.

Lawyer#

The specific threshold for lawyers is €47,600 (upper threshold €58,600). A sole-practitioner Paris lawyer whose turnover comes entirely from private individual clients may remain under the exemption up to that threshold — but once the B2B professional client base becomes predominant, opting for VAT deserves a full analysis.

Artisan, construction#

Working as a subcontractor for general contractors almost always means being subject to VAT (reverse charge on construction work). An artisan who begins as a micro-entrepreneur with a VAT exemption and secures first subcontracts must anticipate the switch to the standard regime early.

E-commerce, online sales#

The exemption is technically compatible with domestic online sales. But once sales to EU private individuals exceed the OSS threshold for intra-Community distance sales, additional VAT obligations arise. The combination of FR exemption + EU sales is a frequent error zone, covered in detail in our article on e-commerce VAT and online sales.

EU Directive 2020/285 of 18 February 2020, transposed in member states from 1 January 2025, created a new optional regime: the EU cross-border VAT exemption for small enterprises.

How it works#

A French SME or sole trader may benefit from a VAT exemption in another EU member state provided that:

1. Its total EU-wide turnover does not exceed €100,000 in the current or prior year.
2. Its turnover in the relevant member state stays below that state's own national exemption threshold.

What this means for French micro-businesses#

Before 2025, a French artisan selling to private buyers in Belgium had to register for VAT in Belgium once Belgian sales crossed the Belgian registration threshold. From 1 January 2025, if they stay below €100,000 EU-wide and below the Belgian threshold, they may remain exempt in both countries. The process requires prior notification to the French tax authority (via the professional space on impots.gouv.fr) and the assignment of an EX exemption number.

Limitation: this regime applies only to B2C sales. B2B intra-Community transactions continue to follow standard reverse-charge rules.

A micro-entrepreneur can exceed the micro turnover cap while remaining below the VAT upper threshold — meaning they exit the micro fiscal regime but continue not charging VAT until the VAT upper threshold is breached. The two exits can occur at different times, creating a transition period that requires careful management.

The VAT base exemption is not automatically the right choice for a sole trader or a micro-business. In Paris, where start-up costs are often significant — professional premises, equipment, service providers — unrecoverable input VAT can exceed €5,000–10,000 in the first year of trading.

What Hayot Expertise recommends:

• At the time of business creation, model two scenarios: exemption vs simplified standard regime, based on projected VAT-bearing costs.
• Opt for VAT from day one if the client base is predominantly VAT-registered businesses — the inclusive price is not a commercial argument in that case.
• Set up monthly cumulative turnover monitoring with alerts at 70%, 85%, and 100% of the upper threshold.
• Anticipate the exit from the exemption six months in advance: billing system configuration, update of general terms, communication to recurring clients.
• Never wait for the annual close to address an upper-threshold breach recorded mid-year: penalties and VAT assessments apply from the month of breach, not only for the post-close period.

The underestimated risk: VAT erroneously invoiced to a client while still under the exemption. Under CGI Article 283-3, any VAT stated on an invoice is owed to the state, even if it should never have been charged. Recovering it from the client requires a credit note and a re-invoice — a process few business owners initiate spontaneously. The result is a remittance that generates no offsetting input deduction.

• Triennial threshold revision: the franchise thresholds (€91,900 / €36,800 / €47,600) are subject to triennial revision aligned with inflation. The next update is expected for 2026 — 2026 values to be confirmed upon official BOFiP publication.
• EU 2025 reform now in effect: the cross-border exemption regime under Directive 2020/285 came into force on 1 January 2025. French micro-businesses selling to private individuals in other EU member states should verify eligibility and, if they wish to benefit, complete prior notification with the French tax authority.
• E-invoicing 2026: even under the VAT exemption, the obligation to receive electronic invoices applies. Businesses under the exemption are not excluded from the e-invoicing reform obligations.

• Prior-year turnover checked against both thresholds (lower and upper).
• "TVA non applicable — article 293 B du CGI" wording present on all invoice templates.
• Input VAT quantified: total VAT-bearing purchases and costs × applicable rate.
• Client base assessed: proportion of VAT-registered B2B vs private individuals.
• Monthly cumulative turnover monitoring in place with threshold alerts.
• VAT opt-in analysed if significant investment planned or rapid growth expected.
• EU 2025 reform checked if selling to private individuals in other EU member states.
• Invoice templates ready to update for the month of transition if applicable.

Sources: Légifrance, Articles 293 B and 293 D CGI; BOFiP, BOI-TVA-DECLA-40; impots.gouv.fr; entreprendre.service-public.fr; EUR-Lex, Directive 2020/285 of 18 February 2020.