VAT exemption in France 2026: where does the 25,000 euro reform stand?

Quick answer. The reform that was meant to lower the VAT exemption to a single 25,000 euro threshold has been dropped. In 2026 the thresholds are unchanged: 37,500 euros for services (upper limit 41,250 euros) and 85,000 euros for the sale of goods and accommodation (upper limit 93,500 euros). As long as you stay below these amounts, you do not charge VAT.

Since late 2024, one figure keeps coming up in every micro-entrepreneur conversation: 25,000 euros. It was supposed to be the new ceiling above which VAT would have to be charged, whatever the activity. The 2026 reality is simpler, and rather reassuring: this single threshold never came into force, it has been dropped, and the historic exemption thresholds are maintained.

This article sets the record straight: what the VAT exemption is, the story of the 25,000 euro reform, the thresholds actually in force in 2026, what happens when you cross them, and how to decide whether to stay exempt or move to VAT voluntarily.

The base exemption (franchise en base) is a regime that relieves the business from charging and reporting VAT (article 293 B of the tax code). In practice, as long as your turnover stays below the threshold, you invoice clients without VAT, showing the wording "TVA non applicable, article 293 B du CGI" on your invoices.

There are two sides to it:

• You do not collect VAT, so you do not pay it over to the State. That is a real gain in simplicity (no VAT return to file).
• But you do not reclaim the VAT on your purchases and investments. For a business that buys little, this is neutral; for one that invests heavily, it is a cost.

The exemption is not reserved for micro-entrepreneurs: an SASU or an EURL can also benefit from it while it stays below the thresholds. It is a VAT regime, separate from the micro regime (which is a way of taxing the profit). You can run a company subject to corporate tax and still be VAT-exempt.

Here is how we got to today's confusion.

• February 2025. The 2025 finance act (law of 14 February 2025) provides for a single VAT exemption threshold set at 25,000 euros of turnover, across all activities. In plain terms, above 25,000 euros VAT would have to be charged, including by a craftsman or a service provider previously comfortable below 37,500 euros.
• Spring 2025. Faced with an outcry from micro-entrepreneurs, the government suspends the measure, first for a few weeks, then until the end of 2025, to allow for debate.
• November 2025. Parliament removes the reform and confirms that the historic exemption thresholds are maintained. The single 25,000 euro threshold will therefore not apply.
• Late 2025. During the 2026 budget debate, a fresh attempt to lower the threshold (article 25 of the 2026 finance bill) is rejected by the National Assembly, then by the Senate.

The result for 2026: the 25,000 euro threshold is well and truly buried, and the exemption runs on the thresholds businesses already knew.

Two thresholds coexist depending on the nature of the activity, each with an upper limit (a tolerance).

These amounts are assessed on the turnover of the calendar year. For a mixed activity (sales and services), you look at the overall turnover (which must not exceed 85,000 euros) and, within it, the services share (which must not exceed 37,500 euros).

Specific thresholds also exist for a few regulated professions, notably lawyers, authors and performing artists. If you fall into one of these activities, check the threshold specific to your situation with the tax office or your accountant.

The mechanism rests on the gap between the exemption threshold and the upper limit.

• You stay below the exemption threshold (37,500 or 85,000 euros): nothing changes, you keep invoicing without VAT.
• You cross the exemption threshold but stay below the upper limit (between 37,500 and 41,250 euros, or between 85,000 and 93,500 euros): the exemption is kept for the year of the overrun. However, if turnover exceeds the exemption threshold two years in a row, you become liable for VAT from 1 January of the following year.
• You cross the upper limit (41,250 or 93,500 euros): this is the immediate switch. You become liable for VAT from the first day of the month of the overrun. Sales made from that day must carry VAT.

It is this last case that surprises people the most: leaving the exemption does not wait for year-end, it takes effect in the very month the upper limit is crossed. So it is best to track cumulative turnover as you go.

The day you become liable for VAT:

• You charge VAT to your clients (usually 20%, sometimes 10%, 5.5% or 2.1% depending on the operation) and pay it over to the State.
• In return, you reclaim the VAT on your purchases, expenses and investments, which was not possible while exempt.
• You file VAT returns. Note: the simplified real regime and its annual CA12 return disappear on 1 January 2027; the return will become monthly or quarterly (CA3). Setting the regime at the point of leaving the exemption therefore deserves proper planning.
• You update your invoice wording: the "TVA non applicable, article 293 B du CGI" line disappears, replaced by the VAT detail per rate.

For a B2B client (a business), moving to VAT is often painless: your client reclaims the VAT you charge. For a B2C client (an individual), on the other hand, charging 20% more raises your price or eats into your margin: that is where the trade-off really counts.

Staying exempt is not always the best choice. You can also opt voluntarily for VAT, even below the thresholds. A few pointers:

• Your clients are mostly businesses and you invest (equipment, stock, subcontracting): voluntary VAT can be a winner, because you reclaim the VAT on your purchases without penalising clients who reclaim it themselves.
• Your clients are individuals and you have few VAT-bearing costs: the exemption is generally more advantageous, because it leaves you a competitive inclusive price with no VAT to pay over.
• You are close to the threshold and growing: anticipate the switch rather than suffer it mid-year. A prepared transition (updating the invoicing software, informing clients, reclaiming VAT on stock) beats a last-minute correction.

A worked example: a consultant invoices 40,000 euros of services in 2026, with 3,000 euros of VAT-bearing purchases during the year. While exempt, he pays nothing over but reclaims nothing. By crossing 37,500 euros without reaching 41,250 euros, he stays exempt that year, but a second overrun next year will switch him over on the following 1 January: worth preparing for now. To see the effect of moving to VAT on your prices and margin, our VAT calculator quickly simulates the amount collected and the net cash received.

The 25,000 euro threshold does not exist in 2026: the reform was dropped. The VAT exemption stays at 37,500 euros (services) and 85,000 euros (sales and accommodation), with upper limits of 41,250 and 93,500 euros. The real question is therefore not "will I go over 25,000 euros?" but "is it worth staying exempt, and am I ready to switch when I approach the real threshold?". This is a point we frame systematically when setting up an activity and when turnover takes off.