When Will I Pay VAT for the First Time?

Quick answer. You become VAT-liable as soon as you cross the exemption thresholds (€37,500 in services, €85,000 in commerce), or immediately if you voluntarily opt for VAT. Your first filing depends on your regime (normal or simplified real basis) and the month you cross the threshold. Under the normal real regime, the first monthly return is filed the following month.

VAT works in tiers. No business is automatically liable on day one: it depends on your turnover, regime and choices. At Hayot Expertise, we see many founders cross the exemption threshold mid-year without knowing exactly when VAT becomes due.

Three mechanisms coexist in 2026:

1. VAT exemption (franchise en base): you neither invoice nor remit VAT as long as you stay under the threshold defined by your activity.
2. Crossing the threshold: when you exceed the raised threshold, you become liable, and the first return follows a set calendar.
3. Voluntary opt-in: you can choose to be liable even below the threshold, to recover VAT on your investments.

The VAT exemption is set out in Article 293 B of the Tax Code. The calculation differs by sector: a single €25,000 threshold for all activities was considered then set aside, and the two distinct thresholds remain the general rule.

Services and Liberal Professions#

Basic threshold: €37,500 of prior-year turnover. Raised tolerance threshold: €41,250.

As long as turnover stays under €37,500, you are not liable. You do not invoice VAT and do not recover it on expenses: that is the advantage of the exemption—lighter administration.

Sales of Goods and Commerce#

Basic threshold: €85,000. Raised tolerance threshold: €93,500.

Traders (resale, accommodation) get a higher threshold reflecting the nature of the activity.

The Crossing Rule#

As long as you exceed the basic threshold without crossing the raised threshold, you stay exempt until year-end. But as soon as you cross the raised threshold (€41,250 or €93,500), you become VAT-liable from the date of that crossing.

Example: a service provider under the exemption. During the year, cumulative turnover crosses €41,250. You become liable from the crossing date, and your subsequent transactions carry VAT.

Even below the exemption threshold, you can opt into VAT. Concretely:

• You invoice VAT to clients.
• In return, you recover VAT on investments, supplies and purchased services.

The option makes sense in three cases:

1. You have significant start-up investments (equipment, software): opting lets you recover VAT immediately.
2. You anticipate rapid growth and know you will exceed the threshold: a clean switch is better.
3. You mainly invoice professional clients who recover VAT themselves: pre-tax + VAT invoicing is neutral for them.

The option is regulated and implies a commitment period: you cannot abandon it overnight.

Once liable, you fall under one of two main regimes, which sets the frequency of your returns and payments.

Normal Real Regime#

Monthly return by default (form CA3, under Article 287 of the Tax Code). A quarterly return is possible if the VAT due during the year is below €4,000. Payment accompanies the return, the month after the period.

Companies (SASU, SARL, SAS) generally fall under the real regime from incorporation if they do not opt for the exemption.

Simplified Real Regime#

Semi-annual instalments (in July and December), based on the prior year's VAT, then an annual reconciliation return (CA12) filed the following year. This regime is lighter administratively and applies to businesses under certain turnover and VAT thresholds.

Example: Switching to VAT Mid-Year#

You run a consulting business (services) under the exemption, as a SASU.

• Early in the year: modest turnover, no VAT (exemption).
• During the year: cumulative turnover crosses the €41,250 raised threshold. You switch to VAT.
• From the crossing: you are liable under the real regime. You file your first CA3 for the period concerned.
• Payment: the VAT due is paid with the return, the following month.

This first return only covers transactions after the switch; earlier sales remain exempt.

Note: a mixed activity (sales + services) applies specific rules based on the share of each. Have your accountant frame your case.

Micro-Entrepreneur Crossing the Threshold Mid-Year#

If you cross €41,250 (services) or €93,500 (commerce):

• You become liable from the date of crossing.
• You must notify the authorities and obtain an intra-community VAT number.
• Your returns shift to CA3 (or instalments per regime).
• You invoice VAT on subsequent transactions.

VAT only applies to the post-crossing period; earlier sales remain exempt.

Voluntary Opt-In from the Start#

If you opt for VAT from incorporation, your first return covers the start-up period and you recover VAT on your initial investments.

VAT Credit and Refund#

At start-up, you invest heavily while sales ramp slowly: deductible VAT may exceed collected VAT. The excess (VAT credit) carries forward to the next period or may, under conditions, be refunded.

A single €25,000 threshold applicable to all activities was considered then set aside: in 2026, the two thresholds of €37,500 (services) and €85,000 (commerce) remain the general rule, with raised thresholds of €41,250 and €93,500. A specific lower threshold may, however, apply to certain activities—notably construction works—under the finance-law provisions in force: check your precise situation before concluding. Otherwise, remember that the switch to VAT is never retroactive on transactions carried out under the exemption.

Recently, the founder of a small web agency approached us. They had been under the exemption since launch and were nearing the €37,500 threshold. Their question: "If I cross mid-year, do I owe retroactive VAT on everything I invoiced?" The answer is no: you become liable from the crossing, on subsequent transactions. Earlier sales remain exempt.

What they had misunderstood is the raised-threshold mechanism: as long as you stay between the basic and raised thresholds, you keep the exemption until year-end. It is crossing the raised threshold that triggers the immediate switch. Another frequent point: do not confuse the VAT exemption threshold and the flat-rate regime ceiling for contributions. A micro-entrepreneur can become VAT-liable without leaving the flat-rate social regime.

Hayot Expertise Advice. Watch your cumulative turnover as you approach the raised threshold. Prepare your invoicing software and VAT tracking ahead of time, and request your intra-community VAT number in good time. The switch is manageable when anticipated: it is last-minute improvisation that costs penalties. In a company, have your accountant validate the switch as soon as it looms.