The French General Directorate of Public Finance issued administrative guidance on March 3, 2025, outlining VAT exemption thresholds applicable throughout 2025, implementing a staged approach with initial increases followed by substantial reductions.
January Implementation
From January 1, 2025, the national turnover threshold for basic VAT exemption increased to €93,500 (from €85,000 in 2024), while the threshold for certain services rose to €41,250 (from €37,500 in 2024). These increases provided temporary relief for small businesses under the franchise en base regime.
March Reduction
A separate basic VAT exemption threshold of €27,500 became effective March 1, 2025, representing a significant reduction from previous levels. This threshold applies broadly across business activities, with businesses exceeding it required to register for VAT and charge tax on their supplies while gaining deduction rights.
The guidance clarifies that businesses losing exemption status due to the March changes must begin VAT compliance from June 1, 2025, for operations conducted from that date. However, businesses exceeding tolerance thresholds between March and May 2025 lose exemption immediately upon threshold breach.
Context
The staged implementation reflects France's balancing of EU state aid considerations with support for small enterprises. The initial threshold increases provided transitional relief before implementing lower permanent thresholds aligned with European Commission guidance on VAT exemption schemes.
