French finance law 2025: Lowering the thresholds for French VAT exemption for small entreprise

Where do we stand? Current applicable thresholds

The VAT exemption for small businesses allows taxpayers established in France to avoid collecting VAT on their transactions, provided their turnover generated in France remains below the thresholds set out in Article 293 B of the French General Tax Code (CGI). These thresholds, reinstated by the law of November 3, 2025, are as follows.

Two crucial points, often overlooked in discussions regarding the €25,000 threshold: Since January 1, 2025, only turnover generated in France is taken into account, and the thresholds are no longer adjusted every three years—they are now fixed.

The consequences of exceeding a threshold depend on which one is breached. Exceeding the previous calendar year's threshold results in the loss of the exemption as of January 1 of the following year. Exceeding the current year's threshold causes it to cease as of the date the threshold is exceeded : since January 1, 2025, there is no longer any carry-over to the first day of the month, nor is there a grace period. Invoices issued without VAT after this date must be corrected; otherwise, the tax will be reclaimed during an audit.

February 2025: A single €25,000 threshold becomes law

Article 32 of the 2025 Finance Act replaced the four national exemption thresholds with a single €25,000 threshold, increased to €27,500 for assessments made during the year, regardless of the activity performed. The stated reasons were simplification, combating competitive distortions, and increasing budget revenue.

The Constitutional Council ruled on February 13, 2025, the law was promulgated on the 14th, and the measure was set to take effect on March 1, 2025. The outcry was immediate: over one hundred thousand signatures on a petition submitted to the Senate, and mobilization by professional federations.

March to December 2025: Three suspensions via press release

The government froze the measure before it took effect to allow for consultation. Two subsequent press releases extended this freeze, first to June 1, 2025, and then to December 31, 2025, pending the 2026 Finance Bill. Furthermore, the administration published a tax ruling regarding the practical procedures for the transition period.

The legal issue, rarely noted at the time: a press release cannot suspend a law. Formally, the €25,000 threshold remained in Article 293 B of the CGI as of March 1, 2025. Businesses that continued to apply the old thresholds, as requested by the administration, found themselves in a situation where the law and the ministerial statements diverged.

There is a serious objection: the guarantee under Article L. 80 A of the Tax Procedures Code protects taxpayers who have complied with an interpretation formally accepted by the administration, and the tax ruling published in March 2025 could have provided that support. However, the protection offered by a press release is more uncertain than that of doctrine published in the official tax bulletin (BOFiP), which is precisely why a law was needed to secure the 2025 tax year.

November 3, 2025: The law ends the reform and secures the past year

Law No. 2025-1044 of November 3, 2025, aimed at ensuring a stable, fair, and clear tax framework for micro-entrepreneurs and small businesses, repealed the reduction to €25,000 and reinstated the previous thresholds within Article 293 B of the CGI. It applies to the 2025 tax year itself, retroactively providing a legal basis for the suspension.

This law establishes the amounts shown in the table above. The BOFiP was updated accordingly on July 1, 2026.

December 2025: Parliament rejects the second attempt

The 2026 Finance Bill returned with a softened approach. Article 25 proposed a threshold of €37,500 for general activities and €25,000 specifically for construction services, as the building sector was explicitly targeted.

The National Assembly removed Article 25 on November 20, 2025, through several amendments from different political groups that were adopted unanimously. The Senate rejected it in turn during the night of December 1 to 2. Ultimately, the 2026 Finance Act did not change any exemption thresholds.

What the reform would have changed, and why the topic will return

The issue was not about reporting, but commercial strategy. For a company billing exclusively to VAT-registered professionals, leaving the franchise remains neutral: the client deducts the tax, and the company gains the right to deduct VAT on its own expenses. For a private client base, the choice is tougher—either pass the tax on to prices at the risk of losing competitiveness, or absorb it into the margin.

The matter is not closed, however. The €25,000 threshold was proposed two years in a row, and the construction sector was specifically targeted during the second attempt. It would be unwise to assume that the question will not resurface in a future budget.

Two reflexes are valid regardless of the fate of future legislation: establish a revenue forecast to see where you stand in relation to the ceilings, and determine the applicable VAT rates for your operations in advance. It is this second analysis, not monitoring the threshold, that takes time the day the franchise exemption ceases to apply.

The two deadlines to prepare for 2027 & 2028

Two fundamental reforms are coming, and these are very real.

The recodification of VAT. Ordinance No. 2025-1247 of December 17, 2025, transfers VAT rules from the General Tax Code to the Code of Taxes on Goods and Services. Initially set for September 1, 2026, the transition was postponed to January 1, 2027, so as not to coincide with the rollout of electronic invoicing. The regime becomes that of the "franchised enterprise," under articles L. 233-1 and following of the CIBS. This is a recodification with constant law: the ceilings and conditions do not change, only the reference evolves. References to the CGI remain accepted on invoices until June 30, 2028.

The end of the simplified tax regime. Article 38 of the 2025 Finance Act abolishes the simplified regime as of January 1, 2027. Companies not covered by the franchise will switch to the standard real regime, with a quarterly CA3 declaration by default when turnover plus taxable acquisitions remains under €1,000,000, and monthly beyond that or by choice. Semi-annual installments and the annual CA12 declaration will disappear.

Exiting the franchise in 2027 will therefore not mean the same thing as in 2025, and the reporting calendar deserves to be anticipated.

Are you wondering about your situation regarding the ceilings, or are you preparing to exit the franchise? Our team is at your disposal.