From January 1, 2025, the tax regime for self-employed people in France will undergo major changes, particularly with regard to VAT exemption thresholds, a reform intended to harmonize practices within the European Union.
Adjustment of franchise thresholds based on VAT
The government has decided to modify the VAT-based franchise thresholds for self-employed people in 2025, directly influencing sales activities and service provision. For housing sellers and providers, the basic threshold will be reduced from €91,900 to €85,000, while the increased threshold will increase from €101,000 to €93,500. This drop implies that entrepreneurs in this sector will have to be more vigilant so as not to exceed the new ceilings and thus avoid unexpected taxation. On the other hand, service providers will benefit from a slight increase in their thresholds, with the basic threshold rising from €36,800 to €37,500 and the increased threshold from €39,100 to €41,250. This increase offers additional margin to increase their turnover without immediately suffering the impact of VAT.
End of the tolerance period and new rules for exceeding
A critical change is the removal of the two-year tolerance period, which until now allowed entrepreneurs to continue to benefit from the VAT exemption even after exceeding the basic threshold. From 2025, this flexibility will disappear, and exceeding the thresholds will result in VAT being imposed the following year. If the increased threshold is exceeded, VAT liability will be immediate.
Implications and actions required for self-employed people
Self-employed people must therefore prepare for more rigorous management of their activity:
- Revenue monitoring: It will be crucial to closely monitor turnover to anticipate any thresholds being exceeded.
- Administrative and accounting adaptation: Prepare necessary changes to meet VAT requirements.
- Reassessment of the legal structure: Consider structural adjustments if activity regularly exceeds the new thresholds.
Expansion of the franchise on a European scale
A notable novelty is the extension of the possibility of benefiting from the VAT-based exemption in other EU Member States, provided that a turnover of €100,000 is not exceeded on a scale of the Union. This measure aims to facilitate the expansion of small businesses beyond French borders.
Stability of thresholds and anticipation
With the elimination of the three-yearly update of the thresholds, the new amounts will remain fixed, requiring continuous adaptation on the part of entrepreneurs to remain compliant with tax requirements.
The changes made to the micro-enterprise regime and the VAT exemption thresholds from 2025 represent a major challenge for French self-entrepreneurs. This reform, aligned with European standards, requires increased vigilance and proactive adaptation to ensure compliance and optimize business strategies in this new tax framework.
