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VAT exemption for small businesses — four thresholds, two effects, one pro rata trap

The French VAT exemption for small businesses (franchise en base) is a regime that RELIEVES businesses from declaring and paying VAT on the services or sales they make. The trade-off is direct: VAT on business purchases CANNOT be deducted. There are FOUR thresholds, not two, and they read in pairs according to the activity. TRADING AND ACCOMMODATION activity: €85,000 of turnover for the previous year (N-1), and an INCREASED threshold of €93,500 for the current year (N). SERVICES activity: €37,500 (N-1) and €41,250 (increased threshold, N). The consequences of exceeding them differ: exceeding the basic threshold makes the business liable to VAT from 1 JANUARY OF THE FOLLOWING YEAR, whereas exceeding the increased threshold makes it liable FROM THE 1st DAY OF THE EXCESS. For 2026 the thresholds remain UNCHANGED: the proposal in the 2025 finance act to introduce a single €25,000 threshold has been ABANDONED. Finally, the wording "TVA non applicable, article 293 B du CGI" must appear on EVERY invoice or fee note, on pain of an adjustment for breach of formal requirements.

Up to date for 2026 — verified on September 12, 2026Official procedure, no printed formGuide: about 25 min

Deadlines

Exceeding the BASIC threshold: the following 1 January
If an exempt business exceeds the previous year's threshold — €85,000 or €37,500 depending on activity — it becomes liable to VAT from 1 January of the following year. It therefore has time to organise itself.
Exceeding the INCREASED threshold: that same day
If the business exceeds the increased threshold — €93,500 or €41,250 — it becomes liable to VAT FROM THE 1st DAY OF THE EXCESS. Invoices issued from that date must state the amount of VAT charged to customers.
The option takes effect on the 1st day of the month it is declared
The option to pay VAT takes effect from the 1st day of the month in which it is declared — not the following month.
2 years before revoking the option
To revoke the option, the business must give it up at the end of a 2-year period. If it has obtained a VAT credit refund, the option is automatically renewed for 2 years and cannot be revoked during that time.

Documents to prepare

  • The exact nature of your activity: trading and accommodation, or services
  • Your turnover for the previous calendar year (N-1)
  • Your turnover for the current year (N), to be tracked continuously
  • For a first year: the start-up date and the number of days of activity, for the pro rata calculation
  • The wording "TVA non applicable, article 293 B du CGI" on every invoice or fee note
  • To opt: a WRITTEN request to the business tax office for the place of your registered office
  • The amount of your intra-EU acquisitions, to compare with the €10,000 threshold excluding VAT
  • Your intra-EU VAT number, to be requested from the tax office as soon as you leave the regime
See the procedure on the official site

No form is attached to this procedure: the link leads to the official page that describes it.

What this page gives you

The guide above and the link to the official site. ActioFin does not produce any document for this page: whatever you fill in or file is done on the official medium.

Who this applies to

  • Any business established in France whose previous year's turnover does not exceed the thresholds applying to its activity
  • Businesses established in another European Union Member State, the regime also applying to them under their own conditions
  • The business with a TRADING AND ACCOMMODATION activity: threshold of €85,000 (N-1) and increased threshold of €93,500 (N)
  • The SERVICES business: threshold of €37,500 (N-1) and increased threshold of €41,250 (N)
  • The business STARTING UP, whose turnover must be adjusted pro rata to its period of activity before comparison with the thresholds
  • The business planning INVESTMENT: opting to pay VAT may be advantageous, since the exemption bars any deduction
  • The business making INTRA-EU ACQUISITIONS: above €10,000 excluding VAT over the previous year or since the start of the current year, it must itself account for VAT in France at the French rate
  • The business that IMPORTS: it pays import VAT whether exempt or not, but cannot deduct it while it remains under the exemption

Worked example

Official example: €82,000 then €90,500, and the pro rata that changes everything in year one

The examples are those published by the source. FIRST CASE, trading activity. A business turns over €82,000 in 2025. The threshold not to be exceeded being €85,000, it can continue to benefit from the exemption in 2026. The following year it turns over €90,500: it exceeds the basic threshold of €85,000, but stays below the tolerance threshold of €93,500. It can therefore continue to benefit from the exemption UNTIL 31 DECEMBER 2026 — and will be liable to VAT from 1 January 2027. SECOND CASE, and this is the first-year trap. Had that same business started up on 14 May 2025 and turned over €82,000 between that date and 31 December, its turnover would have had to be calculated PRO RATA to its period of activity, the thresholds being computed only over a full year. The source gives the formula: (turnover × number of days in a year) ÷ number of days between start-up and the last day of the year. That is (€82,000 × 365) ÷ 232 = €129,009. That figure exceeds €93,500: the business can therefore NO LONGER benefit from the exemption in 2026, even though its actual receipts were only €82,000. The same calculation for a services business turning over €27,000 in the same period gives (€27,000 × 365) ÷ 232 = €42,478, above the increased threshold of €41,250. While it remains exempt, the business invoices EXCLUSIVE OF VAT and puts on every invoice or fee note the wording "TVA non applicable, article 293 B du CGI" — its absence exposes the business to a tax adjustment for breach of formal requirements.

How to fill it in, step by step

  1. Determine the nature of your activity: trading and accommodation on one hand, services on the other. The thresholds differ.
  2. Note your turnover for the PREVIOUS CALENDAR YEAR (N-1) and compare it with the basic threshold: €85,000 for trading and accommodation, €37,500 for services.
  3. Track your turnover for the CURRENT YEAR (N) and compare it with the increased threshold: €93,500 or €41,250 depending on activity.
  4. Remember the difference in consequence: exceeding the basic threshold makes you liable from 1 January of the following year; exceeding the increased threshold makes you liable from the 1st DAY of the excess.
  5. If this is your START-UP year, adjust your turnover pro rata: (turnover × number of days in a year) ÷ number of days between start-up and the last day of the year. It is that adjusted figure that is compared with the thresholds.
  6. While exempt, invoice your services or sales WITHOUT VAT, that is exclusive of VAT.
  7. Put on EVERY invoice or fee note the wording "TVA non applicable, article 293 B du CGI": its absence exposes you to a tax adjustment for breach of formal requirements on audit.
  8. If you are planning investment, assess the OPTION to pay VAT: the exemption bars you from deducting VAT paid on your acquisitions and business purchases.
  9. To opt, send a WRITTEN request to the business tax office for the place of your registered office.
  10. Note that the option takes effect from the 1st DAY OF THE MONTH in which it is declared.
  11. Before opting, measure the commitment: to revoke it you must give it up at the end of a 2-year period — and if you have obtained a VAT credit refund, it is automatically renewed for 2 years with no possibility of revocation.
  12. If you exceed a threshold, request your intra-EU VAT number by contacting your business tax office through your professional account on the tax authority's website, and show it on your invoices.
  13. Watch your INTRA-EU ACQUISITIONS: above €10,000 excluding VAT over the previous year or since the start of the current year, the seller issues an invoice exclusive of VAT and it is you who accounts for VAT in France at the French rate.

The form, line by line

€85,000 and €93,500 — trading and accommodation
Exemption threshold on the previous calendar year's turnover (€85,000) and INCREASED threshold on the current year's (€93,500).
€37,500 and €41,250 — services
Exemption threshold on the previous calendar year's turnover (€37,500) and INCREASED threshold on the current year's (€41,250).
Effect of exceeding
Basic threshold exceeded: VAT due from 1 January of the following year. Increased threshold exceeded: VAT due from the 1st DAY of the excess, and invoices issued from that date must state the VAT charged.
First-year pro rata
(turnover × number of days in a year) ÷ number of days between start-up and the last day of the year. VAT thresholds are computed only over a full year, hence this adjustment.
"TVA non applicable, article 293 B du CGI" wording
Compulsory on EVERY invoice or fee note. Its absence exposes the business to a tax adjustment for breach of formal requirements on audit.
Option to pay VAT
To be made IN WRITING to the business tax office for the place of the registered office. It takes effect from the 1st day of the month in which it is declared. It is advantageous for those planning investment, since the exemption bars any deduction.
Revoking the option
It is given up at the end of a 2-year period. But if the business has obtained a VAT credit refund, the option is AUTOMATICALLY RENEWED for 2 years, with no possibility of revocation during that time.
The €10,000 intra-EU acquisitions threshold
Below it, the seller invoices inclusive of VAT at their own State's rate and the buyer, treated as a private individual, cannot deduct that VAT. Above it, the seller invoices exclusive of VAT and the French business accounts for VAT in France at the French rate.

Good to know

  • The 2026 thresholds are UNCHANGED, and that is information in itself: the proposal in the 2025 finance act to introduce a single €25,000 exemption threshold has been ABANDONED.
  • There are four thresholds and two different effects: the basic threshold defers liability to the following 1 January, the increased threshold triggers it that very day.
  • The first-year pro rata is the regime's costliest trap: €82,000 received over eight months amounts to €129,009 on a full-year basis, and loses the exemption.
  • The exemption lightens obligations — no VAT return at all — but bars any DEDUCTION on business purchases. That is the central trade-off.
  • Opting to pay VAT is particularly relevant ahead of INVESTMENT, since it restores the right to deduct.
  • The option commits you for longer than people think: two years, and two more automatically if a VAT credit refund has been obtained.
  • The option takes effect on the 1st day of the month it is declared — not the following month, unlike some other tax options.
  • The "TVA non applicable, article 293 B du CGI" wording is not a courtesy: its absence is penalised as a breach of formal requirements.
  • On exports, the business does not charge VAT whether exempt or not. On imports, it pays VAT in both cases, but can only deduct it by leaving the exemption.
  • The intra-EU VAT number is obtained by contacting the business tax office through the professional account on the tax authority's website, and must be shown on invoices as soon as the regime is left.

Common mistakes

  • Remembering only one threshold: there are four, crossing activity and reference year.
  • Applying the services thresholds to a trading activity, or the reverse.
  • Believing an excess always leaves you until 1 January: exceeding the INCREASED threshold makes you liable from the 1st day.
  • Comparing a first-year turnover with the thresholds without adjusting it pro rata to the period of activity.
  • Believing you are still exempt after a pro rata above the increased threshold, because actual receipts were lower.
  • Leaving out the "TVA non applicable, article 293 B du CGI" wording on an invoice or fee note.
  • Charging VAT while remaining exempt, or continuing to invoice exclusive of VAT after exceeding the increased threshold.
  • Forgetting that the exemption bars DEDUCTING VAT on business purchases, including on investment.
  • Opting to pay VAT without measuring the 2-year commitment, and its automatic 2-year renewal where a VAT credit refund is obtained.
  • Believing the option takes effect the following month: it takes effect from the 1st day of the month it is declared.
  • Failing to request an intra-EU VAT number on leaving the regime, or failing to show it on invoices.
  • Ignoring the €10,000 intra-EU acquisitions threshold, which changes who accounts for the VAT.

Frequently asked questions

What are the exemption thresholds in 2026?

For a trading and accommodation activity: €85,000 of previous calendar year turnover, and an increased threshold of €93,500 for the current year. For a services activity: €37,500 and €41,250. For 2026 these thresholds remain unchanged — the proposal in the 2025 finance act to introduce a single €25,000 threshold has been abandoned.

What happens if I exceed a threshold?

It depends which. If you exceed the previous year's threshold, you become liable to VAT from 1 January of the following year. If you exceed the current year's increased threshold, you become liable from the 1st day of the excess, and invoices issued from that date must state the amount of VAT charged to customers.

How do I calculate my turnover in the first year?

Pro rata to the period of activity, the thresholds being computed only over a full year: (turnover × number of days in a year) ÷ number of days between start-up and the last day of the year. Official example: €82,000 achieved between 14 May and 31 December gives (82,000 × 365) ÷ 232 = €129,009, above the increased threshold.

What wording must appear on my invoices?

"TVA non applicable, article 293 B du CGI", on every invoice or fee note. If that wording is missing, the business exposes itself to a tax adjustment for breach of formal requirements on audit.

Can I deduct VAT on my purchases?

No. The exemption lightens obligations — no VAT return to file — but in return VAT on business purchases made for the needs of the activity cannot be deducted. To deduct it, you must give up the exemption.

How do I opt to pay VAT?

In writing to the business tax office for the place of your registered office. The option takes effect from the 1st day of the month in which it is declared. It can be advantageous for those planning to make investments.

Can the option be reversed?

To revoke the option, the business must give it up at the end of a 2-year period. However, if it has obtained a VAT credit refund, the option is automatically renewed for 2 years and cannot be revoked during those 2 years.

What about my purchases within the European Union?

While the total of your intra-EU acquisitions has not exceeded €10,000 excluding VAT over the previous year or since the start of the current year, the seller invoices inclusive of VAT at their own State's rate, and you cannot deduct that VAT. Above that, the seller issues an invoice exclusive of VAT and you account for VAT yourself in France at the French rate; they will need your intra-EU VAT number.

Go further

Compute the related amounts

Understand this form: the related course

Related forms

Official sources

Read in French

Guide and document provided for information purposes only; they do not constitute personalised legal or tax advice. Check the recipient organisation's requirements and consult a professional if needed.