The application thresholds for the micro-enterprise tax regime are not the same as those for the VAT-based exemption. A micro-entrepreneur can perfectly well be subject to VAT. This liability may result from exceeding the thresholds for the exemption on the basis of VAT, or from a voluntary option by the micro-entrepreneur for the payment of VAT.
The entrepreneurs’ corner informs you about how VAT works for micro-businesses:
The VAT-based franchise for micro-businesses
When a micro-enterprise is exempt from VAT, it does not collect any tax. Consequently, no VAT must appear on invoices given to customers. The words “VAT not applicable, article 293 B of the CGI” must appear on the invoices. In return, the VAT paid on the purchases of goods and services is not recoverable. Use the tax return estimator is important in this case.
The application of the VAT exemption regime for a micro-enterprise is possible when the turnover does not exceed the following thresholds:
- 85,800 euros for the sale of goods and housing supplies,
- 34,400 euros for the provision of services.
For micro-enterprises which have both a sales activity and a provision of services, the VAT exemption applies as soon as:
- The total turnover (sales + provision of services) does not exceed 85,800 euros,
- And that the turnover specific to the provision of services does not exceed 34,400 euros.
- Finally, for lawyers, authors and performers, this threshold is 44,500 euros.
The micro-enterprise exceeds the thresholds for the deductible based on VAT
Maintaining the VAT exemption
In the event that the above thresholds are exceeded, the VAT-based franchise regime is maintained for the current year and the following year provided:
That the turnover for the current year does not exceed the following increased thresholds:
- 94,300 euros for the sale of goods and housing supplies,
- 36,500 euros for the provision of services,
- 54,700 euros for lawyers, authors and performers.
That the turnover of the previous year did not exceed the basic thresholds of the VAT exemption regime:
If a business is created during the year (which is most often the case), it is applied to the thresholds. On the other hand, to determine if the franchise is applicable during the year following that of the creation, it is necessary to adjust the turnover of the year of creation in proportion to the number of days of activity.
Exit from the exemption regime based on VAT
When the conditions are not met:
If the turnover for the current year exceeds the increased thresholds, the micro-enterprise is subject to VAT from the 1st day of the month in which it is exceeded.
If the turnover for the current year does not exceed the increased thresholds but the turnover for the previous year has exceeded the basic thresholds, the micro-enterprise is subject to VAT from 1st January of the following year.