MPs reject plan to extend VAT to more self-employed workers in France

A controversial plan to lower VAT exemption thresholds for self-employed workers in France has been scrapped after MPs voted unanimously to remove it from the 2025 draft budget.

The measure, originally intended to raise €400 million per year, would have forced an estimated 130,000 micro-entrepreneurs (workers who are registered as self-employed, previously known as

auto-entrepreneurs) to start charging VAT at much lower revenue levels than before.

The reform had been part of the 2025 loi de finances passed earlier this year but was suspended by the government after widespread criticism from across the political spectrum. 

It has now been formally removed following the adoption of a new law proposed by Ensemble MP Paul Midy and backed by 227 MPs on Monday (June 2).

The vote took place during a niche parlementaire - a parliamentary session reserved for a minority to propose their own legislation.

The proposed VAT change had drawn strong criticism from micro-entrepreneurs and trade bodies, including the Fédération nationale des microentrepreneurs (FNAE) and the small business union

(U2P). 

The measure also faced stiff political opposition, with even former prime minister Gabriel Attal - a close political ally of President Macron - speaking against it.

Its inclusion in the 2025 Budget was temporarily suspended on April 30, pending further discussions with unions and trade bodies.

The vote to repeal the threshold change has now made that suspension permanent - although the government could still try to reintroduce the measure in a future budget.

The now-abandoned reform would have lowered the VAT exemption threshold from €37,500 to €25,000 for most service-based micro-entrepreneurs, and from €85,000 to €27,000 for retailers and

other sales-based businesses.

€85,000 for 2024 and €93,500 for 2025 for most business activities

€37,500 for 2024 and €41,250 for 2025 for services other than hospitality or on-site sales

To avoid any uncertainty for small business owners, the new law will apply retrospectively from March 1, 2025 - the date from which the lowered thresholds would have taken effect.

This means that nothing will change for micro-entrepreneurs in terms of VAT obligations this year: those who stayed below the original limits during the period that the proposed law was

suspended will not be required to pay VAT.

In addition, they will not be obliged to pay for authorised electronic billing software - which is set to become a requirement in 2027 for the self-employed workers who are subject to VAT.

Self-employed worker’s union FNAE hailed the vote on social media as “a real victory for all self-employed entrepreneurs, who will be able to regain some peace of mind and visibility over

their business”.

While Monday’s vote will save money for many self-employed workers, the government is still looking to raise funds and cut its deficit.

Indeed, it has pledged to find €40 billion in savings for the 2026 budget, and pressure remains to reduce perceived distortions in the tax system between micro-entrepreneurs and larger

firms.

The finance ministry may seek alternative ways to revisit the VAT question in this autumn’s loi de finance but with the government lacking an overall majority it would face an uphill battle

to get such a reform passed again.