Vat on small businesses: french mps call for no reduction in threshold

PLANS TO LOWER THE THRESHOLD TO €25,000 WOULD HURT MICRO-ENTREPRENEURS AND ‘MASSIVELY DESTROY ACTIVITY AND WEALTH’ SAY CRITICS Plans to lower the VAT threshold for small businesses in France

(meaning the requirement to charge VAT on their services would cut in from a much lower turnover than now) should not go ahead, three high-profile MPs have said, in a bid to defend “the

spirit of enterprise”. Former Prime Minister and leader of the Renaissance presidential party Gabriel Attal, former Housing Minister Guillaume Kasbarian, and former Small Business Minister

Olivia Grégoire, made the call in La Tribune Dimanche on Sunday, February 23. It is supported by around 100 MPs from the ruling Ensemble party and surrounding allies. WHAT ARE THE VAT

THRESHOLD PLANS?  In December 2024, senators introduced an amendment to the Finance Bill 2025, in which they proposed a lowering of the threshold above which “microentrepreneurs” would be

exempt from VAT tax. Currently, the annual revenue thresholds are: * €85,000 for commercial and accommodation activities * €37,500 for services and liberal professions (excluding lawyers) *

€50,000 for artists and lawyers. However, the senators proposed to replace the “existing national exemption thresholds with a single threshold of €25,000”, in a bid to “combat VAT avoidance

and distortions of competition at European level", and to “simplify and rationalise” the system. Read more: Anger over changes to VAT rates for self-employed people in new 2025 French

budget WHAT DO OPPONENTS TO THIS CHANGE SAY? Mr Attal in particular has said that lowering the threshold would “be more of a disadvantage for the country than a benefit”. In the open letter,

the signatories wrote: “The risk is not just that the French will pay more tax: it is also that they will create fewer businesses. This measure would massively destroy activity and wealth

in our country.” The signatories believe that the measure would cause a loss of jobs, and worsen unemployment and business closures.  “More than 200,000 microentrepreneurs will be

affected.[That’s] 200,000 workers in cleaning, sales, construction and transport,” they said. SCRAPPED, NOT SUSPENDED Economy Minister Éric Lombard had already announced plans to suspend the

measure pending “a period of consultation” - due to intense criticism - but Mr Attal and his supporters are now calling for it to be cancelled completely. The change would bring in an

estimated €400 million for the state, but Mr Attal and those opposed to the change said this is not the way to raise much-needed funds.  “Reducing public deficits will come from structural

reforms of the state and public authorities, which must be exemplary and sensible,” they wrote. “Not by taxing businesses and workers even more.” Would the plan to lower the VAT threshold to

€25,000 affect you and your business? Let us know at [email protected].