The French government has finally given some information about the VAT thresholds, which I’m sharing with you – along with some ideas.

What we know for sure:
• You need to register for VAT from the 1st of January if your turnover was above 85 000€ for sales of goods or 37 500€ for services in 2024
• You need to register immediately for VAT if your receipts in 2025 go over 93 500€ for sales of goods or 41 250€ for services in 2025
• New thresholds for 2026 will be published in December – they will also apply to revenues earned in 2025 to appreciate businesses that must register from the 1st of January 2026.

What we do not know for sure yet is what those thresholds will be for which type of activity. Worst case scenario is 25000€ for all types of activities combined. There are also other options that are being discussed. However, until the budget for 2026 is approved and published, we won’t know for sure.

What to do: if you would like to be 100% sure that you won’t have to register for VAT in 2026, the total of your revenue in 2025 must be below 25000 as a precaution. However, I personally think that this is too radical, and possibly not the best way forward for a large portion of business owners.

My personal advice is :
• Research whether your activity is subject to vat
• If you sell outside of France, research in depth whether vat will be applicable to all of your invoices after crossing the threshold (in many cases if won’t)
• if you sell in France, analyse whether majority of your customers are Vat-registered businesses. If this is the case, getting vat registered will add admin work, but will not affect your earnings – you will be able to add vat on top of your current rates, and your clients will be able to deduct the vat they pay to you from the vat they have to pay to the government, so their total expense will remain the same.
• If the majority of your customers are private individuals in France, evaluate, by how much you can raise your prices to pass as much of vat burden to your customers . You can start by proposing higher rates to the new clients (if you’re in services). Evaluate how much of your expenses have deductible vat. This will give you an idea of the overall effect of getting vat registered on your business model.

One final thought. If you’re just starting your business, and even 25000€ threshold seems far away, do not underestimate the impact of vat on your pricing. A lot of new B2C businesses fall into this trap . When you start your businesses you offer low rates to attract the clients. This works, as your Vat-registered competitors cannot match your rates – because of vat. Your business grows quickly, and you reach the vat threshold soon enough. So now you have no choice, but to register for vat too (or stop working for several months, and loose all the customers who need your goods or services regularly). You can’t increase your prices by 20 % straight away either. So suddenly you have to pay 20% more while still earning the same amount. For many business owners this means they can no longer survive on what they earn with their business, or the money they earn isn’t worth the time and effort.

To avoid this vicious circle, when deciding on your rates/prices, base your calculations as if you were VAT registered from the start. Enjoy some extra income in the beginning – ideally put it aside in savings, so that you’re used to the correct level of disposable income from the start (or reinvest into growing your business). This way instead of subconsciously fearing the threshold, you can grow your business with full energy beyond the VAT limits.

Shifting the focus from competing on the price to providing a better product or service may prove to be a more sustainable strategy overall for all businesses owners – new and existing.

If you need a personalised consultation – do not hesitate to get in touch and book a session with me!