Tax exemption limits for self-employed individuals after VAT reform: parameters to circumvent VAT payments
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By Charlotte Rousset, Employment Journalist
Published on
One of the most contentious amendments in the 2025 budget was the proposed reduction of the VAT exemption threshold to €25,000 for self-employed individuals, regardless of their sector. However, swift opposition ensued: small business owners, unions, and politicians spanning the political spectrum strongly criticized the hidden change. Initially frozen until June 1, the change will not take effect this year. The government stated in a press release published on April 30 that it is choosing to listen and engage in dialogue.
Over the past weeks, Junior Minister for Trade, Véronique Louwagie, convened a broad consultation with independent federations. The main takeaway was that there was no collective consensus regarding implementation, or even the abolition, of the proposed measure. In other words, no one wanted a singular €25,000 exemption threshold except perhaps the construction sector, which often suffers from unfair competition due to micro-entrepreneurs who aren't subject to VAT.
Existing Thresholds Remain in Place until December 31, 2025
Although the 2025 reform will not materialize this year, it is not dead yet. In the press release, Bercy announced its intent to re-engage in a "calm dialogue" this fall during the examination of the 2026 finance law bill, which is expected during the upcoming academic year. The stated aim is to refine a "new proposal" that would simplify the VAT exemption system and address the realities of competition. However, until then, the rules remain unchanged, and the VAT exemption will continue to apply according to the conventional thresholds:
- Commercial, artisanal, or accommodation activities: €85,000 in annual turnover;
- Service providers and liberal professions: €37,500 in annual turnover.
As long as your turnover does not surpass these figures, you are VAT-exempt until December 31, 2025. You do not need to charge VAT to your customers or make payments to the state. A much-appreciated relief for the roughly 250,000 auto-entrepreneurs affected by the reform, according to figures from the National Federation of Auto-entrepreneurs (Fnae).
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Associated topics: Auto-Entrepreneur, VAT, Taxation
- Entrepreneurs in various business sectors, including real estate, have found a temporary reprieve as the reduction of the VAT exemption threshold to €25,000, initially scheduled for 2025, has been delayed until further negotiations.
- The government's new proposal, to be discussed during the examination of the 2026 finance law bill, aims to refine the VAT exemption system and address competition concerns in various industries, including real estate.
- For businesses whose annual turnover remains below the conventional thresholds of €85,000 (for commercial, artisanal, or accommodation activities) and €37,500 (for service providers and liberal professions), they continue to be VAT-exempt, ensuring they do not need to charge VAT to their customers or make payments to the state, a relief for the approximately 250,000 auto-entrepreneurs.
- As real estate entrepreneurs navigate their business in 2025 and beyond, understanding the evolving VAT exemption thresholds and engaging in their local association, such as the National Federation of Auto-Entrepreneurs (Fnae), can help them stay informed and prepare for potential future changes in the VAT legislation.
