France is confirming, June 2025 will be the date VAT Threshold Cuts for Services and Goods will take place France will implement a controversial reduction in VAT registration thresholds for services and goods starting June 1, 2025, following a delayed rollout and public consultation. Here’s what businesses need to know about the changes and their implications.
Key Changes
Services Threshold: Drops from €37,500 to €25,000 for VAT exemption eligibility.
Goods Threshold: Set at €85,000, aligning with the EU’s domestic sales threshold.
Registration Threshold: No Threshold for Traders established outside of France.
EU Harmonization: Businesses can opt for a pan-European €100,000 threshold under the EU’s 2025 SME scheme.
Why the Delay?
Originally scheduled for March 1, 2025, the reduction was postponed after backlash from freelancers and politicians, who warned of price hikes and compliance burdens for 250,000 self-employed workers. A public consultation (February 7–28, 2025) led the government to adjust timelines while retaining the €25,000 target for services.
Impact on Businesses
- Micro-entrepreneurs: Service providers nearing €25,000 in annual turnover must register for VAT earlier,
affecting pricing and cash flow.
- Goods Sellers: The €85,000 threshold remains stable, but cross-border traders benefit from the EU’s simplified €100,000 scheme.
- Compliance: Mandatory e-invoicing for B2B (effective January 2025) will add pressure to update systems before June.
EU Context
France’s reforms align with the EU’s push to reduce VAT fraud and standardize thresholds. The bloc’s 2025 SME package allows businesses with pan-EU sales under €100,000 to avoid multiple VAT registrations.
Preparing for June 2025
- Track Turnover: Use accounting tools to monitor sales against the new thresholds.
- Review Pricing: Factor in VAT obligations for service providers approaching €25,000.
- Use EU schemes: Consider the pan-European threshold when trading across borders.
Final Note: While the delay offers temporary relief, the June 2025 deadline requires swift action.
Businesses should consult tax advisors to navigate compliance and avoid penalties.