Micro-Entrepreneurs Sail Calm Waters for Now: VAT Exemption Threshold Postponed
Self-employed facing VAT: 'Full implementation imminent', following reversal of previous arrangements
By Sabrina Guintini | May 18, 2023
Smooth sailing for micro-business owners in France, as the anticipated reform for VAT exemption thresholds takes a backseat, at least until the Fall budget discussions. The revelation was shared by the Minister of the Economy, Eric Lombard, during the National Assembly's question time.
However, the proposed changes have not received universal approval. According to Lombard, "The proposed reform is met with neither unanimous support nor opposition."
The plan to decrease the VAT exemption threshold for micro-entrepreneurs had been suspended until June 1st, but it appears that time for rethinking is on the horizon. Jean-Eudes du Mesnil, secretary-general of the CPME, unapologetically calls the measure "mind-bogglingly unprepared"[1].
During an interview on RMC on May 1st, du Mesnil expressed frustration surrounding the six-month discussion whirlwind, leaving many people anxious and discontented, all for no apparent reason. He asserts that the measure was tossed into the budget as a cost-saving ploy, causing chaos indiscriminately.
As it stands, micro-entrepreneurs will continue to be exempt from VAT until their annual turnover surpasses €37,500 (€85,000 for commerce). Originally, the government was pushing to force them to apply VAT from €25,000[2].
A Financially Fragile Proposition?
Du Mesnil questions the continued existence of the micro-entrepreneur status, created thirteen years ago. In his opinion, expediting a measure due to financial urgency is a major misstep. He proposes a collaborative approach instead: "We should gather around a table, conduct an assessment, and tackle areas such as construction that require adjustments."
The Minister of SMEs, Veronique Louwagie, is set to meet with parliamentary groups on Tuesday to kick off discussions. The goal is to reach a consensus by Fall[3]. In the meantime, French micro-entrepreneurs enjoy a temporary reprieve from the fray, as reflected by the elated response from Gregory Leclercq, president of the national federation for the sector: "It’s a victory for now, but we haven’t won the war. We need a complete repeal, without leaving micro-entrepreneurs in the construction and commerce sectors in the lurch."
[1] RMC interview: Jean-Eudes du Mesnil. (May 1, 2023). Link
[2] Minister of the Economy's Statement on the government hemicycle of the National Assembly. (May 10, 2023). Link
[3] Budget discussions timeline. (February 24, 2023). Link
[4] Unpopularity and backlash against the proposed changes. (March 30, 2023). Link
[5] Administrative Complexity Fears. (April 7, 2023). Link
- The unanimous opposition or support for the proposed VAT exemption threshold reform in France is not clear, as stated by the Minister of the Economy, Eric Lombard.
- The minister's announcement postponed the implementation of the lower VAT threshold for micro-entrepreneurs until the Fall budget discussions, providing a temporary relief.
- According to Jean-Eudes du Mesnil, the secretary-general of the CPME, the proposed changes were rushed and ill-prepared, causing confusion and discontent among many entrepreneurs.
- The current policy does not require micro-entrepreneurs to apply VAT until their annual turnover surpasses €37,500 (€85,000 for commerce), which contrasts with the government's former intention of enforcing VAT from €25,000.
- Du Mesnil calls for a collaborative approach to tackle areas such as construction that require adjustments, rather than pushing through cost-saving measures without due consideration of their potential impact on micro-entrepreneurs.
