VAT Threshold Reform 2026: Where Do Things Really Stand?
Few topics stirred the self-employed as much in 2025 as the plan to lower the VAT franchise threshold to €25,000 for everyone. Between announcements, suspensions and U-turns, many micro-entrepreneurs no longer know what actually applies. Here is the situation clarified, up to date for 2026.
The short answer: the reform was abandoned. In 2026, VAT franchise thresholds remain unchanged. But the story is worth understanding, because it sheds light on a risk that has not entirely disappeared.
What was planned — and why it caused an uproar
The 2025 finance law introduced the idea of a single €25,000 VAT franchise threshold, against €37,500 for services and €85,000 for sales. The stated aim was budgetary: to bring hundreds of thousands of micro-entrepreneurs into the VAT net.
The effect would have been heavy. A consultant invoicing €30,000 a year, currently exempt, would have had to charge 20% VAT to clients — either raising prices or eroding margin — and manage VAT returns. For a client base of individuals or small non-registered structures, the competitive impact was direct.
The timeline of a U-turn
| Date | Event |
|---|---|
| Late 2024 | The single €25,000 threshold is voted in the 2025 finance law |
| February 2025 | First suspension amid an outcry |
| 30 April 2025 | The Economy Minister suspends the measure pending the 2026 budget |
| April 2025 | The Senate finance committee calls the reform "improvised" |
| Late 2025 | Article 25 of the 2026 finance bill (€37,500 single threshold) is removed by Parliament |
| 3 November 2025 | Law no. 2025-1044 definitively repeals the single €25,000 threshold |
The result: neither the €25,000 threshold nor the single €37,500 variant survived. The status quo prevailed.
VAT franchise thresholds applicable in 2026
| Activity | Base threshold | Upper threshold |
|---|---|---|
| Services (BIC/BNC) | €37,500 | €41,250 |
| Sale of goods and accommodation | €85,000 | €93,500 |
| Lawyers, authors, performing artists | €50,000 | €55,000 |
The two-threshold mechanism is essential. As long as you stay under the base threshold, you charge no VAT. If you cross the upper threshold during the year, VAT applies from the first day of the month of the overshoot. Between the two, a tolerance exists if you did not exceed the base threshold the previous year.
Key takeaway: in 2026, nothing changes for VAT. A service provider remains exempt up to €37,500 in revenue. Our full guide to the self-employed VAT threshold details overshoot cases.
The risk hasn't fully disappeared
Abandoned does not mean buried for good. The idea of broadening the VAT base returns regularly in budget debates, notably under the pressure of European rules that cap franchise regimes. It is therefore prudent to:
- Follow each finance law: it is the legislative vehicle through which a new threshold could reappear (see our tracker on the 2026 finance law);
- Anticipate your move to VAT if your activity grows: beyond €37,500, the question is no longer "if" but "when";
- Understand that VAT is not always unfavourable: for a client base of businesses that reclaim VAT, charging it changes nothing to their cost and opens the deduction of your own VAT.
If your revenue approaches the threshold, simulate the impact of a move to VAT on your net income with our micro-enterprise simulator, and check your new 2026 micro caps along the way.