TLDR: Freelance lawyers in France are subject to VAT on their professional services but benefit from a specific exemption that relieves them from applying the tax if their turnover does not exceed certain thresholds. If the threshold is exceeded, they must charge VAT to their clients starting from the first day of the month in which the threshold is surpassed.
VAT Billing Obligation
Freelance lawyers, including those registered with the Conseil d'État or the Cour de Cassation, are subject to VAT on their professional services. This obligation applies to all lawyers practicing independently, regardless of their specialization or field of activity. However, a specific exemption allows them to avoid applying VAT if their annual turnover does not exceed the thresholds set by regulations.
VAT Exemption: Conditions and Limits
The VAT exemption for lawyers allows them not to apply the tax on their services if their annual turnover does not exceed the established threshold. Lawyers benefiting from this scheme cannot include VAT on their fee notes and must state: "TVA non applicable, article 293 B du CGI" (VAT not applicable, Article 293 B of the French Tax Code). This mention is mandatory to avoid any confusion with clients and ensure tax compliance.
Exceeding the Exemption Threshold
If a lawyer exceeds the exemption threshold, they become subject to VAT starting from the first day of the month in which the threshold is surpassed. This means that all services provided from that date onward must be billed with VAT applied. Lawyers who lose the benefit of the exemption may issue corrected fee notes for operations in the month the threshold was exceeded that had not been taxed, thereby regularizing their tax situation.
VAT-Exempt Services
Certain services provided by lawyers are considered outside the scope of VAT. These include fees for procedural acts and representation, as well as compensation paid to lawyers under legal aid schemes. These services are not subject to VAT regardless of the lawyer's tax regime and should not be included in the turnover calculation for exemption purposes.
Billing Obligations
Lawyers not covered by the exemption must issue fee notes or equivalent documents clearly indicating the amount of VAT applied. This obligation ensures transparency with clients and the correct application of the tax. Conversely, lawyers benefiting from the exemption cannot include VAT in their invoices and must limit themselves to the legal mention required by regulations.
VAT Deduction
Lawyers benefiting from the exemption cannot deduct VAT on goods and services acquired for their activity. However, lawyers who become liable for VAT can deduct VAT on goods in stock and ongoing capital assets, with reductions for years of use.