TLDR: Under the VAT exemption scheme, you are exempt from paying VAT on your transactions and cannot deduct VAT on your purchases. You must declare your activity within 15 days, maintain simplified accounting (an annual register of purchases and a daily journal of income), and monitor your turnover to avoid exceeding the legal thresholds. Invoices should only mention VAT if you have opted for VAT taxation.
Initial declaration and identification
You must file a declaration of existence and identification with the relevant business formalities center within 15 days of starting your activity. If you do not explicitly indicate an option for VAT taxation, you are automatically considered under the exemption scheme.
Simplified accounting obligations
You may maintain simplified accounting, which must include:
- An annual register summarizing the details of your purchases.
- A daily journal recording your professional income, supported by invoices and supporting documents. These documents must be presented upon request by the tax authorities.
Calculation of relevant turnover
Only income from your regulated legal activity is considered when assessing the exemption threshold. Non-regulated operations and exceptional income (such as the sale of fixed assets) are excluded. If you maintain your accounts according to commercial law rules, turnover is determined based on services rendered, regardless of payment receipt.
Issuing fee notes
Fee notes sent to VAT-registered clients must not mention VAT, unless you have explicitly opted for VAT taxation (thereby waiving the exemption).
Exceeding thresholds and loss of exemption
If your turnover exceeds the threshold set in Article 293 B of the French Tax Code (CGI) during the year, you become liable for VAT from the first day of the month in which the threshold was exceeded. Payments related to services performed before this date are not subject to VAT. If you lose the benefit of the exemption, you may issue corrective fee notes for the operations of the month in which the threshold was exceeded and must inform the tax authorities of your new status.
Simultaneous exemption schemes
You may benefit from two exemption schemes simultaneously:
- The exemption provided under Section III of Article 293 B of the CGI for operations related to your regulated activity.
- The exemption provided under Section IV of Article 293 B of the CGI for your other operations.
Option for VAT taxation
If you voluntarily choose to waive the exemption by opting for VAT taxation, you are subject to all the obligations applicable to VAT taxpayers.