France's Senate again axes Budget's controversial VAT changes

"A provision in last year's delayed Budget lowered the threshold at which micro-enterprises had to start collecting and paying VAT to €25,000 in annual turnover, rather than the current €37,500 for services and €85,000 for commercial activities. The micro-enterprise status is most commonly used by freelancers, contractors, sole traders and small businesses - it has a maximum earning threshold so most of those on the status are low to medium earners."

"Almost as soon as the bill was passed, that provision was 'paused' following an outcry from small business owners. It was later formally suspended until 2026. In November this year, parliamentarians rescinded the postponed 2025 provision entirely. However, Sébastien Lecornu's second government reintroduced in the Budget an updated proposal for a "common law" threshold at €37,500, with a specific threshold at €25,000 for micro-entrepreneurs in the construction sector."

""All small businesses are up in arms against what the government is trying to do," Senator Victorin Lurel said, calling on the government to, "not only to abolish but to rethink" the proposal. "We clearly need to take a more comprehensive approach," conceded Public Accounts Minister Amélie de Montchalin. On Tuesday the Senate removed the revived plan from the 2026 Budget - although its still unclear whether the budget will be passed at all, and what form it could be passed in, so the idea is not completely dead yet."

France's Senate removed a revived plan to lower VAT registration thresholds for micro-enterprises from the 2026 Budget. A prior Budget provision had reduced the VAT threshold to €25,000 from €37,500 for services and €85,000 for commercial activities. Micro-enterprise status covers freelancers, contractors, sole traders and small businesses with low-to-medium earnings. The €25,000 change was paused after outcry, suspended until 2026 and rescinded for 2025. The government later proposed a common €37,500 threshold and a €25,000 threshold for construction micro-entrepreneurs. The Senate's removal leaves the proposal's future uncertain pending the budget's passage.

Read at The Local France