The French Senate has rejected government plans to lower VAT exemption thresholds for small businesses and self-employed workers, delivering a decisive blow to reforms that had sparked widespread opposition among micro-entrepreneurs.
On 2nd December, senators voted in favour of amendments to remove the proposal from the 2026 draft finance bill, which forms part of the annual budget alongside the social security finance law. The move mirrored action taken by MPs in the Assemblée nationale on 20th November, where amendments were passed with near unanimity, securing 239 votes in favour and just four abstentions.
The rejected reform would have introduced a single VAT exemption threshold of €37,500 for micro-entrepreneurs across most sectors, with a lower threshold of €25,000 specifically for the construction sector, set to take effect from 1st January 2026. The decision to remove the measure from the budget means these changes will be definitively cancelled.
Current thresholds to remain in place
Under existing regulations, VAT exemption thresholds stand at €85,000 for running commercial businesses and renting out furnished accommodation, whilst services and trades benefit from a €37,500 threshold. Self-employed lawyers, authors and performers operate under separate limits, with €50,000 for their main activities and €35,000 for related activities.
The proposed changes had faced strong resistance from small business owners who argued the reforms would create additional administrative burdens, increase accounting costs and force many to raise their business rates to compensate for the lost tax exemption benefits.
Government signals comprehensive review needed
Amélie de Montchalin, Minister of Public Accounts, acknowledged before the Senate that the government has been treating self-employment on a general basis covering aspects including taxes, welfare and social protection. She emphasised the need for a more comprehensive approach to reforming the sector.
Second attempt at threshold reform fails
This marks the second failed attempt by the government to reform VAT thresholds for micro-entrepreneurs. The 2025 budget had already sought to create a single VAT exemption threshold of €25,000 for micro-entrepreneurs, a measure that was initially delayed before being definitively rejected by MPs in October.
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Photo credit: Maxence Pira, Unsplash