Franchise en Base de TVA: 2026 Thresholds, Rules, and Exceptions

The franchise en base de TVA is a French tax regime that lets small businesses skip VAT entirely: no VAT on invoices, no VAT returns, no remittance to the Treasury. It applies automatically when your turnover stays below activity-specific limits, which for 2026 are €85,000 for sales of goods, restaurants, and accommodation, and €37,500 for services and most liberal professions. The trade-off is that you cannot recover the VAT you pay on your own business purchases, so the regime rewards businesses with low input costs and penalizes those with heavy supply or equipment spending.

2026 Turnover Thresholds

France uses two figures per activity: a base threshold measured against last year’s turnover, and an increased threshold measured against the current year’s. You keep the exemption as long as you stay at or below the base threshold in the prior year and at or below the increased threshold in the current year. The 2026 limits are unchanged from 2025:

Goods, restaurants, and accommodation: €85,000 base / €93,500 increased
Services and liberal professions (excluding lawyers): €37,500 base / €41,250 increased
Lawyers, regulated activities: €50,000 base / €55,000 increased
Lawyers, non-regulated activities: €35,000 base / €38,500 increased
Authors and artists, works and rights transfers: €50,000 base / €55,000 increased
Authors and artists, other activities: €35,000 base / €38,500 increased

Thresholds are measured against gross revenue before any deductions.¹

If your business mixes activity types, each category’s revenue is tested against its own threshold. A shop owner who also consults tracks goods revenue against €85,000 and consulting revenue against €37,500 separately.

During your first calendar year of operation there is no turnover cap for the exemption. The thresholds start applying the following year, and are pro-rated if your first year was a partial one. Keeping a monthly running total of revenue is the practical way to see a threshold breach coming before it happens.

What Happens if You Exceed a Threshold

The consequence depends on which line you cross, and the rules tightened at the start of 2025.

Exceeding the Base Threshold

Before 2025, a business could exceed the base threshold for two consecutive years before losing the exemption. That buffer is gone. Since January 1, 2025, any year in which your turnover exceeds the base threshold triggers VAT liability starting January 1 of the following year, with no grace period.²

So a service provider who earns €39,000 in 2026, above the €37,500 base but below the €41,250 increased threshold, keeps the exemption for the rest of 2026 and must begin charging VAT on all invoices from January 1, 2027.

Exceeding the Increased Threshold

Crossing the increased threshold is more abrupt. If your revenue in the current year exceeds €93,500 (goods) or €41,250 (services), you become liable for VAT from the first day of the month in which you cross it. You must immediately add VAT to every invoice, request an intra-community VAT number from your local tax office, and start filing VAT returns.¹

Once you are VAT-liable, you can also start deducting the VAT on your business purchases from that same date. If you have been absorbing significant input VAT, the transition partly offsets itself.

If you continued issuing VAT-free invoices for a period after crossing the line, you need to send corrective invoices to those clients showing the VAT that should have applied. Otherwise you will owe the uncollected VAT yourself.

Invoicing Rules Under the Exemption

Every invoice must show prices without any VAT line while you are under the franchise en base. Adding VAT, even as an informational item, is not allowed and can create a collection obligation.

Each invoice must carry the mention “TVA non applicable, art. 293 B du CGI” (VAT not applicable, Article 293 B of the General Tax Code). This is a mandatory statement, not optional wording. Omitting it does not automatically end the exemption but it does breach invoicing rules and can attract scrutiny during an audit.¹

Because you don’t collect VAT, you also can’t recover the VAT built into your own expenses. Office supplies, professional software, equipment, inventory: you pay the full VAT-inclusive price with no way to reclaim it. This is the central cost of the regime. When input expenses are heavy, the math often tips against staying exempt.

Choosing to Charge VAT Anyway

Any eligible business can elect to leave the exemption and charge VAT even when its turnover is well below the thresholds. Two situations make this worth doing: your clients are themselves VAT-registered businesses who can deduct the VAT you charge, so your prices are effectively neutral to them; or you have significant capital expenditure coming up and want to recover the input VAT.

To opt in, send a written request to the Service des Impôts des Entreprises (SIE) responsible for your business location. The election takes effect on the first day of the month you file it and locks you into VAT for a minimum of two calendar years, renewing automatically unless you actively withdraw.¹

One wrinkle: if you receive a VAT credit refund during your opt-in period, you’re locked in for a further two years and can’t revert early. Think through refund requests carefully if you plan to return to the exemption later.

Activities That Cannot Use the Exemption

Some activities are excluded no matter how small the turnover:

VAT-eligible real estate transactions, such as property development subject to real estate VAT
Farms covered by the simplified agricultural tax assessment scheme
Intra-community deliveries of new vehicles, boats, or aircraft to buyers in another EU member state
Activities that previously elected VAT and whose commitment period has not expired

Businesses in these categories must register for VAT regardless of revenue.

Mandatory Electronic Invoicing From September 2026

France is phasing in mandatory electronic invoicing for all domestic B2B transactions, and the rollout reaches franchise en base businesses whether or not they charge VAT.

September 1, 2026: every company, regardless of size, must be able to receive electronic invoices through a government-approved platform
September 1, 2026: large and mid-sized companies must begin issuing electronic invoices
September 1, 2027: small and micro-enterprises must begin issuing electronic invoices

Once your issuing deadline arrives, invoices must include new mandatory fields: the customer’s SIREN number, a delivery address if it differs from the billing address, and a note specifying whether the transaction involves goods, services, or both. Electronic invoices must be kept in digital form for at least six years.

Even if you’re a micro-enterprise that doesn’t have to issue e-invoices until September 2027, you still need to be able to receive them by September 2026. That means selecting a government-approved platform and making sure your systems can handle incoming electronic invoices from suppliers already required to send them.³

Selling in Other EU Countries

Since January 1, 2025, an EU-wide scheme lets small enterprises sell in other member states without charging VAT there, extending the domestic exemption concept across borders. To qualify, your total EU-wide turnover must not exceed €100,000 in either the current or previous calendar year, and you must also stay below each destination country’s own national exemption threshold.⁴

Registration goes through France as your member state of establishment, which issues you a single EX identification number covering VAT-exempt activity in every EU country where you sell. The process should take no more than 35 working days.

Cross the €100,000 EU-wide ceiling and you lose the cross-border exemption in every member state at once, with your EX number deactivated. You would then need to register for VAT in each country where you sell, unless you still qualify for France’s domestic franchise en base. A quarantine period applies before you can rejoin the scheme.⁴

A Note for American Owners

US citizens and permanent residents who run a French business under the franchise en base still owe US tax on worldwide income. The French exemption releases you from French VAT collection; it does nothing for your US federal filing obligations.

French business income goes on Form 1040. Depending on how the business is structured under French law, you may also need Form 5471 if you hold 10% or more of the voting power or value of a foreign corporation. Sole proprietorships and auto-entrepreneur structures typically report on Schedule C, but a corporate wrapper can trigger the Form 5471 requirement.⁵

If your French business bank accounts, combined with any other foreign accounts, exceed $10,000 in aggregate at any point in the year, you must file FinCEN Form 114, the FBAR, with the Treasury. It’s separate from your tax return with its own deadline.⁶

Form 8938 may also apply. For taxpayers living in the US, the trigger is $50,000 in total foreign financial assets on the last day of the tax year or $75,000 at any point (doubled for joint filers). For taxpayers living abroad, thresholds run higher: $200,000 on the last day or $300,000 at any point ($400,000 and $600,000 for joint filers).⁷

Penalties apply even when no tax is owed. The FBAR alone carries penalties up to $10,000 per unreported account per year for non-willful violations. The simplicity of the French side can make the American paperwork easy to overlook.⁸

1
Service Public Entreprendre. Franchise en base de TVA
2
Service Public Entreprendre. Exemption from VAT: Abolition of the Single Exemption Threshold of 25,000 Euros
3
Service Public Entreprendre. Electronic Invoicing: Its Coming Soon!
4
European Commission. Cross-Border SME Scheme – VAT Rules for Small Enterprises
5
Internal Revenue Service. Instructions for Form 5471
6
FinCEN. Report Foreign Bank and Financial Accounts
7
Internal Revenue Service. Do I Need to File Form 8938, Statement of Specified Foreign Financial Assets
8
Internal Revenue Service. Reporting Foreign Income and Filing a Tax Return When Living Abroad