VAT news: Two useful information

1 – Lowering the exemption (franchise) threshold
2 – Hotel or hotel-type accommodation services

Article of 15/04/2025 updated on 09/06/2025

The 2025 Finance Act established a single national exemption threshold, set at €25,000 for the previous calendar year and €27,500 for the current year, regardless of the activity carried out.

Faced with questions raised by this measure and its implementation on March 1^st 2025, it was decided to suspend this reform until June 1^st 2025.

Finally, the Government decided to suspend implementation of the reform until the end of 2025 in order to propose a new bill that takes into account the realities of competition and simplifies the system.

Below we provide a brief reminder, in the first part, of the current VAT exemption thresholds as well as the terms of exit from the exemption regime.

In the second part, we will set out the conditions that must be met in terms of services provided to customers by a furnished rental company, in order to be subject to VAT under the hotel regime.

1 – The exemption threshold

The VAT exemption applies for the current year when the turnover generated in France for the previous year is less than or equal to:

• €85,000 for companies engaged in trading activities or providing accommodation services;
• €37,500 for companies providing services other than sales for consumption on the premises and accommodation services.

If these thresholds are exceeded, the VAT exemption may continue to apply in the year in which the thresholds are exceeded, provided the “increased” thresholds are not exceeded:

• €93,500 for companies engaged in trading activities or providing accommodation services;
• €41,250 for companies providing services other than sales for consumption on the premises and accommodation services.

In addition, since January 1^st 2025, the VAT exemption also applies to transactions carried out by the company in one or more Member States of the European Union (EU).

The company will benefit from the applicable exemption regime of the Member States concerned if it meets the following conditions:

• not exceed €100,000 in turnover in the EU in the previous year and the current year;
• provide the French administration with prior notification indicating the intention to use the VAT exemption in one or more EU Member States;
• meet the conditions for application of the VAT exemption regime of the EU State(s) concerned.

Consequences of the exit from the “franchise” regime:

In the event of excess of the increased threshold, the company must submit VAT on transactions carried out from the first day the threshold is exceeded. Invoices issued from this date onward must indicate the amount of VAT charged to customers.

The company is now entitled to deduct VAT on its business purchases.

What should new taxpayers do?

• Check with the tax office that their VAT number is active or, failing that, request its activation and create their subscriber area in order to transmit their VAT declarations to the tax authorities (or contact an EDI partner for electronic transmission);
• Update the invoicing software to remove any reference to the VAT exemption regime;
• Implement processes, a management system, or an ERP system that will enable it to comply with all the VAT issues and obligations resulting from this new status as a VAT payer.
  
  
  

2 – Hotel or hotel-type accomodation services

A large number of no-professional furnished rental companies (LMNP mainly) would like to obtain a VAT refund on their investments but are frightened by the conditions required (particularly the ancillary services to be provided) in order for their services to be subject to hotel VAT.

In fact, in addition to the usual nature of repeatedly providing rental services, the para-hotel activity is characterized by the offer, in addition to accommodation, of at least three of the following four services:

• The cleaning of the premises must be carried out regularly. This condition will be considered satisfied when the operator simply has the means to offer such a service to the customer during their stay, at regular intervals. On the other hand, it must be considered not satisfied if the operator only cleans at the beginning and end of the stay or if it provides the customer with cleaning equipment.
  However, it is accepted that an operator only carries out cleaning at the beginning and end of the stay provided that it has the means to offer a cleaning service at a regular frequency, provided however that the stay does not exceed 5 nights.
  
  
• The operator must provide household linen to all tenants during their stay. It is not essential to change it regularly.
  
  
• The operator must have the necessary resources during the rental period to offer a reception service, even if not personalized, to customers. This reception service may be entrusted to a representative who provides it in a single location separate from the premises themselves (for example, a reception service located at the entrance to the village where the rentals are located). An electronic reception system (key box) with no alternative in the form of a physical reception desk is not enough to meet this requirement.
  
  
• The operator must have the necessary means to be able to provide breakfast to all tenants either (at the operator’s choice) in the rooms or apartments, or in a converted room located in the building or the real estate complex.

Note: The furnished premises must include all the furniture essential for normal occupancy by the tenant. However, it is no longer required that the operator be registered in the trade and companies register.

Note: Where separate professionals each provide, under their own responsibility, the provision of furnished accommodation on the one hand and all or part of the ancillary services on the other, the provision of furnished accommodation is exempt from VAT.

Do you have any question about these two information?
Don’t hesitate to contact us, all our team is at your disposal.