VAT news: Two useful information

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

The 2025 Finance Act establishes a single national exemption threshold, regardless of the activity carried out. In a publication dated on March 3^rd 2025, the administration specifies that if the thresholds are indeed modified on March 1^st 2025, the practical consequences of the exit from the exemption regime will be effective from June 1^st 2025.

We will specify below, in the first part, the terms of exit from the franchise regime for the companies concerned.

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 – Lowering the exemption threshold

Companies affected by the exit from the basic exemption scheme as of March 1^st 2025, are taxable entities that meet two conditions:

• did not exit the scheme before in 2025;
• and that exceeded the new thresholds either in 2024 or during 2025.

This threshold, set at €25,000 for the previous calendar year and €27,500 for the current year, regardless of the activity carried out.

Consequently, the taxable persons concerned are companies benefiting from the VAT exemption (franchise) until February 28^th 2025 and:

• whose turnover in 2024 exceeds €25,000;
• or whose turnover from January 1^st 2025, exceeds the threshold of €27,500.

Consequences of the exit from the “franchise” regime:

The transitional regime below applies to taxable persons whose exit results from the threshold changes mentioned above.

For these taxable persons, the obligation to collect VAT and the possibility of deducting input VAT will apply to transactions carried out from June 1^st 2025.

The obligation to collect VAT and the possibility of deducting input VAT will apply to transactions carried out from 1^st June 2025. Thus, the first VAT return must be filed in July 2025. VAT adjustments (particularly for fixed assets) may appear on this return.

What should new taxpayers do now?

• 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 non-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.