VAT stands for Value Added Tax. This is an indirect tax on consumption. It is paid by consumers, but deducted by the auto-entrepreneur. It is included in the selling price, hence the following references in terms of selling price or purchase price:
- Price before tax (HT) means without VAT included ;
- Price inclusive of all taxes means that VAT is included.
The VAT collected by the auto-entrepreneur is paid to the government in accordance with specific procedures, discussed in greater detail in our article.
VAT rates vary according to the provisions of the General Tax Code:
- Standard rate of 20% for products and services.
- Intermediate rate of 10% for unprocessed agricultural products, energy improvements, certain housing services, passenger transport, etc.
- Reduced rate of 5.5% for food products, books, energy subscriptions, etc.
- Special rate of 2.1% for drugs reimbursed by Social Security, etc.
The basic VAT exemption scheme applies to auto-entrepreneurs, based on certain sales ceilings. It takes into account the nature of the activity carried out:
- Craftsmen, self-employed professionals, service providers: 36,800 euros per year, with a tolerance threshold of 39,100 euros.
- Purchase and sale of goods, accommodation activities: 91,900 euros per year, with a tolerance threshold of 101,000 euros.
For the basic VAT exemption, there are two types of threshold:
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The exemption threshold corresponds to the ceiling that must not be exceeded in order to benefit from the basic VAT exemption scheme;
- The tolerance threshold is a ceiling slightly higher than the deductible threshold, constituting a tolerance in the event of the latter being exceeded.
If the auto-entrepreneur falls within the tolerance threshold for two consecutive years, he must apply VAT from January 1 of the following year.
In addition, if a self-employed entrepreneur exceeds these VAT exemption thresholds during the course of a calendar year, he is liable for VAT from the 1st day of the month in which the thresholds are exceeded. He must then pay VAT in accordance with the provisions set out below.
If your annual sales allow you to benefit from basic VAT exemption, you must include the following information on your invoices: "TVA non applicable, article 293 B du Code général des impôts" (VAT not applicable, article 293 B of the General Tax Code).
If you are liable for VAT, your invoices must include your VAT identification number for any total amount (excluding VAT) equal to or greater than 150 euros. If you sell your products outside France, you must include your intra-Community VAT number on your invoices.
VAT declarations by micro-entrepreneurs require certain formalities to be completed. To declare your VAT, go to your professional space on the Service des Impôts des Entreprises (SIE) website. From your SIE professional space, you can specify two amounts:
- VAT invoiced to your customers, and therefore payable.
- VAT paid on business purchases.
There are two possible scenarios in terms of VAT treatment.
The normal actual regime
Under the "régime réel normal", micro-entrepreneurs must file their n°3310 CA3 declaration electronically on a monthly basis. However, if the annual VAT due is less than 4,000 euros, the entrepreneur may file electronically every calendar quarter.
It's quite rare for auto-entrepreneurs to opt for this VAT system, as the administrative obligations are quite onerous. Using the services of a chartered accountant can save time and avoid mistakes.
Simplified real-estate regime
Under the simplified actual tax regime, the entrepreneur must make two VAT instalments: in June and December. He submits the n°3517 CA12 declaration, summarizing all taxable operations relating to the last closed accounting period. An annual adjustment declaration must be filed before May of the following year.
This is the least restrictive system for micro-entrepreneurs, who do not need to use the services of a chartered accountant to keep their accounts.
When it comes to VAT, micro-entrepreneurs are exempt from having to charge it to their customers. This is a specific feature of the micro-business micro-tax system, and a real asset in terms of tax management.
Written by our expert Editorial staff
July 11, 2024
