For freelancers, consultants, and small business owners in France or Germany, knowing when to start charging VAT is one of the most important early tax decisions you will face. Both countries offer VAT exemption schemes for businesses below certain revenue thresholds, meaning you do not add VAT to your invoices, do not file periodic VAT returns, and do not remit tax to the authorities.
These exemptions are not permanent. Once your revenue crosses defined thresholds, your invoicing obligations change, your pricing may need to change, and your administrative workload increases. Understanding where those limits sit, how grace periods work, and what your invoices should say at each stage is worth getting right before you hit the limit.
The French Franchise en Base de TVA
France's small business VAT exemption is called the franchise en base de TVA, governed by Article 293 B of the Code général des impôts. Below the applicable threshold, you do not charge VAT to clients, do not file VAT returns with the DGFiP, and cannot reclaim VAT on your own purchases. The scheme applies automatically at registration for auto-entrepreneurs and micro-entrepreneurs whose revenue falls below the relevant limit. You do not need to apply for it.
The Two-Tier Threshold System
France uses a two-tier threshold approach, and this is where many small business owners run into confusion. For each category of activity, there is a base threshold and a higher tolerance threshold. The rules work like this:
If your revenue exceeds the base threshold but stays below the tolerance threshold, you retain the exemption through the end of the current calendar year. VAT applies from 1 January of the following year.
If your revenue exceeds the tolerance threshold at any point during the year, VAT applies from the first day of the month in which you crossed it. There is no end-of-year continuation in this case. This is the scenario to prepare for carefully, because it means invoices you issued earlier in that month may need to be corrected if you issued them without VAT.
2025 and 2026 Thresholds by Activity Type
Service providers (prestataires de services)
This category covers freelancers, consultants, IT professionals, designers, coaches, and most knowledge-work professionals.
Base threshold: 37,500 euros Tolerance threshold: 41,250 euros
If your revenue for the year exceeds 37,500 euros but stays below 41,250 euros, you remain exempt until 31 December and register for VAT from 1 January of the next year. If your revenue exceeds 41,250 euros during the year, VAT applies from the first of that month.
Commercial sales and accommodation services
This category covers businesses selling physical goods, whether wholesale or retail, and those offering furnished short-term rentals and accommodation.
Base threshold: 85,000 euros Tolerance threshold: 93,500 euros
The same two-tier logic applies. Exceeding 85,000 euros but staying under 93,500 euros keeps you exempt through year-end. Exceeding 93,500 euros triggers VAT from the first of the current month.
Mixed-activity businesses
If you have both service revenue and commercial sales revenue, two conditions must both be met to retain the franchise en base exemption: your total revenue from all activities combined must stay below the higher commercial threshold (85,000 euros), and your service revenue alone must stay below the lower service threshold (37,500 euros). The two rules interact rather than apply independently. Businesses with genuinely mixed activities should verify their exact situation with an accountant.
Monitoring Your Revenue Through the Year
You do not calculate your threshold against a rolling 12-month total. The assessment is made on the calendar year, from 1 January to 31 December. At the start of each year, your eligibility for the following year depends on what you earned in the year just ended.
A practical habit is to check your cumulative year-to-date revenue at the end of each month against the relevant threshold. When you reach roughly 80 percent of the base threshold, it is time to prepare your invoicing software and alert your accountant. When you reach the base threshold, start the VAT registration process even before the year ends, so you are ready to issue VAT-compliant invoices from 1 January.
What Appears on Your Invoices Below the Threshold
Every invoice issued under the franchise en base de TVA must carry the following exact phrase:
"TVA non applicable, article 293 B du CGI"
This wording is mandatory and the article reference must be included. Writing "TVA exonérée" or "Non assujetti à la TVA" without citing Article 293 B is technically non-compliant and can be challenged during a tax audit.
The practical layout effect is simple: no VAT rate line, no VAT amount, and no TTC total. Your HT price is the total price your client pays. No tax decomposition appears anywhere on the invoice.
What Changes When You Cross the Threshold
Becoming VAT-liable in France involves several simultaneous changes.
You contact your Service des Impôts des Entreprises (SIE) to obtain a French VAT identification number (numéro de TVA intracommunautaire). This number follows the format: FR + two verification digits + your 9-digit SIREN, for example FR 12 123456789.
Your invoices must now show your VAT number, your client's VAT number for B2B transactions, the applicable VAT rate per line (the standard French VAT rate is 20 percent, with reduced rates of 10 percent and 5.5 percent for certain goods and services), the VAT amount per rate, the HT total, and the TTC total.
You remove the franchise en base mention entirely from your invoice template.
You begin filing periodic VAT returns (déclarations de TVA), either monthly or quarterly depending on your annual VAT liability, and transfer the collected tax to the DGFiP.
The transition also forces a pricing decision. If you were billing clients at 36,000 euros per year and now add 20 percent VAT, your invoices read 43,200 euros TTC. VAT-registered clients can reclaim that 7,200 euros and see no real increase. Individual clients or non-VAT-registered businesses face a genuine price rise unless you choose to absorb the VAT by reducing your net price.
The German Kleinunternehmerregelung
Germany's equivalent scheme is the Kleinunternehmerregelung under section 19 of the Umsatzsteuergesetz (UStG). Below the applicable thresholds, you do not charge VAT, do not file regular VAT returns, and cannot reclaim input VAT on purchases.
Updated Thresholds from January 2025
The thresholds changed significantly on 1 January 2025 under the Jahressteuergesetz 2024, which implemented EU Directive 2020/285 on the harmonisation of small business VAT exemptions.
Previous thresholds (up to 31 December 2024): Revenue in the prior year: must not have exceeded 22,000 euros net Revenue in the current year: must not be expected to exceed 50,000 euros net
Current thresholds (from 1 January 2025): Revenue in the prior year: must not have exceeded 25,000 euros net Revenue in the current year: must not exceed 100,000 euros net
Both figures are assessed on a net basis, meaning VAT-exclusive revenue. For businesses that have always been exempt and never charged VAT, the net and gross figures are the same. The distinction matters only when switching between regimes.
How the German Threshold Logic Works
The prior-year limit determines your eligibility at the start of each new calendar year. If your revenue in the previous year exceeded 25,000 euros, you are not eligible for the Kleinunternehmerregelung in the current year, regardless of what you expect to earn.
The current-year limit of 100,000 euros is a hard cap. If you exceed it at any point during the year, the Kleinunternehmerregelung ends immediately from that transaction onward. Unlike France, there is no tolerance mechanism that allows you to continue through year-end. The exemption stops the moment you cross 100,000 euros.
This creates two distinct monitoring tasks. You watch the prior-year total to know whether you qualify at the start of each year. And you watch the running current-year total to catch the moment when the exemption must end mid-year.
The Cross-Border Dimension from 2025
The Jahressteuergesetz 2024 also introduced the option for businesses established in other EU member states to use the Kleinunternehmerregelung in Germany, provided their total EU-wide revenue stays below the relevant thresholds. This reflects the broader EU harmonisation under Directive 2020/285. If you are established in France, for example, and also supply services to German clients, the new cross-border small business exemption option may apply to your situation. This is a relatively new and still underused provision, so verify the specific requirements with a tax advisor before applying it.
What Appears on Your Invoices Below the Threshold
German invoices issued under the Kleinunternehmerregelung must include a statement explaining why no VAT is charged. The standard and widely accepted phrasing is:
"Gemäß § 19 UStG wird keine Umsatzsteuer berechnet."
This references section 19 of the Umsatzsteuergesetz directly. As with the French equivalent, you do not show a VAT rate, VAT amount, or gross total. The net amount is your invoice total.
Kleinunternehmer do not require a German VAT identification number (Umsatzsteuer-Identifikationsnummer) for domestic invoices. However, if you supply services to VAT-registered businesses in other EU member states, you need one so that the reverse charge mechanism applies correctly and your client can account for the tax on their side.
What Changes When You Cross the Threshold
Once you become a regular VAT taxpayer under German law, your invoices must include your German VAT identification number, the applicable VAT rate (19 percent standard rate, 7 percent reduced rate for certain categories of goods and services), the net amount (Nettobetrag), the VAT amount per rate, and the gross total (Bruttobetrag).
You remove the Kleinunternehmer exemption statement from your template.
You begin filing periodic advance VAT returns (Umsatzsteuervoranmeldungen) with your Finanzamt, typically monthly or quarterly depending on your expected tax liability, and submit an annual VAT return (Umsatzsteuererklärung) at year end.
France Versus Germany: Key Differences at a Glance
The two schemes share the same purpose but differ in structure in ways that matter practically.
France uses two separate thresholds depending on activity type (services versus commerce), and the two-tier tolerance mechanism means crossing only the base threshold gives you time to transition at year-end. Germany uses a single threshold structure but distinguishes between prior-year and current-year revenue, and the current-year limit is an immediate hard stop with no tolerance.
France's base threshold for service providers sits at 37,500 euros, while Germany's current-year hard cap is 100,000 euros. A freelance consultant in Germany has considerably more headroom before VAT obligations begin, even though Germany's prior-year eligibility limit of 25,000 euros is lower than the French base threshold.
Both countries allow voluntary opting into VAT below the threshold, and both set minimum binding periods for that election (two years in France, five years in Germany).
Voluntary VAT Registration: When It Makes Sense
Both France and Germany allow you to register for VAT voluntarily even when you are below the threshold.
In France, you submit a written option to your Service des Impôts des Entreprises. The option is binding for a minimum of two years. In Germany, you inform your Finanzamt and the option is binding for five years.
Voluntary registration is worth considering in two main scenarios. First, if most of your clients are VAT-registered businesses who can reclaim the VAT you charge them. In that case, charging VAT costs your clients nothing net, while you gain the right to reclaim VAT on your own purchases. Second, if you have significant input VAT costs, for example on software subscriptions, equipment, professional services, or office rent, reclaiming those costs can outweigh the administrative overhead of filing VAT returns.
If your clients are primarily individuals or non-VAT-registered businesses, voluntary registration is generally not in your interest, because the VAT you add to your invoices is a genuine extra cost they cannot recover.
Practical Checklist
Track your revenue monthly against the relevant threshold. Do not wait until year-end to discover you crossed a limit two months ago.
If approaching the base threshold in France: start the VAT number application process early, update your invoice template, and inform your accountant. If you cross the base threshold, you have until 31 December before VAT applies.
If approaching the tolerance threshold in France or the 100,000 euro limit in Germany: the change is immediate. Update your invoices before issuing the next one and contact your tax authority the same day.
If approaching the prior-year limit of 25,000 euros in Germany: you will not lose the exemption during the current year, but you will start the next year as a regular VAT taxpayer. Use the remaining months of the current year to prepare.
At year-end, confirm your full-year revenue figure in both countries. In France, the prior-year revenue determines your eligibility for the following year's exemption. In Germany, the prior-year figure determines whether you qualify from 1 January.
Facturwise is an invoicing platform built for freelancers and small businesses across Europe, with support for Factur-X/ZUGFeRD e-invoicing, SEPA QR codes, and multi-currency billing. Whether you are currently invoicing under an exemption or have already crossed into full VAT territory, you can set up and send professional invoices in minutes. Start invoicing for free.
Disclaimer: This article is provided for general information only and does not constitute tax or legal advice. VAT thresholds and rules change periodically and individual circumstances vary. The figures stated reflect rules as understood at the time of writing in April 2026. Always verify current thresholds and obligations with your national tax authority (DGFiP in France, Finanzamt in Germany) or a qualified accountant before making decisions.
Frequently Asked Questions
What is the VAT threshold for auto-entrepreneurs providing services in France?
The base threshold is 37,500 euros. A tolerance threshold of 41,250 euros applies: exceeding 37,500 euros but staying below 41,250 euros keeps you exempt through year-end, with VAT applying from 1 January. Exceeding 41,250 euros triggers VAT from the first of the current month.
What is the VAT threshold for Kleinunternehmer in Germany from 2025?
From 1 January 2025, the thresholds are 25,000 euros net for the prior calendar year and 100,000 euros net for the current calendar year. Exceeding the 100,000 euro limit mid-year ends the exemption immediately.
What phrase must appear on French invoices under the franchise en base de TVA?
The exact phrase required is "TVA non applicable, article 293 B du CGI". No VAT rate or VAT amount is shown. The HT total is the invoice total.
What phrase must appear on German invoices under the Kleinunternehmerregelung?
A widely accepted phrasing is "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet." No VAT rate or VAT amount is shown. The net total is the invoice total.
Can I choose to charge VAT even if I am below the threshold?
Yes, in both countries. In France the option is binding for two years, in Germany for five years. It is worth doing if your clients are VAT-registered businesses that can reclaim the tax you charge them.