VAT threshold drop for self-employed in France suspended until June
The controversial measure is opposed by professional groups and several leading MPs
Minister of Finance Eric Lombard says he will “listen to the demands of self-employed entrepreneurs”
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The proposed introduction of lower VAT thresholds that would see many micro-entrepreneurs subject to charging the tax has been suspended until June to allow for a consultation period - but the measure’s high-profile critics are calling for it to be abolished altogether.
Under the proposals, all workers, retailers and professionals who are self-employed as microentrepreneurs would have to charge 20% VAT once they earn more than €25,000 a year.
At present, the VAT thresholds are €37,500 for most microentrepreneurs and €85,000 for retailers.
The changes, which were initially scheduled to come into force on March 1 would have seen hundreds of thousands of microentrepreneurs either charge more by adding the VAT to their current pricing, or lose 20% of their revenue (by maintaining their price but having to pay VAT on it to the French tax authorities).
Changes suspended - but not cancelled
Minister of Finance Eric Lombard alluded to suspending the proposed threshold decrease on February 6, saying he would “listen to the demands of self-employed entrepreneurs”.
The suspension was confirmed by the Finance Ministry on February 28.
“The government has decided to suspend the reform until June 1 in order to work with stakeholders and members of parliament on appropriate responses to concerns”.
However, critics of the proposals would like to see them cancelled altogether.
Former prime minister Gabriel Attal called the proposed changes “more of a disadvantage for the country than a benefit”.
“The risk is not just that the French will pay more tax: it is also that they will create fewer businesses. This measure would massively destroy activity and wealth in our country,” he wrote in an open letter to La Tribune Dimanche on February 23.
“More than 200,000 microentrepreneurs will be affected. [That is] 200,000 workers in cleaning, sales, construction and transport.”
Read more: VAT on small businesses: French MPs call for no reduction in threshold
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