French government drops controversial VAT reforms for self-employed workers
Proposals will not be included in future budget discussions and current levels will remain in place
VAT rates will remain at current levels
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Plans to lower VAT thresholds for self-employed workers have been scrapped, with ministers confirming the reform will be excluded from future drafts of the 2026 budget.
Several attempts to reform current rules have been made by the government, with measures being proposed in the 2025 budget.
Rejected by MPs and Senators and cancelled in November 2025 after months of discussion, a revised version of the measure introduced in the draft 2026 budget was also struck from the bill by both chambers during debates.
The proposed changes included in the 2026 would have seen the level for VAT payments set at 鈧�37,500 for self-employed retailers (down from the current 鈧�85,000) as well as remain at this level for most other self-employed people such as craftspeople, but with a reduction to 鈧�25,000 for self-employed construction workers.
While the 2026 budget will not pass in time for January 1, MPs will return at the start of next year and look to pass a watered-down version of it.
鈥楴ot a good idea鈥�
鈥淢Ps and senators stated that this [reform] was not a good idea.. There is a compromise because, clearly, our reform proposal is not sound,鈥� said Budget Minister Am茅lie de Montchalin on Monday, December 22.
鈥淚 acknowledge this, it is democracy. It will not be included in the final budget.鈥�
It means rates will remain at current levels, at least for now.
These see most self-employed workers in service businesses enter the VAT system after income reaches 鈧�37,500, or 鈧�85,000 for commercial businesses and renters of furnished accommodation (eg. chambres d鈥檋么tes).
The government said reforms included in the 2026 budget would bring in nearly 鈧�350 million per year in additional taxes.
Opponents however claimed it would make the position of many self-employed workers untenable, as the extra payments would significantly reduce profits.
The way VAT calculations are made mean that the taxes would apply to all sales once a chargeable threshold is reached, and not only to sales after a certain amount, causing a reduction in real income for workers making just above the proposed thresholds.
Despite this good news for self-employed workers, they will still need to prepare to switch to electronic billing by September 2025 if they have not already done so, which could cost a minimum of 鈧�600 per year.
