Value Added Tax is, generally speaking, a levy on consumption.
In theory, it is not up to vendor companies to absorb VAT costs, but rather the end consumer. The vendor company simply collects the amount on behalf of the government.
In practice, however, VAT can and does influence prices and tariffs. For example, this happens when you sell products or services to members of the public, who - unlike professionals and companies - cannot recover the VAT on their purchases.
It is possible to claim VAT exemption under certain conditions, and to qualify, your turnover must not be greater than:
- €91,900 for activities in commerce or the accommodation sector
- €36,800 for services and liberal professions.
Note: these new thresholds are valid for 2023, 2024 et 2025.
The exemptions apply automatically if you do not exceed the above limits, and you do not need to make any requests. Having said that, if you do exceed those limits, it is up to you to contact the business tax office (Service des Impôts des Entreprises - SIE) in order to obtain a VAT number. So keep a close eye on how your turnover grows to avoid hefty fines when the tax inspectors come calling.