Sole trader invoicing and VAT: the practical guide

By default, when you launch as a sole trader (micro-entrepreneur) in France, you fall under the VAT exemption scheme (“franchise en base de TVA”). In practice, this means you don’t charge VAT to your clients. It’s a real administrative boost when starting out, but be careful: this comfort depends on turnover thresholds you need to watch closely. Good invoicing management is therefore crucial, from day one.

What is the VAT exemption scheme?

When diving into the deep end of self-employment, the first concept to master is the VAT exemption scheme. This default regime simply means you invoice your clients excluding tax (net of VAT). For your individual clients, that’s good news: your prices are more attractive, since they don’t have to pay VAT. On your end, the paperwork is much lighter.

This infographic nicely sums up the situation of a freelance creative who, thanks to this system, can focus on their craft rather than complicated tax calculations.

Not having to juggle VAT at the start is a real asset for launching serenely and offering prices that hit the mark.

The concrete advantages when starting out

Not charging VAT when you’re starting out changes quite a few things, and for the better.

• You’re more competitive: Your prices are automatically lower than those of a standard business subject to 20% VAT. That’s a strong argument for winning over your first clients.
• Management is a breeze: No VAT return to fill out, which means more time you can spend finding jobs and growing your business.
• Your cash flow is simpler to read: The money coming into your account is net (before contributions and taxes, of course). No need to set anything aside for the state.

This regime is really designed to make launching easier. Take the example of a freelance graphic designer: they can invoice a brand identity project at €1,000 net. An agency, on the other hand, would have to invoice €1,200 including tax. For a client with a tight budget, that 20% gap can clearly make the difference.

It’s essential to master invoicing rules from the outset. To dig deeper into the topic, feel free to check out our complete guide on sole trader invoicing without VAT, which notably details the legal mentions to include on your documents.

And if the adventure tempts you beyond our borders, it can be interesting to draw inspiration from models for starting a business internationally, which offer other perspectives on entrepreneurship.

Monitoring VAT thresholds: an unavoidable step to grow

As a sole trader, moving to VAT invoicing never comes as a surprise. It’s a logical step, directly tied to your turnover growth. To anticipate it properly and avoid unpleasant surprises, you need to understand how these famous thresholds work. It’s not just a number to memorize, it’s a mechanism to master.

Specifically, there are two thresholds to keep in mind. They differ depending on whether you sell goods or offer services. Be careful, these amounts are updated regularly, so always check the current year’s figures!

The difference between the base threshold and the increased threshold

The first key figure is the base exemption threshold. As long as your annual turnover doesn’t exceed it, you’re fine: you invoice excluding tax, thanks to the VAT exemption scheme.

The second is the increased threshold, also called the tolerance threshold. If your turnover sits between the base threshold and this increased threshold, you benefit from some flexibility. You can finish the current year (year N) without charging VAT. However, it’s settled: starting January 1st of the following year (N+1), you’ll have to apply it.

The real turning point is when you cross the increased threshold. At that point, the change is immediate. You must start charging VAT from the first day of the month in which you exceeded this cap.

To make this clearer, let’s take the example of a freelancer.

Scenario: a marketing consultant

Imagine a consultant who invoices services. For 2025, the thresholds concerning them are €37,500 (base) and €41,250 (increased).

• Scenario 1: They end their year with turnover of €38,000. They’ve exceeded the first threshold but remain below the increased threshold. They continue invoicing without VAT until December 31st. But they must already prepare: from January 1st, all their invoices will need to include VAT.

• Scenario 2: On October 15th, their cumulative turnover reaches €42,000. They’ve just crossed the increased threshold. The process kicks in: they must contact their local business tax office (SIE) without delay to obtain their intra-community VAT number. All invoices issued from October 1st onward will need to be corrected to include VAT.

Careful not to mix everything up: turnover caps and VAT thresholds

A common mistake is confusing VAT thresholds with the turnover caps of the micro-entrepreneur regime. The turnover caps, which are much higher, determine whether you can remain a sole trader.

It’s therefore entirely possible (and even quite common) to be a sole trader and charge VAT. To dig deeper, our complete article on VAT for micro-businesses will give you all the details.

Here’s a table to help you see things clearly and keep the right figures on hand.

Summary of turnover and VAT thresholds for sole traders

This table summarizes the turnover caps not to exceed to keep the micro-entrepreneur regime, and the thresholds related to the VAT exemption scheme.

Type of activity	Micro-regime turnover cap	VAT exemption threshold	Increased VAT threshold
Sale of goods	€188,700	€91,900	€101,000
BIC services	€77,700	€36,800	€39,100
BNC services	€77,700	€36,800	€39,100

Keeping an eye on these figures is the best way to steer your business. If you want to explore turnover caps further, the site corrigetonimpot.fr clearly explains sole trader thresholds (in French). By mastering this data, you stop suffering administrative changes and start anticipating them.

Here we go: issuing your first invoice with VAT

The moment has come. You’ve carefully monitored your turnover thresholds, and now you need to charge VAT. This first time can feel a bit intimidating, but in reality, it’s a very logical procedure. Let’s see together how to approach this transition smoothly and without mistakes.

The very first thing to do is an administrative step, but an absolutely crucial one: obtaining your intra-community VAT number. Without this key, it’s impossible to go any further and charge VAT legally.

Fortunately, the request is fairly simple. You just need to contact your local business tax office (SIE) through the secure messaging of your professional account on impots.gouv.fr. In your message, simply explain that you’ve exceeded the VAT exemption threshold and request activation of your number. It generally takes a few days to a few weeks to receive it.

Rethinking the structure of your invoice

Once you have your VAT number in hand, the format of your invoices will need to change. The famous mention “TVA non applicable, art. 293 B du CGI” must now disappear to make way for new essential information. This is the perfect time to refresh your memory on the principles of client billing and make sure all the fundamentals are solid.

Your new invoices must necessarily display:

• Your intra-community VAT number: place it alongside your usual information (business registration number, address).
• Your business client’s VAT number: if you’re invoicing another VAT-registered business, this is a mandatory mention.
• The breakdown of amounts: each line (service or product) must be detailed excluding tax.
• The VAT rate applied: clearly indicate the percentage used (for example, 20%).
• The VAT amount: the total VAT you’re collecting on this invoice.
• The total amount including tax: the final sum your client will need to pay you.

These new mentions are essential to guarantee the transparency and compliance of your documents in the eyes of the tax authorities.

Applying the right VAT rate

The VAT rate to charge depends directly on the nature of your activity. It’s essential not to get it wrong, as a mistake could quickly become a headache when filing your returns.

In France, the most common rates are as follows:

• Standard rate of 20%: This is the default rate. It applies to the vast majority of services and goods sales.
• Intermediate rate of 10%: Often found for renovation work on older housing or in the restaurant industry.
• Reduced rate of 5.5%: This applies to essential goods, books, or energy subscriptions.

For a graphic designer, web developer, or consultant, the 20% rate will almost always be the norm. Conversely, a construction tradesperson will often have to juggle between the 10% and 20% rates, depending on the exact nature of the work carried out for clients.

A concrete calculation example on an invoice

Imagine a consultant invoicing a consulting assignment at €1,500 excluding tax.

• Amount excluding tax: €1,500.00
• VAT at 20%: €1,500 × 0.20 = €300.00
• Total amount including tax: €1,500 + €300 = €1,800.00

On your invoice, these three amounts must be perfectly identifiable. Your client will pay you €1,800, and on your end, you’ll then need to remit the €300 in VAT to the state. This is precisely where an invoicing tool like Bizyness makes your life easier: it performs these calculations automatically and ensures all legal mentions are properly included, saving you from mistakes that can be costly.

Get ready for the major shift to electronic invoicing

Managing VAT is an important milestone, but it’s not the only major change coming for sole traders. Another sweeping reform is on the horizon: mandatory electronic invoicing. This isn’t just a small technical update; it’s a complete overhaul of how we’ll all create, send, and receive our invoices.

It might be tempting to see this as a distant constraint, but it’s a transition that requires getting started right now. Very soon, sending a simple PDF by email won’t be enough anymore. You’ll need to go through certified platforms to issue invoices in a specific format that is both structured and secure.

To fully understand what’s ahead, let’s look at the two pillars of this new system.

The new invoicing ecosystem: how does it work?

The first key player is the Public Invoicing Portal (PPF). Think of it as the state’s official digital postal service, a free platform that will centralize part of the invoice exchanges.

Alongside it, you’ll have Partner Dematerialization Platforms (PDPs). These are private companies, approved by the state, that will offer electronic invoicing services. Their advantage? They will often provide much more complete features than the public portal. Your current invoicing software, such as Bizyness, has a good chance of becoming a PDP or interfacing with one of them to simplify your life.

The purpose of this reform is clear: automate VAT returns, more effectively combat tax fraud, and give the state a clearer, real-time view of the economy. It’s a real shift in logic aimed at securing and streamlining transactions between businesses.

In concrete terms, for you as a sole trader, this means that to invoice your business clients, you’ll be required to go through either the PPF or a PDP. This obligation, which of course concerns all sole trader VAT invoicing, should already be part of your thinking about how you manage your business today.

A precise timeline and penalties not to take lightly

The deadline is fast approaching, and it’s essential to note it down clearly. From September 1, 2026, all businesses, including micro-businesses, will be required to know how to receive invoices in electronic format. The obligation to issue them will then roll out progressively.

Ignoring this new regulation could cost you dearly. Penalties are planned: a fine of €15 per non-compliant invoice, with a cap set at €15,000 per year. These amounts clearly show that the state is taking this transition very seriously. It’s therefore more than wise to prepare well in advance.

Ultimately, this mandatory shift to electronic invoicing is also a great opportunity to modernize your administrative management. By looking into the topic now, you’ll have time to choose the solution that suits you best and turn this obligation into a real advantage for your business. To help you, feel free to check out our complete guide on electronic invoicing for sole traders.

Managing your cash flow with VAT

Moving to VAT is a real milestone in the life of a micro-business. It’s not just a line to add to your invoices. It’s a whole new financial exercise which, once mastered, can genuinely become an advantage for your cash flow.

Managing sole trader VAT invoicing opens a door that’s often overlooked: the ability to deduct VAT on your own business purchases. In concrete terms, this means you can recover the tax paid on your equipment, your software, or even your travel expenses. That’s far from trivial.

VAT deduction, a new source of savings

To make this clearer, let’s take a concrete example. Imagine you’re a web developer and you splurge on a powerful new laptop, priced at €1,800 including tax.

• Before being liable for VAT: This laptop really does cost you €1,800.
• After becoming liable: You can recover the 20% VAT on this purchase. The calculation is simple: €1,800 / 1.20 = €1,500 excluding tax. You therefore recover €300 in deductible VAT. In the end, your laptop will only have cost you €1,500.

This financial advantage applies to a whole range of expenses and can seriously boost your margin.

But be careful, this new ability to deduct VAT comes with a significant counterpart: you now have to collect the tax on behalf of the state. And here, you need iron discipline so as not to sink your cash flow.

The VAT you collect on your invoices never belongs to you. Think of it as money you’re temporarily holding for the tax authorities. Forgetting this rule of the game can quickly put you in a very difficult financial situation.

Organizing collection for stress-free returns

The key is to put a rigorous method in place from the very first day you charge VAT. The money collected must be set aside, clearly separated from your actual turnover, to avoid confusion.

A simple but remarkably effective trick: open a second bank account just for VAT. As soon as a client pays you, immediately transfer the VAT amount to this dedicated account. That way, when it’s time to file, the funds are already there, safely set aside. No unpleasant surprises.

It’s also important to note that invoicing management for sole traders in France is governed by precise thresholds. Whereas previously the base exemption thresholds for services were set at €37,500 for year N-1 and €41,250 for year N, a single threshold has since been introduced. Since March 2025, this threshold has been lowered to €25,000, which directly impacts the moment a micro-entrepreneur becomes liable for VAT. To learn more on this topic, you can check out information on sole trader income and thresholds (in French).

By adopting stricter accounting organization and equipping yourself with the right tools, this administrative obligation turns into a powerful lever. VAT management then becomes a cornerstone of your financial management, allowing you to better anticipate your expenses and optimize your margins.

Your questions on VAT as a sole trader, our clear answers

Managing VAT can quickly become a headache. To help you see things more clearly, we’ve gathered the most frequently asked questions on sole trader invoicing with VAT.

What should I do if I exceed the VAT threshold during the year?

No need to panic, but you need to act quickly. If you cross the increased threshold, you enter the world of VAT from the first day of the month in which the threshold was exceeded. Your first move? Contact your local business tax office (SIE) to obtain your intra-community VAT number. This is essential.

Next, you’ll need to regularize the situation. You’ll have to issue corrected invoices for all the work carried out during that month, adding the VAT that hadn’t originally been applied.

Can I charge VAT even if I’m below the thresholds?

Absolutely. You can choose to opt into the standard VAT regime voluntarily. It’s an interesting strategic option, especially if you have significant investments to make, such as purchasing professional equipment or expensive software.

The advantage? By opting for VAT, you can recover the VAT you pay on your own business purchases. On large expenses, the savings are not negligible.

The process is simple: a written request to your SIE is enough. But be careful, it’s a real commitment. Once the option is chosen, it’s valid for at least two years.

What mention should I put on my invoices when I don’t charge VAT?

As long as you’re under the VAT exemption scheme, the law requires you to include a small standard phrase on all your invoices. It informs your client and the tax authorities that you’re not liable for VAT.

This mention is: “TVA non applicable, art. 293 B du CGI”. Never forget it, its absence can be held against you in the event of an audit. It’s a small line that carries real weight.

How do I declare and pay the VAT I’ve collected?

Once liable, a new routine sets in. You’ll need to declare the VAT charged to your clients, and deduct the VAT you yourself paid on your business expenses.

Everything happens online, from your professional account on the tax authority’s website. Most of the time, the return is filed monthly or quarterly. A little tip to avoid being caught off guard on cash flow: as soon as a client pays you, set the VAT amount aside in a separate account. It saves lives (and balance sheets).

---

Managing invoicing and VAT can seem intimidating, but a good tool completely changes the game. With Bizyness, you can automate your invoices, keep an eye on your thresholds in real time, and stay compliant without pulling your hair out. Discover how Bizyness can simplify your life as an entrepreneur.