Tax submissions can allow you, for example, to increase your profit margins if you align yourself with market prices including tax and to recover the equivalent of the VAT payable at your margins. You also have the opportunity to present more attractive prices to your customers, compared to your competitors who are subject to VAT.
For the Entrepreneurs
It is a derogatory regime whose implementation aims to provide financial support to auto entrepreneurs. However, it is important to note that you do not recover VAT on your purchases. But it is a regime that allows you to simplify your self-employed turnover declarations because you do not have to file a VAT return.
How does the auto entrepreneur VAT work?
In concrete terms, the principles specific to self-employed VAT are simpler than those of traditional VAT. First of all, you do not distinguish the amounts excluding tax from the amounts including tax at the level of sales invoices delivered to your customers. Then you can easily pay the VAT to your suppliers. Finally, you do not make a VAT declaration, you do not pay anything back to the Corporate Tax Services, but there is also no VAT recovery on the purchases you make.
- The basic VAT exemption for self-employed persons therefore appears to be a double-edged sword. It is true that your customers do not pay VAT, which presents an irrefutable financial and commercial advantage. However, you cannot reclaim the VAT on the operating acquisitions you make. Concretely, if your activity requires very important costs for the start-up, this regime can turn out to be quite disadvantageous.
- In addition, it is important to remember that you must necessarily indicate that you are a beneficiary of the basic VAT exemption on your auto entrepreneur invoices. In other words, not only the price of your products or services is HT, but you also have the obligation to make appear the mention: “Exemption from VAT, article 293B of the CGI” on the invoices which you deliver to your customers.
What are the limits of the auto entrepreneur VAT regime?
You should know that the basic franchise is directly linked to your status as a self-employed person. Therefore, once you exceed the turnover thresholds defined to limit the benefit of the VAT exemption, you immediately lose this advantage. However, you can remain under the self-employed or micro-enterprise regime as long as you respect the limit of the self-employed ceilings. If you want more details on this situation, you can do more advanced research or ask for information about exceeding auto entrepreneur limits. We devoted a previous article to this. Read it for information on the consequences of exceeding auto entrepreneur limits. Choosing an independent contractor tax calculator happens to be essential in this case.
However, it is important to note that the VAT exemption regime is not primarily reserved for auto entrepreneurs. This regime may also apply to other companies which comply with the defined turnover ceilings. In other words, when you decide to leave this regime, voluntarily or taking into account the fact that you no longer meet the criteria to be considered as a self-employed person, you will still be able to continue to benefit from the basic franchise of the self-employed VAT.