SME Scheme – General features
Exemption
The SME scheme is automatically applicable as long as the thresholds are not exceeded. However, in any case, it is possible to opt for taxation.
Transactions excluded from the SME scheme
The following transactions are excluded from the SME scheme in France:
• Occasional transactions, like the supply before first occupation of a building or parts of a building or the supply of building land,
• Exempt cross-border supplies of new means of transport made from one Member State to another.
National annual threshold
There are two different thresholds for VAT exemption in France. A threshold of 85 000€ for supplies of goods, sales for onsite consumption and accommodation rental and 37 500€ for supplies of services.
There is also a special scheme for VAT exemption for, authors and artists, with a threshold of 50 000€ for the main activity and 35 000€ for other supplies of goods or services.
Domestic SME scheme
Simplified VAT obligations
A small enterprise established in France which applies the SME scheme only in France must state the beginning of its activity. However, it doesn’t have neither to VAT register nor to submit periodical VAT returns. It will have to keep simplified accounts and will be able to issue simplified invoices.
Cross-border SME scheme
The cross-border SME scheme applies in the following situation(s):
1. The small enterprise applies the SME scheme in other Member States than its Member State of establishment, or;
2. The small enterprise applies the SME scheme both in its Member State of establishment and in other Member State(s).
Simplified VAT obligations
The VAT registration in each Member State where the small enterprise applies the SME scheme is replaced by a single prior notification to be submitted in its Member State of establishment.
The periodical VAT returns are replaced by a single quarterly report for all Member States to be submitted in the Member State of establishment.
Currency
The values of supplies of goods and services to be indicated in the prior notification, the update to a prior notification and the quarterly reports must be in EUR.
Way of submission
The prior notification, the update to a prior notification and the quarterly reports should be submitted by electronic means.
Additional simplified VAT obligations
A small exempt enterprise applying the cross-border SME scheme in France will have to keep simplified accounts and will be able to issue simplified invoices (B2B and B2C). However, it doesn’t have to submit administrative statements.
Loss of simplified VAT obligations
Non-compliant small enterprises may be required to VAT register and to submit periodical VAT returns.
Transitional period
France applies a transitional period in case the national annual threshold / sectoral thresholds is/are exceeded by 10% during the current calendar year. For the general scheme, the threshold is raised to 93 500 € for supplies of goods, sales for onsite consumption and accommodation rental and 41 250 € for supplies of services for the current year. For the special scheme for lawyers, authors and artists, the threshold is raised to to 55 000 € for the main activity and 38 500 € for other supplies of goods or services for the current year.
Quarantine
Quarantine period in case of exclusion from the SME scheme
Small companies excluded from the SME regime in France cannot benefit from this exemption as long as their turnover for the previous year is not less than or equal to the SME scheme threshold.
Quarantine period in case of voluntary departure from the SME scheme
Small enterprise which decides to voluntarily leave the SME scheme in France cannot benefit from this exemption for a period of 2 years.
Appeals
Domestic SME scheme
The national SME scheme is automatically applied to small enterprises whose turnover don't exceed the SME scheme thresholds, without any administrative statements on the part of the enterprise.
Cross-border SME scheme
Appeals related to the following topics should be addressed to Member State of establishment (MSEST)
• Union annual turnover
• Prior notification, correction and update to a prior notification
• Quarterly reports and correction of a quarterly report
• Exclusion for exceeding the Union annual turnover
Cash Accounting
A small enterprise established in France which applies the SME scheme in France or a small enterprise applying the cross-border SME scheme in France will be able to keep simplified accounts. They must keep a register recapitulated by year, with details of their goods and services purchased, and a day-book, day-to-day, with details of their professional receipts.