Lawyer

VAT small-turnover exemption for lawyers: a superb opportunity! ... Really?

03/2025
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You have just taken the oath, you do not know if you need to have an accountant, you are neither a URSSAF specialist, nor a VAT specialist and you are wondering if you can benefit from the VAT exemption for lawyers: the answers to your questions are here!

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What is the VAT exemption for lawyers?

As a lawyer, you provide services that make you a “taxable person” for VAT.

This means that in principle, you have to charge VAT on the services you charge to your customers (subject to applicable territoriality rules). Correlatively, you can deduct the VAT you incur on expenses incurred in the course of your activity.

A simple example to illustrate a basic VAT mechanism:

When you charge one of your French private customers for a consultation of €1,000 excluding VAT, you will apply 20% VAT on your price excluding VAT, i.e. an amount of €200. This amount will be paid by your customer who will pay €1,200 including VAT. You will then have to remit this so-called “collected” VAT to the tax authorities.

At the same time, if you buy your lawyer's dress for €800 excluding VAT, you also pay 20% VAT on the price excluding VAT, i.e. €160. This VAT will be “deductible”.

When you prepare your VAT return, the deductible VAT will be deducted from the VAT collected, so you will pay 200-160=40 € to the Treasury.

With the VAT exemption... Forget all that!

The VAT exemption is a optional mechanism allowing you to:

  • Do not charge VAT to your customers;
  • No longer deduct the VAT that you bear in the course of your activity;
  • Do not file a VAT return;
  • Indicate on your invoice the specific mention “VAT not applicable, article 293 B of the CGI”.

Using the same example, with the VAT exemption, you charge your customer for €1,000 without VAT and you buy your avocado dress for €960 including VAT without being able to deduct the VAT that you have incurred.

You have understood the principle but you are still not sure if it is in your interest to benefit from the VAT exemption?

So, let's get to the heart of the matter!

What is the point of franchising?

+ Absence of filing a VAT return

The first benefit of franchising is declarative. By opting for the franchise, you will not need to file VAT returns.

In practice, the filing of the VAT return can be managed by your accountant (If you have one) or by yourself (In this case, you will have to keep a minimum of brief accounts and ensure that your return is filed on time, otherwise you will be subject to penalties.).

By opting for VAT exemption, there is no need to keep your cash receipts, and no need to file a VAT return.

For those with administrative phobia, this argument alone may suffice!

+ A competitive advantage if you bill individual customers

You have an interest in opting for VAT exemption if you mainly or exclusively invoice private customers. Indeed, these customers do not recover VAT on your consultations (unlike professional customers).

As you will have understood, charging VAT to individual customers means increasing the cost of its service for the customer. With the franchise you can:

  • Reduce the cost of your service for your customers (instead of charging 1,200€ TTC you charge 1,000€ excluding VAT without affecting your margin);
  • Increase your margin (by charging €1,200 excluding VAT);

The franchise thus makes you more competitive compared to your colleagues who are required to apply VAT.

The VAT exemption for a young lawyer who plans to have a large client base of individuals (criminal law, family law, etc.) can be a competitive advantage that must be analyzed closely!

Who says advantages says disadvantages?

- Impossibility to deduct the VAT incurred in the exercise of your activity

The major disadvantage of the franchise is that you cannot deduct the VAT that you bear on your expenses incurred in the course of your activity.

You will therefore not be able to deduct VAT on your operating costs (lawyer's dress, office equipment, commercial lease if applicable, restaurant expenses, etc.).

It is therefore necessary to determine whether you expect to incur costs in the context of your activity in order to measure the financial impact of the VAT exemption.

- The franchise loses interest if your customers are professionals subject to VAT

The VAT exemption loses its value if you invoice your services only to professional customers subject to VAT who can deduct the VAT you charge them.

In practice, if you sign a collaboration contract and you do not expect to create a personal customer base composed of individuals, the VAT exemption is not in your interest.

- You must regularly monitor your turnover

To benefit from the franchise, you must respect turnover thresholds (see below). If these thresholds are exceeded, you lose the benefit of the franchise (either on January 1 of the following year or on the 1st day of the month in which the threshold was exceeded).

If you benefit from the franchise, it is therefore necessary to monitor your turnover monthly to ensure that you do not exceed the threshold! Quite a blow for those who thought that benefiting from the franchise would allow them to never have to worry about their VAT problems. It's just the opposite!

You will have understood it: Exemption from VAT should mainly be considered for lawyers who mainly bill private clients.

Just because you receive a low retrocession amount does not mean you have an interest in benefiting from the franchise. If you are a collaborating lawyer receiving €4,000 in retrocession, by benefiting from the VAT exemption you prevent yourself from deducting the VAT borne on your expenses. However, this can be a significant amount over the year.

Don't opt for VAT exemption for the wrong reasons: ask yourself the right questions!

  • How much do I earn? How much will I earn during the year?
  • Who will I bill my services to? To individuals or professionals?
  • Will I incur significant costs in the course of my business?

In practice, it seems to us that the actual regime (a VAT return filed every month) does not constitute any particular difficulty in its implementation. This regime allows you to pay and deduct your VAT for each month that has passed. Whether you are preparing your VAT return alone or using an accountant, this solution should be preferred from the start of its activity.

If you want to go further, you will find below the thresholds to respect in order to benefit from the VAT exemption.

How to benefit from the franchise?

To benefit from VAT exemption, you must not exceed certain turnover thresholds both concerning your so-called “regulated” activity and concerning your “non-regulated” activities.

The thresholds that should not be exceeded concerning your regulated activity

The regulated activity of a lawyer corresponds to your consulting activity, with the exception of the amounts received in the context of unregulated activity, which are listed in article 293B of the CGI (see below).

A threshold that must not be exceeded in N-1:25,000€ in net sales.

To benefit from the VAT exemption, you must not have generated a turnover of more than €25,000 excluding VAT (€47,500 excluding VAT before June 1, 2025) in N-1.

Attention: this threshold must be prorated according to the number of days during which this turnover was generated!

If you take the oath on October 1 and receive a fee of €22,500 between October 1 and December 31, then the threshold of €27,500 excluding VAT would be exceeded for this year. Indeed, by proratizing this amount over a full year, this would have generated a total turnover of around 67.5k.

A threshold that must not be exceeded during the financial year: €27,500 in net sales.

The threshold of 27.500applies per fiscal year, it is not proratized. Before June 2025, it was €58,600.

Exceeding the threshold of 27.500€ during the current year requires you to submit to VAT transactions carried out from the 1st day of the month in which the threshold was exceeded.

If invoices were issued without VAT during the month during which the exemption threshold was exceeded, these transactions must be subject to corrective invoices (if you were required to issue them) and be subject to VAT. Attention: if you do not regularize invoices issued without VAT even though the threshold had been exceeded, this may be a source of adjustment in the event of a tax audit.

It is therefore recommended to regularly monitor your activity to anticipate the threshold being exceeded and to charge VAT from the first day of the month during which you expect to exceed the threshold.

As soon as you notice that the threshold has been exceeded, you should inform your tax office so that this update is taken into account on your online space and that you file VAT returns.

Thresholds not to be exceeded for unregulated activities

By “unregulated activities”, the administration refers to the following activities:

  • asset management and administration;
  • intermediation and negotiation in the field of rentals and real estate or commercial transactions;
  • debt collection;
  • the provision of a lawyer who collaborates with premises and clients (in exchange for the payment of a fee).

With regard to the turnover generated as part of these activities, these activities are included in the calculation of €25,000 or €27,500 as of June 2025.

Some numerical examples

Do you understand? Let's take Vincent and Randa as an example, who may be in your situation!

Vincent took the oath of office on November 1 and checked the “basic franchise” box on his CFE form... What is the situation in practice?

Vincent is an associate of a firm paying him a retrocession of fees in the amount of €5,000 per month. He will therefore receive €10,000 between November and December. It is therefore well below the threshold of €27,500 during the year, there is no risk that he will lose the benefit of the franchise this year.

On the other hand, Vincent will receive €10,000 over a period of 61 days (from November 1 to December 31). This corresponds to a total amount of €59,836 prorated over 365 days, i.e. well beyond the annual threshold of €25,000 excluding VAT.

Consequently, Vincent will no longer be able to benefit from the VAT exemption on 1 January of the following year, because his amount received in N-1, after proratization, is greater than the threshold of 25,000€ excluding VAT. He will have to contact his tax office in order to switch to the real regime as of January 1.

For her part, Randa was sworn in on January 1, she applied the VAT exemption from the first day of her activity and received fees for a total amount of 22,000€ over the year. It is therefore well below the threshold of 25,000€ excluding VAT during its first year of fiscal year and can continue to benefit from the VAT exemption the following year.

However, as of November 1, Randa had already received €26,500. It will exceed the threshold of €27,500 during the year during the month of December. She must therefore immediately contact her tax office in order to ask to switch to the real regime.

In addition, it is imperative that it charges VAT from the first day of December, as it will no longer be able to benefit from the franchise as of this date.

Are you a lawyer and do you have questions about VAT for yourself or for your clients? Do not hesitate to contact us!

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Grégoire Person

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Thomas Le Boucher

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