We had a cracking year for gite income in 2023 at 33,300€ and (victim of the sucess) came perilously close to the limit for prestations de service before you have to switch onto the TVA charging regime.
We had our best January ever and being close enough to the Jeux Olympiques, it is likely to be another good year.
However, if we go over by only a few thousand, what are the real consequences, other than having to hike our prices by 20% (and that is unlikely to go down very well…could bring our income back down with a bump!)
Do we have to get an accountant to do a VAT return (we don’t have much time or any experience on that one)?
Can we then reclaim VAT on energy bills and the like?
Does it inherently change our Autoentrepreneur status?
Anyone have any experience of reaching this limit? Are we best off trying to in fact limit revenues and stay under the threshold, if it is a lot of hassle and the price rise for clients would be detrimental to business ?
Appreciate your thoughts and insights, as always, thanks in advance.
If you went over to “regime réel” & are registered for TVA you can then claim back all the TVA that you pay on the costs of running your business, which you currently cannot do.
Equally all of your legitimate costs can be offset against tax, which is also not possible under AE.
This means that although you would need to charge 20% TVA on all your prices you might be able to reduce the HT price so that the overall rise wouldn’t be so great.
However, if you are happy with the profit you are making whilst below the TVA requirement it might be less stressful to limit your bookings.
Thats helpful, thank you. Since we currently only pay the 7% cotisation rate including 1% impot sur le revenue (because we are meublés de tourisme classé) it would seem prudent to stick where we are.
I cant see us offsetting nearly enough costs to cjut already low prices.
@Danielle_Robins That’s exactly what I’ve been doing for the last 10 years. Many people are very negative about VAT/TVA but it has a lot of benefits if you have high expenditure.
Don’t be afraid about going over the threshold. Don’t spend the VAT, it’s not your money, it’s the government’s, they want it and don’t be late. If in doubt, get an accountant.
I’ve just quickly add up the items I think we could claim on, it would basically only be our gas, electric, internet bill, website provider, a few DIY and sundry purchases (toilet rolls, shampoo etc).
Thinking about it, it doesn’t seem like it would be worth it. 20% on about 400€ a month of expenses (excluding our mortgage payment). Especially if we then lose the right to only pay 7% tax and cotisations combined.
I think I’m barking up the wrong tree and that Badger is right, just try to stay under (unlikely to massively grow the business from here on).
I also tried to stay below the VAT threshold in the UK for similar reasons. Plus the fact of less admin as if you register for VAT you must pay it on time to the government as RobLePest says. Not that the turnover issue turned out to be an issue…
But I simply didn’t have enough expenses to make it worth registering for VAT - which I could also have done voluntarily even below the threshold.
I would only register if the growth on the business was a chunk over the threshold and not just a little bit, and if I was sure that level of business was going to last.
The only other reason for making your reporting requirements more onerous and having to charge more to consumer clients (who can,'t recover the VAT) as different from corporate clients (who.can recover VAT if they pay it) would be if there were capital grants or tax allowances I could take advantage of. Such as if I could claim interest off my tax for a business property or equipment loan. Or if I could designate one vehicle as a business vehicle and deduct any finance costs paid, depreciation, or tax allowances, or running costs from my profits.
Well done for doing so well - I remember you were having to rethink completely last year and I am glad you have come through it.
Thank you, we had come to the conclusion that it was best to stay under, after weighing up all the advice received. It just doesnt make any financial sense and would complicate things.
The only difficulty now is that we have had record beating months ever since January and may have to close down reservations even earlier than anticipated… we’re keeping a close eye on the advance booking figures.
Ditto with my photography business. If most of your customers are other VAT-registered businesses, then being in the VAT world makes sense - it all flushes through the system and has little effect on your finances (sorry for the analogy!).
But if you are a B to C business (e.g. when I mostly photographed weddings), then getting over the VAT threshold means an instant 20% price rise for your customers, which means you lose a proportion of jobs and have to pedal like heck to boost your turnover enough to compensate.
So it’s a disincentive for small businesses like mine to expand and take on staff. In a way I wish charging VAT was mandatory from the start, but I’m sure the Inland Revenge wold not be able to cope with all the extra VAT returns…
