Good news for small businesses! The revenue threshold for qualifying for the VAT exemption scheme will be gradually raised starting January 1, 2027.
What is the VAT exemption scheme?
The VAT exemption scheme allows small businesses whose annual revenue does not exceed a certain threshold to be exempt from certain VAT obligations.
Specifically, businesses that opt for this scheme:
- Do not charge VAT to their customers;
- Are not required to file periodic VAT returns;
- Cannot claim a VAT refund on their business purchases.
This program is optional, and certain activities are excluded from it.
What are the new thresholds?
A law dated September 23, 2026, provides for a gradual increase in the revenue cap, at a rate of an additional €1,000 each year.
The new thresholds will be as follows:
| Year | Maximum revenue |
|---|---|
| 2026 | 25,000 € |
| 2027 | 26,000 € |
| 2028 | 27,000 € |
| 2029 | 28,000 € |
| 2030 | 29,000 € |
| 2031 | 30,000 € |
What happens if the threshold is exceeded?
Exceeding the threshold may result in mandatory transition to the standard VAT regime.
- Excess of less than 10%: The tax authorities must be notified by December 15 of the relevant year. The transition to the standard VAT regime then takes effect on January 1 of the following year.
- Excess of more than 10%: The transition to the standard VAT regime is immediate and must be reported to the tax authorities.
The necessary procedures must be completed using Form e604B via MyMinfin.
Which tax regime should you choose for your business?
Although this increase represents an opportunity for some small businesses and self-employed individuals, the VAT exemption scheme is not necessarily the most advantageous in all situations.
In fact, the inability to claim a VAT refund on business purchases and investments can have a significant financial impact.
It is therefore essential to analyze your situation before opting for this scheme.
Would you like to know if the VAT exemption scheme is right for your business?
The Fiscal Clear team provides guidance and advice to help you choose the tax regime that best suits your situation.