2025 Finance Law: several changes in VAT

Several measures in the 2025 Finance Act have changed, more or less profoundly, the rules applicable to VAT.

Renovation Works in Older Housing.

Until now, the benefit from the reduced VAT rates-10% for improvement, transformation, development and maintenance work, and 5.5% for energy renovation work-on residential premises (house, apartment, etc.) completed more than 2 years ago, customers were required to provide the service providers with a certificate confirming that the conditions for applying the reduced rate were met (including the nature of the work and the age of the dwelling).

As of February 16, 2025, this certificate has been replaced by a mention on the estimate or invoice.

Use of POS Software

Companies and professionals subject to VAT who supply goods or services to private customers and do not require an invoice must use secure cash register software and demonstrate its compliance. Previously, they could present either a certificate from an accredited body or an individual certificate from the publisher. However, as of February 16, 2025, the individual certificate from the publisher is no longer valid. Therefore, companies must ensure they obtain a valid certificate; otherwise, they need to contact their publisher for one.

Please note: Failure to provide a certificate may result in a fine of €7,500.

Energy Transition in Residential Buildings

As of March 1st, 2025, the supply or installation of fossil fuel boilers will be subject to the 20% rate (8.5% in the French overseas departments), unless an estimate and advance payment are received before this date, in which case, a reduced rate of 10% will apply. Additionally, starting October 1st, 2025, a VAT rate of 5.5% will be introduced for the supply and installation of photovoltaic panels (≤ 9 kWp) in homes, pending an implementing decree.

Upheaval of VAT Regimes for Small Businesses

Effective March 1st, 2025, the turnover limits for VAT exemption were set to decrease to €25,000, regardless of the activity. However, due to concerns raised by businesses, the government has suspended this reform until June 1st, allowing for potential adaptations. Therefore, the current limits will remain in effect until that date.