VAT Not Applicable Under Article 293 B (CGI): Rules, Meaning & Invoicing

Article 293 B allows small businesses to issue invoices without charging value added tax when their turnover stays below set limits, simplifying tax compliance while requiring a specific legal note and preventing recovery of tax paid on expenses.

Key takeaways

• The regime applies only to businesses whose annual turnover remains below defined thresholds that vary by type of activity, such as sales of goods, accommodation, services, or regulated professions.
• Businesses under this rule must clearly state on every invoice that value added tax is not applicable under Article 293 B and show only net amounts.
• Companies benefiting from this exemption do not charge, collect, declare, or pay value added tax to the tax authorities.
• Any value added tax paid on purchases, operating costs, or investments cannot be reclaimed while using this regime.
• Exceeding the turnover limits automatically makes the business liable for value added tax from that point onward.
• Eligible businesses may choose to opt out of the exemption in order to charge value added tax and recover tax on their expenses.

What Is “VAT Not Applicable – Art. 293 B of the CGI”? 

“VAT Not Applicable – Article 293 B of the CGI” refers to a French tax rule that allows small businesses to operate without charging VAT on their sales. This system is called the franchise en base de TVA and is designed to simplify tax obligations for businesses with low annual turnover.

Key pointers for easy understanding:

• It applies to small businesses and micro-entrepreneurs whose turnover stays below specific legal thresholds.
• Businesses under this regime do not add VAT to invoices and do not pay VAT to the tax authorities.
• Invoices must include the mandatory wording: “TVA non applicable, article 293 B du CGI.”
• The business cannot recover VAT paid on its own expenses or purchases.
• The activity itself is normally taxable, but the business is temporarily exempt due to its size, not its nature.
• Eligible businesses may voluntarily opt out if they prefer to charge VAT and reclaim input VAT.

Article 293 B of the French General Tax Code

Article 293 B of the French General Tax Code is a rule that allows small businesses to operate without charging VAT (Value Added Tax) on their sales, as long as they stay below certain annual revenue limits. In everyday terms, it’s a VAT exemption designed to make life easier for very small businesses and freelancers.

How It Works

Normally, businesses must:

• Add VAT to their invoices
• Collect that VAT from customers
• Pay it to the tax authorities

Article 293 B removes these obligations for small businesses. If you qualify:

• You do not add VAT to your prices
• You do not pay VAT to the government
• You do not file VAT returns

Who Is Covered by Article 293 B?

The VAT flat-rate exemption regime may apply to all businesses established in France or, more broadly, within the European Union, provided their turnover remains below or equal to specific thresholds, which vary depending on the type of activity:

• Commercial and accommodation activities: €85,000 in the previous year or €93,500 in the current year
• Liberal professions or service provision: €37,500 in the previous year or €41,250 in the current year
• Lawyers, authors of intellectual works, or performing artists: €50,000 in the previous year or €55,000 in the current year

Mandatory Invoice Statement (Article 293 B)

When an eligible business issues invoices without VAT, the statement VAT Not Applicable Art. 293 B of the CGI” is mandatory. It may be typed directly onto the invoice or applied using a dedicated stamp.

All other standard invoice details must also appear, including:

• Invoice number
• Company name (legal name)
• SIRET number
• Invoice date
• Client information
• Description of the goods or services sold
• Total amount excluding VAT (HT)

VAT Not Applicable vs. Not Subject to VAT: What Is the Difference?

Before answering this question, it is important to recall the definitions of both concepts.

• VAT Not Applicable means that the business is exempt from collecting VAT and therefore does not charge VAT to its clients.
• Not Subject to VAT means that the business is not recognized as a taxable person for VAT purposes and therefore falls entirely outside the VAT system, exempting it from all VAT collection and invoicing obligations.

The distinction lies in the nature of the exclusion from the VAT mechanism.

VAT not applicable concerns specific transactions which, due to their particular nature or existing legal provisions, are not subject to VAT, even when the business carrying out these transactions otherwise falls under the VAT regime.

Conversely, being not subject to VAT reflects the situation of a business that does not meet the criteria required to be considered taxable and is therefore not integrated into the VAT system at all.

Advantages of VAT Not Applicable (Article 293 B)

• Administrative simplification: the business is exempt from collecting, declaring, and paying VAT, significantly reducing tax formalities.
• Improved cash flow: no VAT advance payments to the State, making financial management easier, especially at the start of an activity.
• More competitive pricing: the absence of VAT allows businesses to offer attractive prices, particularly to individual customers.
• Time savings and clarity: simplified accounting management enables entrepreneurs to focus on developing their business.
• Accessibility for small structures: this regime is particularly well suited to micro-enterprises and low-turnover activities.

When Does Article 293 B Statement Become Mandatory?

Article 293 B statement becomes mandatory as soon as a business benefits from the VAT flat-rate exemption regime.

Sample Invoice with the Article 293 B Statement

Here is the VAT Not Applicable - Art. 293 B of the CGI invoice example template

Word Format Download

PDF Format Download

You can:

• Edit it directly in Microsoft Word / Google Docs
• Reuse it as a template for all VAT-exempt invoices
• Customize branding (logo, fonts, colors) if needed

Conclusion

VAT not applicable, governed by Article 293 B of the French General Tax Code, is a specific regime intended for businesses whose turnover remains below the statutory thresholds. It results in the absence of VAT invoicing and requires the inclusion of a specific statement on invoices. Clearly distinct from the concept of being not subject to VAT, it offers significant advantages in terms of administrative simplicity and competitiveness, while also imposing certain limitations, notably the inability to recover VAT.