Do you carry out a freelance activity and you have decided to choose the status of auto entrepreneur? Before embarking on the various administrative procedures, it is important that you know if you have to pay VAT. As a self-employed entrepreneur, you should know that you fully benefit from the micro-tax regime. This system allows you to benefit from several advantages, including the basic VAT exemption.
Understanding the principles of self-employed VAT can seem quite difficult at first; the fact remains that this is a legal obligation. By carrying out the administrative formalities necessary for the regularization of your activity, you will face all the questions that are discussed in this article on a daily basis. It is therefore necessary to master them well. Get all the answers you need to fully understand how VAT works as a self-employed person. Here you can count on independent contractor tax calculator to a great extent.
How does VAT work?
Before looking into the particularity of auto entrepreneur VAT, it is essential to clarify the concept of VAT. If you are new to the field of entrepreneurship, know that VAT is a form of tax directly related to the products consumed (direct consumption tax). Apart from specific exemptions, this tax concerns all commercial transactions, whether they are concluded between a company and an individual or between professionals.
On French territory, companies do not pay VAT, it is the buyer / customer who pays this tax . Companies play the role of VAT collectors for the benefit of the Business Tax Service. In concrete terms, here is the operating mode of a box not framed by the VAT exemption.
The company charges the payment of VAT to its customers via a VAT invoice
- It also pays VAT on the products it purchases, if it deals with suppliers for example.
- Finally, it is responsible for paying the difference to the tax services.
- The company recovers VAT on operational purchases.
It is at this level that the self-employed person’s tax regime is quite specific and that the rules are different in the case of self-employed person’s VAT.
What are the specificities of VAT for a self-employed person?
As stated above, the auto entrepreneur VAT is special, mainly in terms of how it works.
Self-employed person VAT basic exemption rule
One of the benefits of being a self-employed entrepreneur when you are a freelancer is that you are entitled to the basic VAT exemption as a self-employed person. In other words, this means that you don’t have to make a distinction between the HT invoice that you will have to present to your customers and the invoice with the amount including VAT. This basic self-employed VAT exemption has many advantages.