The question of whether or not financial services should be subject to, or exempt from, VAT has been a recurrent issue since the introduction of the VAT system. France is one of the few countries that have chosen for an intermediate solution by making the VAT regime in respect of financial services optional. The conditions under which financial institutions may exercise the option for taxation have recently been amended to the effect that the VAT regime has become more flexible; this has brought French financial institutions into the difficult position of having to decide whether they should continue the option for taxation or revoke it. In this article, the author discusses the various aspects of the French rules.