Business taxation in France: 2026 guide

French business taxation involves several distinct levies, each with its own thresholds, rates and filing deadlines. For a company director or founder, the challenge is not simply knowing that these taxes exist but understanding the calculation rules, the payment calendar and the reliefs that may apply.

This 2026 guide covers the main components of French business taxation: IS (impôt sur les sociétés, corporation tax), VAT (taxe sur la valeur ajoutée, TVA), CFE (cotisation foncière des entreprises, local business property tax), CVAE (cotisation sur la valeur ajoutée des entreprises, business value-added levy), instalment payments and the annual tax return (liasse fiscale). It incorporates the corrected VAT franchise thresholds introduced by loi n° 2025-1044 of 3 November 2025 (the Midy Act) and the 2026 budget provisions on CVAE.

In brief. A company subject to IS pays 25% corporation tax (15% on the first €42,500 of profit for eligible SMEs), remits net VAT collected, pays CFE by 15 December, and files its liasse fiscale by 20 May 2026 for a financial year ending 31 December 2025. The 2026 VAT franchise thresholds are €85,000 (goods) and €37,500 (services) — not the older figures still cited in some references.

French business taxation breaks down into several layers:

• IS (corporation tax) or IR (income tax) depending on legal structure and elections made
• VAT (TVA): collected on sales, deducted on purchases, the net balance remitted to the tax authority
• CFE (cotisation foncière des entreprises): local tax based on the rental value of business premises
• CVAE (cotisation sur la valeur ajoutée des entreprises): for companies with turnover exceeding €500,000
• Additional levies: taxe sur les salaires (payroll tax for bodies outside the VAT system), sector-specific contributions

Sole traders and transparent partnerships (SNC, single-member EURL without IS election, property holding SCI under IR) are taxed at the partner or individual level under IR rather than IS.

IS rates in 2026#

The 15% reduced rate applies to SMEs with turnover below €10 million whose capital is held at least 75% by individuals.

Worked example — SAS with €100,000 taxable profit#

Consider an SAS qualifying for the reduced SME rate (turnover < €10m, capital 75%+ held by individuals) with taxable profit of €100,000:

• IS on the first €42,500: €42,500 × 15% = €6,375
• IS on the balance (€100,000 − €42,500 = €57,500): €57,500 × 25% = €14,375
• Total IS = €20,750, an effective rate of 20.75%

Without the reduced rate, IS would be €25,000. The SME reduced-rate benefit amounts to €4,250 here.

Our view. The reduced SME rate is often treated as automatic. In practice it requires checking the capital structure each year. A change in shareholding or an equity round can disqualify the company without the director being aware.

VAT rates in France#

VAT regimes#

Franchise en base (small business exemption): the company does not charge or remit VAT. It applies as long as turnover stays below the relevant threshold.

2026 thresholds under loi n° 2025-1044 of 3 November 2025 (Midy Act):

Exceeding the upper threshold triggers immediate VAT liability from the first day of the month of breach. Exceeding the base threshold but remaining below the upper threshold allows the company to stay on franchise for the following year.

Régime simplifié d'imposition (RSI — simplified regime): one annual return (form CA12) with two advance payments in July and December. Available below specified turnover and annual VAT ceilings.

Régime réel normal (standard regime): monthly returns (form CA3) or quarterly returns depending on annual VAT due. Mandatory above RSI thresholds or available on election.

The underestimated risk. Companies sitting just below the franchise threshold often hesitate to opt voluntarily into VAT. Yet for businesses with predominantly B2B customers, voluntary registration can be neutral or advantageous: VAT on purchases and investments is recoverable, improving cash flow from the first return.

Companies whose IS for the previous year exceeded €3,000 must pay four instalments during the year, each calculated at 25% of the reference IS.

The balance is settled when the liasse fiscale is filed. Companies may modulate their instalments downward if they can demonstrate that the current year's IS will be lower — subject to a 5% tolerance. Excess reductions generate a late-payment surcharge.

The CFE is levied on all businesses and self-employed individuals carrying on a professional activity in France, regardless of legal form or tax regime.

Automatic exemption: companies whose turnover or receipts are below €5,000 in the reference year are exempt from CFE.

The tax base is the rental value of the business premises. The rate is set by the municipality and therefore varies considerably by location.

Payment deadline: CFE is due on 15 December each year.

Newly created businesses are exempt from CFE in the year of incorporation.

The CVAE applies only to companies with turnover exceeding €500,000. Below this threshold, no CVAE is due, although companies with turnover above €152,500 must still file a value-added declaration.

For 2026 and 2027, the maximum CVAE rate is frozen at 0.28% (the 2024 level), following the phased reductions that began in 2021. The definitive abolition of CVAE, legislated but repeatedly deferred, remains on the statutory trajectory, but the exact timetable is subject to change.

For a detailed analysis of the reform and abolition schedule, see our dedicated article on CVAE suppression 2026.

Liasse fiscale (annual corporate tax return)#

For a financial year ending 31 December 2025, the liasse fiscale must be filed electronically by 20 May 2026 (the statutory deadline of the second working day following 1 May, extended by the 15-day allowance for electronic filing).

For financial years ending on any other date, the deadline is 3 months after the closing date.

Consolidated 2026 tax calendar#

Late-payment penalties#

Failure to file or pay on time triggers:

• a 10% surcharge on unpaid tax (art. 1728 CGI)
• late-payment interest at 0.20% per month (art. 1727 CGI)
• a 40% surcharge if no return is filed within 30 days of a formal notice

Business taxation is not purely a compliance constraint: it involves structural choices with multi-year consequences.

First pillar: choosing the right tax regime. IS versus IR, operating company versus holding structure, voluntary VAT registration — these decisions deserve a quantified analysis, not a default choice at incorporation.

Second pillar: managing taxable profit before year-end. Decisions taken in the final weeks of the financial year (investment, provisions, the dividend-versus-salary trade-off) can materially affect IS due. See our article on optimising taxable profit before the year-end close.

Third pillar: continuous documentary compliance. A well-prepared liasse fiscale, VAT accounts reconciled with the general ledger, instalments calculated accurately — these reduce the exposure and cost of a tax inspection. The liasse is also a management document: reading it carefully reveals the ratios and risk areas that every director should know.

Our view. The most common issue we see in SME files is not deliberate non-compliance but disorganisation: IS instalments not provisioned, CFE overlooked, the VAT franchise threshold exceeded without formal registration. The consequences are as much cash-flow problems as compliance risk.

Updated 26 May 2026. This article is for information purposes only and does not replace a personalised analysis of your tax position, which requires review of your accounting records and the rules in force. For your situation, consult a registered expert-comptable.