CVAE Abolition 2024-2026: What Changed for French Businesses

The CVAE (Cotisation sur la Valeur Ajoutee des Entreprises) was a key local business tax in France for nearly 15 years. Introduced in 2010 as a replacement for the taxe professionnelle, it formed, together with the CFE, the Contribution Economique Territoriale (CET).

The 2023 Finance Act scheduled the complete abolition of the CVAE in two stages, with the rate halved in 2023, then completely eliminated from financial years opened in 2024 onwards. In 2026, the CVAE no longer exists for businesses.

This guide explains this major change: who was affected, what has changed, what it means for the CET, residual obligations, and the impact on the tax burden of businesses.

History and How It Worked

The CVAE (Cotisation sur la Valeur Ajoutee des Entreprises) was owed by any company whose revenue excluding VAT exceeded 500,000 euros and which carried out a professional non-salaried activity in France.

Its tax base was the value added produced by the company, that is:

Value added = Revenue – External purchases and charges (simplified)

The precise formula excluded certain elements (financial income, exceptional income depending on the regime) and capped the value added between 70% and 80% of revenue depending on the type of company.

Who Was Liable?

All companies (individuals or legal entities) carrying out a non-salaried activity with revenue > 500,000 € excl. VAT:

• Industrial and commercial companies;
• Liberal professions;
• Associations carrying out a commercial activity;
• Excluding farmers and certain specific activities.

2023 Finance Act: The Planned Abolition

Article 55 of the 2023 Finance Act scheduled the complete abolition of the CVAE in two stages:

1. In 2023: CVAE rate halved (from 0.375% maximum to 0.1875% maximum);
2. In 2024: Rate reduced to 0% for all financial years opened from 1 January 2024.

Situation in 2026

For financial years closed in 2025 and 2026 (and subsequent years), the CVAE is definitively at a zero rate. Companies no longer owe any CVAE.

Note on straddle financial years: For financial years opened before 1 January 2024 and closed after (e.g., financial year from 1 July 2023 to 30 June 2024), transitional rules applied. All such financial years are now closed.

CET Reduced to CFE Alone

The Contribution Economique Territoriale (CET) was composed of:

• CFE (Cotisation Fonciere des Entreprises) + CVAE

With the abolition of the CVAE, the CET is now reduced solely to the CFE. Companies only pay the CFE as their territorial economic contribution.

Impact on the CET Cap

The CET cap at 1.531% of value added is maintained in principle, but it now only covers one tax (the CFE) instead of two.

In practice, the relief mechanism remains applicable if the CFE alone exceeds 1.531% of the value added — which can only occur for companies with very high real estate intensity (very high rental value relative to their value added).

The May 2025 Deadline (Last Year)

Even though the rate has been zero since financial year 2024, certain residual declaration obligations existed in 2024 and 2025:

• Declaration 1330-CVAE (value added and headcount declaration): mandatory until 2024 for companies with revenue exceeding 500,000 € excl. VAT, to calculate the territorial distribution of revenue between municipalities;
• CVAE instalments (form 1329-AC): now abolished since the rate is zero.

In 2026, these declaration obligations are definitively abolished. No CVAE declaration is required.

A Significant Tax Reduction

The abolition of the CVAE represents a tax reduction of nearly 8 billion euros per year for French businesses (total CVAE collected in 2022).

For a typical SME with revenue of 5 million euros and value added of 2 million euros:

• CVAE at the maximum 2022 rate (0.375%) on 2 M€: approximately 7,500 euros in annual savings.

For large companies, the saving was proportionally much more significant.

Compensation to Local Authorities

The abolition of the CVAE represents a revenue shortfall for the local authorities who were the beneficiaries (municipalities, departments, regions). The government has put in place compensation through a fraction of national VAT, which guarantees stable funding but disconnected from local economic activity.

In 2026, the only remaining obligations in the context of the former CET are:

1. Pay the CFE according to the usual schedule (deposit in June, balance in December);
2. Verify the application of the CET cap if the CFE alone exceeds 1.531% of value added;
3. Archive CVAE declarations from previous years (in accordance with the legal fiscal retention period: 6 years).

The abolition of the CVAE is part of a broader movement to reform local business taxation in France:

• 2010: Abolition of the taxe professionnelle → creation of CFE + CVAE;
• 2021: Progressive abolition of the taxe d'habitation for primary residences;
• 2023-2024: Abolition of the CVAE;
• Ongoing: Reflection on the future of the CFE and local business taxation.

These successive reforms have considerably lightened the local tax burden on businesses.

• The CVAE is definitively abolished for financial years opened from 1 January 2024;
• In 2026, no CVAE payment or declaration is required;
• The CET is now reduced solely to the CFE;
• The CET cap at 1.531% of value added is maintained for the CFE alone;
• The total tax relief for French businesses is approximately 8 billion euros per year.

(Sources: impots.gouv.fr CVAE, BOFiP, Service-Public.fr, Legifrance LFI 2023 art. 55)