End of the Simplified VAT Regime in 2027: Who Is Affected

Quick answer. On 1 January 2027, France's simplified VAT filing regime disappears (2025 Finance Act). Every VAT-liable business, except those under the basic exemption, moves to the standard regime: a quarterly CA3 return as long as turnover, including taxable acquisitions, does not exceed €1,000,000, and a monthly return above that. For a financial year that matches the calendar year, the 2026 instalments will be the last ones.

The measure went largely unnoticed, yet it affects a great many small and mid-sized businesses. Article 38 of the 2025 Finance Act (Act no. 2025-127 of 14 February 2025) abolishes the simplified VAT regime, known as the RSI-TVA, from 1 January 2027. In practice, tens of thousands of businesses that filed only one annual VAT return will have to switch to a regular filing rhythm. The challenge is not merely administrative: it changes cash-flow management and requires rethinking accounting organisation as early as 2026.

This article breaks down the reform: who moves, to which regime, on what schedule, and how to prepare for the change. For the underlying choice between the two standard regimes, you can also read our companion article on simplified or standard regime: which assessment regime to choose, which complements this analysis from a decision-making angle.

Until 31 December 2026, the simplified VAT regime relies on a logic of reduced filing. The business files only one annual recap return, the CA12 form, and pays two instalments during the year. It is this convenience that the reform removes.

The current regime applies to businesses whose turnover excluding tax stays within precise brackets:

One point is often overlooked: even within these brackets, a business whose VAT due in the previous year exceeds €15,000 automatically falls under the standard regime. Turnover is therefore not the only criterion. Many business owners believe they are on the simplified regime when this VAT ceiling has already pushed them out of it.

The simplified filing mechanism works as follows:

1. Two half-yearly instalments are paid, in July (55% of the VAT due for the previous financial year) and December (40%).
2. An annual CA12 return reconciles everything after the year-end, based on the VAT actually collected and deductible.
3. The balance is paid or refunded depending on the result of this reconciliation.

For a business whose financial year matches the calendar year, the July and December 2026 instalments will be the very last under this system, and the CA12 for the 2026 financial year will be the last one. If the financial year does not match the calendar year, the reform applies to transactions carried out after the close of the financial year that includes 31 December 2026 (Article 38, VI, of the 2025 Finance Act): the last CA12 then covers that financial year.

From 1 January 2027, every VAT-liable business that does not fall under the basic exemption moves to the standard VAT regime. The filing rhythm changes dramatically.

From 1 January 2027, Article 287 of the French General Tax Code, rewritten by Article 38 of the 2025 Finance Act, sets the CA3 filing frequency according to turnover rather than the amount of VAT. The return is quarterly when turnover plus taxable acquisitions did not exceed €1,000,000 in the previous calendar year and does not exceed €1,100,000 in the current year; above that, it is monthly. A business below these thresholds can opt for monthly returns, for at least four calendar quarters. The thresholds are indexed to inflation, with a change every three years. The current rule allowing quarterly returns below €4,000 of annual VAT only applies until 31 December 2026. The annual instalments disappear: VAT is declared and paid as it goes, based on the VAT actually collected and deductible over the period.

Hayot Expertise tip. Do not reduce this reform to a formality. The real issue is cash flow: with the CA3, collected VAT no longer sits in your accounts for several months before reconciliation. Rebuild your 2027 cash-flow forecast to factor in more frequent VAT outflows, so you avoid a poorly anticipated month-end squeeze.

Our reading#

Moving from the simplified to the standard regime is not trivial, but it should not be dramatised either. For a business already kept with rigour, the CA3 is a familiar, reliable mechanism: it gives a more accurate, month-by-month view of the VAT position. The hidden benefit is the end of nasty surprises at the annual reconciliation, which regularly caught out owners whose activity had grown sharply during the year. To go deeper into how filing works, see our guide on the VAT return.

The scope of the reform is simple: businesses currently under the simplified VAT regime are affected and will join the standard regime. Businesses under the basic exemption, which do not charge VAT, are not.

The basic exemption deserves a clarification. A business under the exemption does not collect VAT and does not deduct it. It therefore stays outside the reform. However, if it crosses the exemption threshold in 2026 or later, it becomes VAT-liable and will fall directly under the standard regime, since the simplified regime will no longer exist. This is a point to watch for fast-growing businesses.

The basic exemption#

It is not affected. A business that does not charge VAT continues its activity unchanged. The point of vigilance is threshold crossing: from 2027, leaving the exemption means entering the standard regime directly, with no intermediate step through the simplified regime.

The micro-business#

The micro regime for profits is independent of the VAT regime. A micro-entrepreneur may be under the VAT exemption (the most common case) or, if it has exceeded the exemption thresholds, become VAT-liable. In the latter case, it will fall under the standard VAT regime from 2027, while keeping its micro regime for the taxation of its profits.

The new business#

A company created in 2026 or 2027 that becomes VAT-liable (by option or by crossing a threshold) will never have known the simplified regime if it starts after the deadline. It will enter the standard regime directly. For a founder, it makes sense to build a CA3 rhythm into the accounting organisation from the outset.

The VAT / profits distinction, a source of confusion#

This is the most misunderstood point. The reform abolishes the simplified VAT regime. The simplified actual regime for the taxation of profits, the one that gives rise to the 2033 tax package, survives after 2027. A business can therefore stay under the simplified actual regime for its profits while now filing its VAT via the CA3. The two regimes are not linked. Confusing them leads to the mistaken belief that the whole of the company's taxation is being overhauled, which is not the case.

The underestimated risk#

The most common risk is not the VAT calculation, which software handles well, but the calendar. Going from one return a year to twelve (or four) requires regular monthly closings, and therefore continuously up-to-date bookkeeping. A business that recorded its documents once a quarter will have to tighten its rhythm, on pain of late filings and penalties. It is as much a change of organisation as a change of regime.

The year 2026 combines two distinct developments that must not be mixed up. On one side, the abolition of the simplified VAT regime on 1 January 2027. On the other, the recodification of the VAT rules, carried out by Order no. 2025-1247 of 17 December 2025, which transfers the provisions from the General Tax Code to the Code of Taxes on Goods and Services (CIBS). Initially planned for 1 September 2026, this transfer was postponed to 1 January 2027 by Order no. 2026-671 of 27 July 2026.

This recodification is done at constant law: it relocates the texts without changing the substantive rules. It therefore does not have the same operational impact as the end of the simplified regime. To understand this underlying project, see our dedicated article on the VAT reform within the CIBS and our full guide on the VAT recodification on 1 January 2027. If you want to review the rates and filing mechanisms that apply, our overview of VAT for SMEs in 2026 covers the basics.

Two strategies are possible in 2026. The first is to actively prepare for the switch on January 2027 without changing regime before the deadline. The second is to opt now for the standard regime, in order to run in the processes a full year before the obligation. The choice depends on the business's accounting maturity.

Trade-off: switch on 1 January 2027 or anticipate in 2026#

For a business whose accounting is already kept monthly and whose software is up to date, waiting until 1 January 2027 is reasonable: there is no point bringing forward a constraint. For a business used to a quarterly or annual rhythm, opting for the standard regime as early as 2026 makes it possible to learn the CA3 without pressure and to identify friction before it becomes a compliance problem. This is the most prudent scenario for organisations that know they are fragile on the regularity of their bookkeeping.

Illustrative case: a services SME that has filed its VAT once a year since its creation, with no real monthly monitoring. Preparing the move to the CA3 often reveals, in this situation, that the bookkeeping is several months behind. The real task is then not VAT, but bringing the bookkeeping up to date: anticipating the reform becomes the opportunity to structure the accounting organisation.

Preparation checklist#

• Check your current VAT regime and confirm that you really fall under the simplified regime (mind the €15,000 VAT-due ceiling).
• Estimate your turnover, including taxable acquisitions, to know whether you will file a quarterly CA3 (up to €1,000,000) or a monthly one from 2027.
• Rebuild a cash-flow forecast that factors in more frequent VAT outflows.
• Check that your accounting software handles the CA3 return and electronic payment.
• Set up a monthly (or at least quarterly) closing of the accounts.
• Decide, with your chartered accountant, between a switch on 1 January 2027 or an early option in 2026.
• Train the person in charge of bookkeeping in a regular filing rhythm.

Points of vigilance for 2026#

Two deadlines collide in 2026: the last simplified-regime instalments (July and December) and the ramp-up of the new processes. Do not treat the final CA12 reconciliation lightly: it must be clean, because it definitively closes your history under the simplified regime. In parallel, the CIBS recodification on 1 January 2027 may change labels and references in your tools. Coordinate the two projects rather than endure them one after the other.

Our firm, registered with the Île-de-France Order of Chartered Accountants, supports these transitions within its bookkeeping and review and corporate tax advisory engagements. The VAT reform is also part of the broader timetable of filing modernisation, which should be addressed alongside the 2026 electronic invoicing rollout. For an overview of instalments and returns, see also our note on taxation, VAT returns, corporate tax and instalments.