Finance Law 2026: Key Takeaways for Your Business

The 2026 Finance Act keeps the reduced 15% corporate tax rate on the first €42,500 of profit for eligible SMEs, with the standard rate still at 25%. Income tax brackets are indexed by 0.9%, with the 0% band now running up to €11,600. VAT exemption thresholds for small businesses stay at €85,000 for sales and €37,500 for services. The maximum CVAE (value-added business tax) rate is held at 0.28% in 2026 and 2027, with full abolition pushed back to 2030. On investment income, the CSG increase voted in the Social Security Financing Act brings the flat tax (PFU) to 31.4%.

France's Finance Law for 2026 introduces significant changes across the full fiscal and social spectrum. Corporate tax, income tax, VAT, employer contributions, CVAE: no area is left untouched.

For most business owners, parsing a budget text running to several hundred articles is a daunting task. This article provides an operational overview: the big picture, the figures that matter, and what you need to plan for concretely. For measures specifically targeting SMEs (reduced corporate tax rate, IR-PME, electronic invoicing), see our dedicated article Finance Law 2026: the 5 key measures for VSEs/SMEs.

The 2026 Finance Bill (PLF 2026) was rejected at first reading in the National Assembly, forcing the government to invoke Article 49.3 to pass a text heavily amended by the Senate. The result is a compromise between fiscal consolidation and support for activity.

The main tax burden falls on large corporations (exceptional corporate tax surcharge for groups with revenue exceeding €1.5 billion) and certain capital income. SMEs and the self-employed benefit from targeted relief measures. Three key trends emerge:

• Pressure on large groups is maintained — temporary corporate tax surcharge renewed for 2026.
• Administrative simplification advances slowly — a few thresholds raised, reporting obligations marginally eased.
• The CVAE phase-out remains frozen: the maximum rate stays at 0.28% in 2026 and 2027, with full abolition postponed to 2030.

15% reduced rate maintained for SMEs#

Despite a widely discussed amendment during the debates, the profit ceiling eligible for the 15% reduced corporate tax rate is not raised: it stays at €42,500 (CGI art. 219 I b). The standard 25% rate applies above this threshold.

Eligibility conditions remain unchanged: turnover below €10 million, fully paid-up capital, held at least 75% by natural persons. Maximum tax saving stays at €4,250 per financial year (10-point gap between 15% and 25% on the €42,500 of eligible profit).

Exceptional contribution for large groups#

The exceptional contribution on large companies' profits is extended for one more year (2026 Finance Act, art. 12), but its threshold is raised: it now only applies to companies with turnover exceeding €1.5 billion (versus €1 billion in 2025). Its rate, applied to the corporate tax due, is 20.6% between €1.5 and €3 billion of turnover and 41.2% above, bringing the effective corporate tax rate above 30% for the largest entities.

This measure, initially presented as temporary, is designed to finance part of the public deficit. For directors of mid-market companies (ETIs), the €1.5 billion threshold is a fiscal warning signal to anticipate in structuring strategies. Transactions, mergers or group restructurings that could push consolidated revenue above this threshold should be modelled with the tax impact factored in.

Depreciation and provisions: no change in 2026#

The declining-balance depreciation and regulated provisions regime is unchanged. However, the deductibility of financing costs remains capped at 30% of fiscal EBITDA (ATAD II rules), a key consideration for leveraged holding structures. Interest charges on acquisition debt within a holding company must be carefully tracked to avoid exceeding this cap, which would result in a non-deductible surplus carried forward.

Progressive bracket revaluation#

The progressive income tax bracket is revalued by 0.9% to account for inflation (2025 income, declared in 2026):

Flat tax maintained at 12.8% but social levies increase#

The PFU (flat tax) remains fixed at 12.8% on capital income (dividends, interest, capital gains). However, the CSG increase under LFSS 2026 raises social levies to 18.6% (from 17.2%), bringing the global flat tax rate to 31.4%.

The option for the progressive bracket remains available and advantageous for households with a marginal rate of 11% or below, given the 40% dividend allowance. Beyond this, the 31.4% flat tax remains generally more favourable.

For a director setting their 2026 compensation strategy, the distinction between salary (taxed at the progressive rate) and dividends (taxed at 31.4% flat) now requires recalibration given the higher social levies.

Family quotient ceiling indexed#

The maximum benefit from each additional half-part of the family quotient rises to €1,807 per additional half-part for the taxation of 2025 income (from €1,791 the previous year), the same 0.9% indexation as the tax brackets.

VAT exemption thresholds: unchanged in 2026#

Finance Law 2026 does not change the VAT exemption thresholds (franchise en base de TVA). The plan for a single €25,000 threshold was abandoned (Law no. 2025-1044 of 3 November 2025), and the thresholds in force since 1 January 2025 apply:

• Sales of goods, accommodation, food to eat on site: €85,000 of annual turnover (higher threshold €93,500).
• Services: €37,500 (higher threshold €41,250).
• Exceeding the threshold: above the base threshold, the exemption ends on 1 January of the following year; above the higher threshold, VAT is due immediately. The two-consecutive-year tolerance was removed in 2025.

These thresholds directly concern micro-entrepreneurs, independent consultants and craftspeople. If your turnover is approaching these amounts, review your position with an accountant to prepare for charging VAT or to assess a voluntary option.

VAT rates: no structural change#

The four VAT rates in force remain unchanged for 2026:

• Standard rate: 20% — the vast majority of goods and services.
• Intermediate rate: 10% — catering, renovation works, passenger transport.
• Reduced rate: 5.5% — food products, books, medicines, equipment for disabled persons.
• Super-reduced rate: 2.1% — reimbursable medicines, online press.

E-invoicing: a VAT lever to anticipate#

While the e-invoicing reform is technically a separate measure, it has direct VAT implications. The obligation to receive invoices from September 2026 affects all VAT-registered businesses. The e-reporting obligation will require periodic transmission of VAT data to the DGFiP, accelerating automated checks. An update to your invoicing software and declaration process is now urgent.

CSG increase and impact on social levies#

The LFSS 2026 raises the CSG rate on investment income and capital income from 9.2% to 10.6%, bringing total social levies to 18.6%.

SMIC revaluations in 2026#

The gross monthly minimum wage (SMIC) rises by 1.18% to €1,823.03 as of 1 January 2026, then to €1,867.02 on 1 June 2026. This revaluation has a direct impact on:

• Employer costs for low-wage positions: approximately €2,200 gross employer cost for a SMIC-level employee, depending on applicable exemptions.
• The RGDU single degressive reduction, which since 1 January 2026 replaces the former Fillon reduction and the reduced health and family-allowance rates, up to 3x SMIC; its reference SMIC stays at the 1 January 2026 value (€12.02 an hour) for the whole year.
• The calculation of collectively-bargained redundancy indemnities and other allowances indexed to SMIC in certain sectors.

Contribution reduction for home employment and personal services#

The home employment tax credit remains fixed at 50% of eligible expenditure, up to a maximum of €12,000 per year (with higher ceilings for certain family situations). No changes to the scope of eligible services are introduced by Finance Law 2026.

CVAE: phase-out trajectory confirmed#

The CVAE phase-out is frozen: the maximum rate stays at 0.28% in 2026 and 2027, before 0.19% in 2028 and 0.09% in 2029; full abolition is postponed to 2030 (2025 Finance Act, timetable kept by the 2026 Finance Act). Only companies with turnover above €500,000 are subject to CVAE; below this threshold, the charge is zero. For businesses above the threshold, the CVAE charge stays level until 2027.

CFE: no national change#

The business property tax (CFE) is determined by local authorities (communes and EPCIs). Finance Law 2026 introduces no national changes to CFE base rules or rates. Changes to your 2026 CFE depend exclusively on decisions by your local authority.

Important note: the CFE exemption for new businesses (first year of activity) is maintained, as are the temporary exemptions for businesses located in designated territorial development zones (France Ruralités Revitalisation zones, priority urban neighbourhoods). The ZFU-TE, however, were not extended beyond 31 December 2025: set-ups in a priority neighbourhood since 1 January 2026 fall under the new regime of Articles 44 octies B and 1466 A CGI.

Property tax and contribution on commercial premises#

Property tax (TFPB) follows the revaluation of cadastral rental values, indexed to inflation. For 2026, this revaluation is set at +0.8% for both built and unbuilt properties (+1.7% in 2025). Owners of commercial premises should anticipate a slight increase in their property tax charge.

Finance Law 2026 is not a tax revolution, but it contains numerous technical adjustments that, taken together, can materially affect your tax burden. The unchanged SME reduced corporate tax rate, the income tax bracket revaluation and stable VAT exemption thresholds are useful markers for well-managed businesses, which must however factor in the frozen CVAE phase-out.

The increase in social levies on capital income, the large-group surcharge, and the SMIC revaluation require a review of your compensation and cash flow decisions for 2026.