Finance Law 2026: The 8 key measures for VSEs/SMEs

Quick answer: French Law n° 2025-1680 of 14 February 2026 raises the reduced 15% corporate income tax ceiling from €42,500 to €100,000 of profit, generalises e-invoicing on 1 September 2026 (reception) and 2027 (issuance for SMEs), refocuses the IR-PME scheme on JEIs (Young Innovative Enterprises), sets the Flat Tax at 31.4% and confirms the CVAE phase-out through 2030. Potential savings for an SME earning €100k in profit: up to €5,750 per year.

The 2026 finance law, definitively adopted on 14 February 2026, paints a contrasting tax landscape for French businesses. While large groups bear the burden of a renewed exceptional surtax on corporate income tax, VSEs and SMEs benefit from several major support measures. Here is the operational summary of the eight structural measures you need to steer your 2026 tax planning.

The 2026 budget context is tight: French public deficit still near 5% of GDP, public debt above 113% of GDP, and ongoing EU negotiations on the multi-year trajectory. Within this framework, the French government chose a dual approach: making large groups contribute (exceptional CIT surtax above €1.5bn turnover, surtax on share buybacks) while supporting SME cash flow and investment.

For VSEs and SMEs, this translates into three main levers:

• CIT relief on first slices of profit via the €100,000 reduced-rate ceiling
• Support for innovation through the IR-PME refocus, CIR/CII stability and the C3IV green credit
• Tax modernisation with e-invoicing rollout and continued CVAE phase-out

The underlying economic conditions, however, remain demanding: CSG increase on capital income, tightened anti-abuse rules on transfers, and stricter rules on "sumptuary goods".

1. CIT: the 15% rate ceiling jumps to €100,000#

This is undoubtedly the most emblematic measure for small businesses. Previously set at €42,500, the ceiling for taxable profit at the reduced corporate income tax rate of 15% is increased to €100,000. Above that, the standard 25% rate continues to apply.

Impact: for an SME earning €100,000 in taxable profit, the tax savings reach approximately €5,750 per year (the difference between 25% and 15% on the €42,500–€100,000 bracket).

Cumulative conditions: turnover excluding VAT below €10 million, fully paid-up capital at year-end, and at least 75% ownership by individuals (directly or indirectly). Eligible holding structures must verify the transparency of their capital chain.

2. IR-PME (Madelin reduction): focus on innovation and JEIs#

The IR-PME scheme, which grants an income tax reduction for investments into non-listed SME capital, is refocused on Young Innovative Enterprises (JEI):

• Rate maintained at 25% (direct subscriptions to JEI capital) and up to 30% for specific targeted operations
• Annual ceiling for qualifying payments unchanged (€50,000 / €100,000 for a couple)
• Restriction: FCPI subscriptions are now excluded from the reduction, unless the fund invests at least 50% of its assets in JEIs in the fiscal sense

This measure incentivises wealthy individuals to channel savings directly to innovative startups rather than into generalist funds.

3. E-invoicing: the start date is confirmed#

The schedule is now written into French law. All VAT-liable businesses must prepare:

• 1 September 2026: reception obligation for ALL businesses, plus issuance obligation for large companies and mid-caps (ETI)
• 1 September 2027: issuance obligation for SMEs, VSEs and micro-entrepreneurs

Each business must connect to a Partner Dematerialisation Platform (PDP) registered by the French Tax Authority, or to the public portal. The e-reporting obligation (B2C transactions and cross-border operations) follows the same milestones.

Our advice: do not wait until the last minute. Migrating to a compatible tool as soon as 2026 (Pennylane, Sage, Cegid, etc.) secures your compliance and streamlines VAT collection.

4. CVAE: continuation of the phase-out#

The Business Value Added Contribution (CVAE) continues its gradual extinction planned through 2030. The 2026 Finance Law confirms:

• Maximum rate reduced to 0.19% for 2026 (vs. 0.28% in 2025)
• Liability threshold maintained at €500,000 in excluding-VAT turnover
• Calculation base (added value as defined for tax purposes) unchanged
• Value-added cap maintained

Point of attention: if your turnover is close to the €500,000 threshold, a turnover-management strategy (deferred invoicing, intragroup re-invoicing) can avoid triggering CVAE for marginal amounts.

5. Flat Tax on dividends: 31.4% with the CSG increase#

The Single Flat-Rate Levy (PFU), also called Flat Tax, now applies at the overall rate of 31.4%:

• 12.8% for income tax (unchanged)
• 18.6% for social contributions, after the CSG increase from 9.2% to 10.6% voted in the 2026 Social Security Financing Law (LFSS 2026)

For managers paying themselves dividends, the Flat Tax at 31.4% remains more advantageous than the progressive scale as soon as the marginal tax bracket exceeds 30%. The election for the progressive scale (with 40% allowance and 6.8% deductible CSG) becomes attractive again only with a marginal bracket of 11% or below and a lightly taxed household.

6. Professional capital gains: exemption extended to 6 years#

The holding period to benefit from the capital gains exemption on family business transfers (articles 151 septies B and 238 quindecies of the French Tax Code) is extended from 5 to 6 years. The aim: discourage short-term optimisation schemes by requiring genuine entrepreneurial commitment before tax-free disposal.

Attention: "sumptuary goods" (luxury vehicles, jewellery, yachts, artworks not part of the business assets) are now expressly excluded from the calculation of eligible assets. Increased vigilance is required on the composition of current assets prior to disposal.

7. CIR / CII and C3IV: stability confirmed for innovation#

The 2026 Finance Law confirms the stability of innovation support schemes:

• CIR (Research Tax Credit): rate maintained at 30% up to €100m of eligible expenses, 5% above
• CII (Innovation Tax Credit): renewed at 20% for SMEs within the European meaning, with an annual cap of €400,000 of eligible expenses
• C3IV (Green Industry Investment Tax Credit): maintained for investments in production of batteries, solar panels, wind turbines and heat pumps, with rates between 20% and 45% depending on location and company size

These schemes remain compatible with the JEI status and the 15% CIT rate, creating a very favourable tax combination for deeptech startups.

8. Anti-abuse measures and reinforced reporting obligations#

The 2026 Finance Law introduces several technical measures to fight abusive optimisation:

• Tightening of the anti-abuse rule on contribution-disposal transactions (article 150-0 B ter of the French Tax Code): eligible reinvestment now restricted to productive assets
• Tighter framework for management packages: tax qualification of gains revised to avoid reclassification as salary
• Extension of public country-by-country reporting (CbCR) to additional companies above the €750m threshold
• Reinforced sanctions for non-filing of the DAS-2 form and CIR declarations

VSEs / SMEs with profits below €100k#

Net winner. CIT savings ranging from a few hundred euros to about €5,750 per year if profit reaches €100,000. To be combined with CIR/CII stability for innovative entities.

Startups and JEIs#

Major winners. The JEI + CIR/CII + 15% CIT trio delivers near-zero taxation during the early years. Combined with renewed investor appetite thanks to the IR-PME refocus on JEIs.

Managers paying themselves dividends#

Slight loser. The PFU rises from 30% to 31.4%: a €100,000 dividend generates €1,400 in additional levies. The dividends vs. salary trade-off should be revisited annually with your accountant.

Companies near the €500k CVAE threshold#

Watch out. Year-end turnover steering can avoid triggering CVAE for marginally liable taxpayers.

Wealth-management holdings#

Neutral to favourable. The parent-subsidiary and tax-integration regimes are preserved. Increased vigilance on contribution-disposals (article 150-0 B ter) and on the composition of assets eligible for capital-gains exemption.

Large groups (turnover > €1.5bn)#

Losers. Renewed exceptional CIT surtax, surtax on share buybacks, tighter framework on management packages. See our dedicated article on the 2026 exceptional CIT surtax.

From a French accounting firm's standpoint such as Hayot Expertise, the 2026 Finance Law is overall a pro-SME text whose real impact depends on operational execution speed:

1. The 15% CIT on the first €100k applies immediately as soon as the fiscal year opens on 1 January 2026. Verify without delay your capital payment and shareholder composition — capital not fully paid up on 31 December may forfeit eligibility for the whole year.

2. E-invoicing on 1 September 2026 is no longer negotiable. Any delay in choosing a PDP or migrating software will translate into emergency costs in 2026 or sanctions from 2027. Hayot Expertise has selected Pennylane as our priority partner.

3. The dividends vs. salary trade-off must be reviewed. The PFU increase to 31.4% slightly narrows the gap with salary-based compensation in some configurations (notably SAS/SASU structures with high marginal brackets). A personalised audit is recommended.

4. For startups, the JEI + refocused IR-PME + CIR/CII combo remains unbeatable. Anticipate R&D documentation from the very start of projects: 2026 tax stability does not waive declarative rigour.

5. CVAE: don't drop your guard. The 0.19% maximum rate seems low, but the calculation base (added value) can generate significant amounts for high-margin services businesses.

• 15% CIT ceiling raised to €100,000: savings up to €5,750/year for an eligible SME
• E-invoicing: mandatory reception 1 September 2026, SME issuance 1 September 2027 — select a PDP as early as 2026
• IR-PME refocused on JEIs: rate maintained at 25–30%, FCPIs eligible only if >50% invested in JEIs
• Flat Tax now at 31.4% (12.8% IT + 18.6% social) after the CSG increase in LFSS 2026
• CVAE: maximum rate at 0.19%, full extinction planned by 2030, vigilance around the €500k turnover threshold
• CIR/CII/C3IV: confirmed stability, winning combo with JEI and 15% CIT for deeptech startups
• Family business transfer: exemption extended to 6 years of ownership, sumptuary goods excluded

Official sources#

• French Law n° 2025-1680 of 14 February 2026 (Finance Law 2026) — Légifrance
• French Tax Authority Guidelines — Reduced 15% CIT rate for SMEs (BOI-IS-LIQ-20)
• impots.gouv.fr — Official e-invoicing schedule 2026-2027
• DGFiP — CVAE gradual phase-out 2024-2030
• URSSAF — Social Security ceiling and CSG 2026 (LFSS 2026)
• Bpifrance — Updated JEI status for 2026

Need a personalised audit of your 2026 tax situation? The experts at Hayot Expertise support you in optimising your structure (capital payment, shareholder restructuring, PDP selection, CIR/JEI calibration) to make the most of these new measures.

Get a quote for a personalised study