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

Quick answer: the 2026 Finance Act keeps the reduced 15% corporate income tax ceiling at €42,500 of profit (the amendment raising it to €100,000 was not retained), 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. Maximum saving from this reduced rate: up to €4,250 per year.

The 2026 finance law 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:

• 15% reduced CIT rate kept on the first €42,500 of profit
• 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% reduced-rate ceiling kept at €42,500#

A widely discussed amendment proposed raising the ceiling for taxable profit at the reduced corporate income tax rate of 15% from €42,500 to €100,000. It was not retained in the enacted law: the ceiling stays at €42,500. Above that, the standard 25% rate continues to apply.

Impact: the reduced rate delivers a maximum saving of approximately €4,250 per year (a 10-point gap between 25% and 15% on the €42,500 of eligible profit).

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 of 30% for subscriptions to the capital of a young innovative company within the meaning of article 44 sexies-0 A of the French Tax Code (article 199 terdecies-0 A bis)
• Annual ceiling for qualifying payments unchanged (€50,000 / €100,000 for a couple)
• Restriction: the reduction for subscriptions to FCPI fund units is abolished for payments made on or after 21 February 2026 (law no. 2026-103 of 19 February 2026, article 22); funds invested in the shares of young innovative enterprises come under the last paragraph of I of article 199 terdecies-0 A bis of the French Tax Code

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 an approved platform (plateforme agréée) registered by the French Tax Authority, the term that replaced "partner dematerialisation platform". The free invoice-exchange service of the public portal was dropped in October 2024: it is no longer a fallback channel, and Chorus Pro remains the route for invoices addressed to the public sector. 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) follows the phase-out postponed to 2030 by article 62 of the 2025 Finance Act. The 2026 Finance Law left that trajectory unchanged:

• Maximum rate frozen at 0.28% for tax due in respect of 2026 and 2027 (against 0.19% in 2025, a year that carried an additional contribution)
• 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. Business transfers: the Dutreil commitment extended to six years#

For transfers made since 21 February 2026, the individual holding commitment under the Dutreil pact goes from four to six years under articles 787 B and 787 C of the French Tax Code (law no. 2026-103 of 19 February 2026, article 8). For company shares (article 787 B), the collective commitment stays at two years and one of the signatories or heirs holds a management role during that commitment and for the three years following the transfer, so the minimum total length reaches eight years. For a sole proprietorship (article 787 C), the business is carried on for the three years following the transfer. The relief from gift and inheritance duties remains 75% in both cases.

The same law removes from the relief base, for company shares, the share of value representing assets not used exclusively for the business during the three years before the transfer, or since their acquisition, and until the individual commitment ends: hunting and fishing property, passenger vehicles, yachts, pleasure boats and aircraft, jewellery, precious metals, works of art, collectors' items and antiques, racehorses and competition horses, wines and spirits, dwellings and residences. Cash is not on that list.

Not to be confused: the professional capital gains exemptions are unchanged. Article 238 quindecies of the French Tax Code still requires five years of activity, and article 151 septies B still applies, to property used for the business, a 10% allowance for each year of ownership beyond the fifth, in its version in force since 2009.

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 of up to about €4,250 per year (15% vs 25% on the first €42,500 of profit). 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).

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% reduced CIT rate applies to the first €42,500 of profit per twelve-month period, from the financial year opening on 1 January 2026, the balance being taxed at 25%. Full payment of the share capital is assessed at the financial year end: capital subscribed but not fully paid up at that date rules out the reduced rate for the whole year, whose profit is then taxed at 25%. The 75% ownership condition, by contrast, must be met throughout the year.

2. E-invoicing has come into force. Receiving electronic invoices has been mandatory for all VAT-liable businesses established in France since 1 September 2026, as has issuance for large companies and mid-caps (ETI); SMEs, VSEs and micro-entrepreneurs will issue from 1 September 2027. Connecting to an approved platform (plateforme agréée) is the legal route for receiving your suppliers' invoices. We work with Pennylane.

3. The dividends versus salary trade-off is reviewed every year. The PFU moving to 31.4% narrows the gap with salary-based compensation in some configurations, notably in SAS and SASU structures with a high marginal bracket. The calculation depends on the level of compensation and on the social protection sought.

4. For a young innovative enterprise, R&D documentation is built from the very start of projects. Time tracking, descriptions of the work and state-of-the-art reviews are compiled as the projects run: a tax credit is justified with evidence, not on the filing date.

5. CVAE: the maximum rate stays at 0.28% for 2026 and 2027. Since the base is added value, the contribution can reach significant amounts for a high-margin services business.

• 15% reduced CIT rate ceiling kept at €42,500 of profit per twelve-month period for eligible companies, 25% above: the 2026 Finance Law did not change that ceiling, and the saving reaches €4,250 per year at most
• E-invoicing: receiving electronic invoices has been mandatory for all VAT-liable businesses established in France since 1 September 2026, as has issuance for large companies and mid-caps (ETI); issuance by SMEs, VSEs and micro-entrepreneurs follows on 1 September 2027
• IR-PME: the reduction for subscriptions to FCPI fund units is abolished for payments made on or after 21 February 2026 (law no. 2026-103 of 19 February 2026, article 22); funds invested in the shares of young innovative enterprises come under the last paragraph of I of article 199 terdecies-0 A bis of the French Tax Code
• Flat Tax at 31.4% on dividends (12.8% income tax and 18.6% social contributions), after the CSG on this income moved to 10.6%
• CVAE: maximum rate kept at 0.28% for 2026 and 2027, with no contribution due below €500,000 of turnover excluding VAT
• Dutreil pact: the individual holding commitment is extended to six years for transfers made since 21 February 2026, with sumptuary assets excluded from the relief base

Official sources#

• Finance Law for 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? Hayot Expertise supports you in optimising your structure (capital payment, shareholder restructuring, choice of approved platform, CIR/JEI calibration) to make the most of these new measures.

Get a quote for a personalised study