French economic simplification law: what changes for small businesses

After almost two years of back and forth in Parliament, the French law on the simplification of economic life is no longer a bill: it has been published, partly struck down and is already partly in force. For the manager of a small or medium-sized business, the real question now is to sort what applies today, what is waiting for a decree and what was lost along the way.

Quick answer. The French economic simplification law is Law No. 2026-403 of 26 May 2026, published in the Journal officiel on 27 May 2026 after decision No. 2026-903 DC of 21 May 2026, which struck down 23 of its 84 articles. For small businesses, it mainly affects commercial leases, insurance, banking and business transfers.

Yes: the law on the simplification of economic life was enacted on 26 May 2026 as Law No. 2026-403, and part of its provisions came into force on 28 May 2026. Parliament gave its final approval in mid-April 2026, following a joint committee (commission mixte paritaire).

Members of the National Assembly referred the law to the Constitutional Council on 21 April 2026. In decision No. 2026-903 DC of 21 May 2026, the Council found the law partially compliant: 23 entire articles and some provisions of two other articles were declared unconstitutional, mainly because they were "legislative riders", meaning measures with no sufficient link to the original bill.

Publication in the Journal officiel took place on 27 May 2026. Implementation is staggered: some measures have applied since 28 May 2026, others apply from 1 January 2027, and others only once the decrees provided for by the law are published.

The economic simplification law brings together very diverse measures, organised under several titles: organisation of the administration, administrative procedures for businesses, company operations, dispute resolution, aligning the rights of very small businesses with those of consumers, industrial projects and the energy transition.

For a small or medium-sized business, five blocks have a concrete and verifiable effect: commercial leases, insurance contracts, the banking relationship, business transfers and access to public procurement. There is also a reporting measure that directly affects the preparation of the accounts: information on corporate philanthropy moves to the management report.

The rest of the text (town planning, industrial sites, data centres, energy) is mainly relevant to large projects and local authorities. We do not cover it here.

The measures with the greatest impact on SMEs are those on commercial leases, because some of them apply to existing leases and directly change the tenant's cash position.

Commercial leases: monthly rent and capped guarantees#

A tenant of premises used for retail or craft activities can now ask to pay rent monthly, provided there are no undisputed arrears; the request is then binding on the landlord from the next due date. This option also covers leases in progress on 27 May 2026.

The security deposit and all guarantees required from the tenant are capped at one quarter's rent, meaning a quarter of the annual rent, for leases signed or renewed since the law came into force. The law also governs repayment: when keys are handed back on or after 26 August 2026, the landlord must repay the deposit within three months at most, after deducting sums still owed and duly justified.

Finally, the law regulates clauses that limit the annual change in rent linked to commercial lease indices: these clauses must now work symmetrically, for both increases and decreases.

Insurance: leaving a contract after one year#

Small and medium-sized businesses can terminate, at any time after one year, insurance contracts covering their property used for business purposes, without fees or penalties. The law also extends to professionals the insurer's duty to give reasons when it terminates a contract, and it sets time limits for claims settlement. Several observers point out that some details depend on a decree: to be confirmed by official publication before you terminate.

Banking: clearer fees, free account closure#

Banks must send micro-businesses a free annual statement of their banking fees. From 1 January 2027, closing a deposit or savings account, including for a legal entity, becomes free, and the main professional fees and services must use common names to make comparisons easier. Sources present the exact date of the first annual statement differently: check with your bank.

Business transfers: lighter employee information#

For transfers taking place on or after 26 July 2026, the minimum period for informing employees in advance of the sale of a business or of a majority of the shares drops from two months to one month. This direct information now only applies to companies that are not required to set up a works council (CSE) with economic powers, in practice those with fewer than 50 employees: the separate regime for companies with 50 to 249 employees is repealed. The sale may also go ahead earlier if every employee has stated that they will not make an offer. The cap on the civil fine for failing to do so is reduced from 2% to 0.5% of the sale price. At the same time, the law strengthens the "valuation" tax ruling: for an SME within the EU definition, the tax authority's silence within the set time limit counts as acceptance of the proposed value for a transfer by gift.

Public procurement: advance payments and a single platform#

The minimum rate of advance payments made by the State to SMEs holding State contracts is due to rise from 5% to 20%, by decree. By 2030, contracts of the State, its agencies, hospitals and social security bodies will go through the single PLACE platform. The law also raises the threshold below which works contracts are exempt from advertising and creates a mechanism for reserving lots for young innovative companies; the amount and date of the new threshold are to be checked in the implementing texts.

A published measure is not necessarily an applicable measure: the simplification law combines provisions that apply immediately, provisions with a deferred date and provisions that depend on a decree.

Our view. The most immediate gain for a small business tenant is monthly commercial rent: moving from quarterly rent paid in advance to monthly rent smooths working capital needs from the next due date, with no negotiation. At the firm, we advise quantifying the effect on the cash flow plan before writing to the landlord, so that it becomes a management decision rather than a reflex.

The Constitutional Council struck down 23 entire articles of the simplification law, mostly on the ground that they were legislative riders contrary to Article 45 of the Constitution. A censure on this ground says nothing about the merits: the measure may come back in another text.

For SMEs, the most visible censure concerns Article 23, which sought to make remote participation the default rule for SARL general meetings, including for approving the accounts. The rules on remote participation in SARLs therefore remain those that applied before the law, subject to your articles of association. If you hold your accounts approval meeting by video conference, reread the articles of association rather than relying on early commentary on the reform.

The "SME test", intended to measure the impact of new rules on small businesses, had a turbulent journey: removed by MPs in committee, it was defended by employers' organisations to the end. Its final wording and actual scope should be checked in the text published in the Journal officiel.

The underestimated risk. Many summaries published during the parliamentary process describe articles that did not survive the decision of 21 May 2026. Before applying a measure, check that it appears in the published version of Law No. 2026-403 and that it is not waiting for a decree. A lease clause or an insurance termination based on a struck-down article exposes you to a dispute.

Article 6 of the law abolishes, from 1 January 2027, the specific return for philanthropic donations provided for by Article 238 bis of the French Tax Code for donations above €10,000, and replaces it with information in the management report. Until 31 December 2026, the current reporting obligation still applies.

In practice, the burden does not disappear: it moves to a different document. The management report will have to describe the philanthropy policy, the donations giving entitlement to the tax reduction, the beneficiaries and, where applicable, any benefits received in return. Our article on the content of the management report in 2026 details the other sections to produce.

In practice. For a company that gives more than €10,000 a year, the right move is to keep a donations register from 2026 onwards (beneficiary, date, amount, tax receipt, benefit received). This register will serve both for the last return under the old regime and for the future disclosure in the management report.

The most effective method is to test the law against your contracts rather than the other way round. Here is the order we recommend:

1. List your commercial leases with their signature or renewal date, the rent payment frequency and the amount of the guarantees.
2. Quantify the effect of monthly rent on your cash flow plan for the next twelve months.
3. List your insurance contracts on business property and their anniversary dates.
4. Ask your bank for the annual breakdown of your fees and compare offers ahead of 2027.
5. If a sale is planned, realign the employee information timeline with the new one-month period.
6. Prepare the philanthropy disclosure for the management report of financial years starting from 2027.

Quick verification checklist

• The measure appears in the published version of Law No. 2026-403
• It was not struck down by decision No. 2026-903 DC
• Its entry into force date has passed
• No implementing decree is expected, or it has been published
• Your contracts or articles of association do not provide for a different, valid rule
• The decision is documented (letter, amendment, minutes)

For annual taxation, which falls under another text, see our summary of the key 2026 finance law measures for SMEs and the one on what the 2026 finance law changes for very small businesses.

The simplification law lightens some formalities, but it removes none of the basic accounting and tax obligations: bookkeeping, filing of accounts, VAT returns and the corporate tax return remain unchanged. The e-invoicing reform follows its own timetable, independent of this law.

Two points deserve particular attention. First, the commercial lease measures create rights for tenants, but also drafting issues for landlords: a property company (SCI) letting premises to an operating company must review its lease templates. Second, the banking and insurance measures give businesses new bargaining power, which only has an effect if the business knows its renewal dates. For lease negotiations, our article on negotiating commercial lease rent and service charges complements this reading.

• Law No. 2026-403 of 26 May 2026 on the simplification of economic life was published in the Journal officiel on 27 May 2026.
• Decision No. 2026-903 DC of 21 May 2026 struck down 23 of the 84 articles, mainly as legislative riders.
• Commercial leases are the most operational block: monthly rent on request, guarantees capped at one quarter, deposit repaid within three months.
• Several measures (insurance, advances on public contracts) still depend on a decree.
• The philanthropy return moves to the management report on 1 January 2027.