VAT Group (Single Taxable Person) in France 2026: Conditions, Option and Strategy

Up to date as of 12 May 2026. The French VAT group regime — known in domestic tax law as the assujetti unique (single taxable person) — has been applicable since 1 January 2023 (Article 256 C of the Code Général des Impôts, introduced by the 2022 Finance Act). It transposes Article 11 of the EU VAT Directive 2006/112/EC, a provision that Germany, the Netherlands, Italy, Belgium and several other Member States have used for many years. In France, the mechanism is not reserved for listed groups: it applies to any cluster of at least two VAT-registered entities established on French territory, provided the required links are properly characterised. At Cabinet Hayot Expertise in Paris, we have been advising groups on this regime since it came into force and accompany clients from eligibility analysis through option filing and ongoing declarative governance.

Article 256 C CGI provides that VAT-registered persons established in France may be treated as a single taxable person when they are closely linked financially, economically and organisationally. The regime was introduced by Article 162 of Law No. 2021-1900 of 30 December 2021 (Finance Act for 2022) and applies to options filed from 1 January 2023 onwards.

The administrative doctrine#

The DGFiP has commented on this regime in two published BOIs:

• BOI-TVA-AU-10: scope of application, definition of the three links, eligible and ineligible entities, effects on transactions.
• BOI-TVA-AU-20: practical modalities of the option, appointment of the representative, declarative management, exit from the regime, and VAT adjustments.

These instructions constitute the binding administrative doctrine. In a tax audit involving the qualification of links or the treatment of intra-group transactions, they are the primary reference document.

The EU basis: Article 11 of the VAT Directive#

Article 11 of Directive 2006/112/EC authorises each Member State to regard as a single taxable person persons established in that Member State "who, while legally independent, are closely bound to one another by financial, economic and organisational links". France exercised this option later than most neighbouring countries. This EU basis makes the mechanism legally robust and immune to challenge on principle by the tax authorities.

BOFiP BOI-TVA-AU-10 makes clear that the three links must be simultaneously and durably characterised. The absence of even one link is sufficient to exclude eligibility or to justify a challenge during a tax audit.

Financial link: ≥ 50 % of capital or voting rights#

The financial link requires one member (generally the holding company or group parent) to hold, directly or indirectly, at least 50 % of the capital or voting rights of each other member. This 50 % threshold is lower than the 95 % threshold required for IS tax consolidation, which broadens the pool of potentially eligible groups.

Key points: Indirect ownership is taken into account — an intermediate holding company can be used to chain participations to reach the threshold. However, a 49 % stake does not suffice, even if accompanied by a casting vote under a shareholders' agreement: it is the statutory ownership percentage or statutory voting rights that count.

Economic link: convergence of activity or operational interdependence#

The economic link is characterised in one of the following situations according to the BOFiP:

• Similar or complementary principal activity: members carry on activities of the same type or whose production cycles are complementary.
• Principal intra-group flows: one member carries out the bulk of its activity with other members (internal supplier, service holding company, internal purchasing centre, etc.).
• Common or joint management or exploitation: members operate under a common brand or identical commercial terms.

A frequent pattern at Cabinet Hayot Expertise in Paris: a Parisian service holding company that invoices management, accounting and IT services to its operating subsidiaries satisfies the economic link through intra-group flows, provided those flows are real, documented and priced at arm's length.

Organisational link: joint or coordinated management#

The organisational link requires joint or coordinated management across the members. In practice, it may be established by:

• the same natural persons serving as directors of each member;
• shared governance bodies (group management committee, shared deputy chief executive);
• centralised policies on HR, information systems or treasury management.

Mere common ownership by the same shareholder is not sufficient — the organisational element must manifest itself in operational management. A group organisational chart, minutes of joint management committee meetings and cross-granted delegations of authority constitute the most probative documentary evidence.

Who may join the VAT group?#

Any VAT-registered person established in France may join the group, including:

• companies subject to corporate income tax (IS) or personal income tax (IR);
• holding companies with a taxable economic activity (animating holding or mixed holding);
• civil law companies (SCIs) that are VAT-registered;
• French branches of foreign entities, subject to the links being characterised.

Who is excluded?#

• Entities exclusively exempt from VAT (pure healthcare establishments, certain general-interest organisations without subsidiary taxable activity) cannot join the group.
• Entities established outside France: the scope is strictly national.
• Non-taxable persons.

Our view: pure holding companies — those whose activity is limited to holding participations without providing services to subsidiaries — sit in a risk area. Without a taxable economic activity of their own, they may not qualify as eligible taxable persons. If the holding is not an animating holding, its eligibility must be verified before the option is filed, to avoid the scope being challenged in a tax audit. This question is analysed in detail in our article on animating holding companies: conditions and risks 2026.

The option procedure#

The option is filed by the designated representative of the group — one member acting on behalf of the group vis-à-vis the DGFiP. The form to use is the SUOption form (BOFiP BOI-FORM-000004), filed with the Service des Impôts des Entreprises (SIE) territorially competent for the representative.

The form must include:

• the identity of all group members (name, SIREN number, registered office);
• the designation of the representative;
• the requested effective date.

Mandatory calendar#

For an effective date of 1 January N: the option must be filed before 31 October N-1. This deadline is strict — an option filed on 2 November for entry on 1 January of the following year will be rejected with no possible remedy.

For 2027: the option must be filed before 31 October 2026. A decision to form a VAT group therefore requires a complete analysis and instruction process no later than the end of August 2026, to allow time for documentation, verification and signatures.

Minimum three-year irrevocability#

The option is irrevocable for a minimum period of 3 years. It is tacitly renewed annually unless denounced in the 3 months preceding the end of the current calendar year. After the initial 3 years, withdrawal is possible at the end of a calendar year, with 3 months' notice.

The underestimated risk: some management teams opt for the VAT group after a favourable simulation based on the current year, without anticipating scope changes — disposal of a subsidiary, acquisition of a non-eligible entity — that may arise within the 3 years. Once the option is in place, a member joining or leaving can trigger VAT adjustments on goods still held in stock or as capital assets, with immediate cash-flow consequences.

A single VAT identification number#

Once the option is in place, the VAT group has a single VAT identification number in the name of the representative. Individual members cease to have an active VAT number for their day-to-day transactions.

A single CA3 return#

The representative files a single monthly or quarterly CA3 return in the name of the group, consolidating all members' transactions with parties outside the group. Members must transmit their VAT data to the representative according to an agreed schedule and format — this internal flow is one of the organisational points that requires the most advance preparation.

Intra-group neutrality#

Supplies of goods and services between VAT group members are outside the scope of VAT: they do not give rise to any collection or deduction. Intra-group invoices are issued excluding VAT, with the mention: "Transaction internal to the single taxable person — CGI art. 256 C". This neutrality mechanism is particularly valuable for groups containing members with partial or nil deduction rights (financial sector, mixed real estate, medico-social): services recharged internally no longer generate irrecoverable VAT.

In practice: a Paris service holding company that recharges €500,000 excl. VAT of management services to subsidiaries — one of which has a deduction coefficient of 0.65 — avoids, through the VAT group, the irrecoverable VAT on the non-deductible share. Depending on the subsidiary's coefficient, the annual saving can be material.

Practical example: a holding company and two Paris-based subsidiaries#

Consider a three-entity group:

• HoldCo SAS (registered office Paris 8): animating holding that recharges management, accounting and IT services — €600,000 excl. VAT per year to its two subsidiaries.
• FilA SAS: distribution activity, 100 % taxable. Deduction coefficient of 1.
• FilB SAS: mixed activity (taxable office space rental + exempt insurance activity). Deduction coefficient of 0.65.

Before the VAT group:

• HoldCo invoices €300,000 HT to FilA and €300,000 HT to FilB.
• FilA: full deduction, €0 irrecoverable VAT.
• FilB: 65 % deduction. Irrecoverable VAT = €300,000 × 20 % × 35 % = €21,000 annual loss.

After the VAT group:

• The €600,000 of intra-group services fall outside the scope of VAT.
• Annual saving: €21,000.
• Over 3 years (minimum irrevocability period): €63,000 net gain before set-up and management costs.

This calculation is simplified: it does not account for VAT adjustments on constitution of the group, effects on the group's overall VAT credit position, or organisational costs. A full simulation, drawing on the last three years of tax returns and documented intra-group flows, must be commissioned from a specialist accountant.

Article 1693 ter CGI provides that each member of the VAT group is jointly and severally liable for the VAT owed by the representative in respect of periods of membership. If the representative fails to pay the CA3 liability, the DGFiP may recover the amount from any member — including a solvent subsidiary — without first pursuing the representative.

Practical consequences:

• A VAT group agreement must govern how VAT is apportioned between members and organise recourse in the event of default.
• Due diligence on the solvency and financial health of each proposed member must be conducted before the option is filed.
• Where a financially fragile new member is proposed for entry, the joint liability risk must be assessed and formally documented.

The designated representative#

The representative is the sole declarative contact for the group vis-à-vis the DGFiP. It is responsible for filing the CA3 and paying the net VAT liability. It may delegate technically to an accounting firm or an EDI provider, but the substantive responsibility remains with the representative.

Obligations of non-representative members#

Each non-representative member must:

• Maintain its own VAT accounting in order to supply the data required for the consolidated CA3 within the agreed timetable.
• Issue intra-group invoices excluding VAT with the legal mention: "Transaction internal to the single taxable person — CGI art. 256 C".
• Retain supporting documents for all transactions with third parties outside the group for 10 years (LPF art. L102 B).

Interaction with mandatory e-invoicing#

According to DGFiP documentation on the single taxable person and e-invoicing, the VAT group follows the timetable of the largest member entity for mandatory e-invoicing purposes. For groups including a large enterprise (over 5,000 employees or over €1.5 billion revenue), the receiving obligation is already active. The coexistence of the unique group VAT number and individual e-invoicing identifiers must be configured in information systems before the option takes effect.

Mandatory exit#

Exit is mandatory when the conditions of membership are no longer met: loss of the financial link (disposal of shareholding), disappearance of the organisational link, dissolution of a member. This exit takes effect by operation of law on the date the link disappears, without any notice period.

Voluntary exit after 3 years#

Voluntary withdrawal is available at the end of the minimum 3-year irrevocability period, by notification to the SIE in the 3 months before the end of the current financial year. Exit takes effect on 1 January of the following year.

VAT adjustments on exit#

On exit, members must carry out VAT adjustments on goods and services for which input tax was deducted outside the group period and which are still held in stock or as capital assets. These adjustments — governed by BOFiP BOI-TVA-AU-20 — can result in VAT clawbacks or additional credits. Their calculation is technical and must be anticipated well in advance of the exit decision.

France was one of the last euro-zone countries to introduce this regime, which means doctrine and case law are still consolidating. Groups with entities in several EU countries must pay close attention to differences in treatment: neutrality achieved in France does not automatically extend to entities established outside French territory.

Our view: for a fully taxable Paris-based group — distribution, consulting, SaaS, construction — the VAT group brings administrative simplification but limited direct tax saving. For a mixed group including a financial, real estate or medico-social entity with partial deduction rights, however, the saving on irrecoverable VAT can easily justify the organisational complexity. The analysis must be conducted on a case-by-case basis, after simulating the consolidated deduction coefficient.

Since the regime came into force in 2023, we have accompanied several Paris-area groups through the option process. The recurring lessons are as follows.

First point of vigilance: groups consistently underestimate the organisational burden of the consolidated CA3 return. Centralising VAT data from 3 to 5 separate entities, verifying it, consolidating it and filing it on time requires a rigid internal procedure — and often an investment in tooling (ERP or VAT consolidation module).

Second point: the joint liability clause (CGI art. 1693 ter) must be addressed in a formalised VAT group agreement before the option is filed. Without this agreement, recourse between members in the event of partial default is legally complex and slow to enforce.

Third point: the VAT group option is a strategic decision that must be coordinated with the group's IS policy — tax consolidation, transfer pricing, intra-group service valuation — and with the mandatory e-invoicing timetable. It should not be made in isolation. For groups combining VAT group and IS consolidation, our page on group taxation and holding companies Paris describes the full articulation.

This article is for information purposes only. It does not replace a personalised analysis of your situation, your documents and the law in force. The thresholds, rates and conditions mentioned are those known at the date of update — certain 2026 parameters remain subject to evolution following additional BOFiP publications. For any decision relating to the VAT group regime, contact Cabinet Hayot Expertise in Paris.

Sources: CGI art. 256 C and art. 1693 ter (Légifrance) — BOFiP BOI-TVA-AU-10 and BOI-TVA-AU-20 — BOFiP BOI-FORM-000004 (SUOption form) — EU Directive 2006/112/EC art. 11 — Law No. 2021-1900 of 30 December 2021 (Finance Act 2022).