Tax 2026 France: Key Corporate and Individual Tax Measures

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Tax 2026 France. Extension of the Exceptional Corporate Income Tax Surtax for Large Companies

The French Finance Act for 2025 introduced an exceptional surtax on corporate income tax (CIT) targeting large companies generating significant profits. This measure initially applied to companies with annual turnover of at least €1 billion in France, for the first financial year ending on or after December 31, 2025. The turnover threshold was assessed based on either the financial year in which the surtax was due or the previous financial year (i.e., 2024 or 2025 for calendar-year companies).

2025 Surtax Rates

The applicable surtax rates for 2025 depend on turnover thresholds:

  • Companies with turnover below €3 billion (both in the current and previous financial year):
    → Surtax rate: 20.6% (Total Effective Tax Rate: 30.97%)
  • Companies with turnover equal to or above €3 billion (in either the current or previous financial year):
    → Surtax rate: 41.2% (Total Effective Tax Rate: 36.125%)

Extension to 2026

The 2026 Finance Act extends this exceptional surtax for an additional year. It now applies to the first two financial years ending on or after December 31, 2025 (i.e., FY 2025 and FY 2026 for companies closing on December 31).

However, the scope is narrowed in 2026 to exclude medium-sized companies:

  • The threshold is increased to €1.5 billion turnover (instead of €1 billion in 2025)
  • The threshold is assessed only for the 2026 financial year, unlike 2025 where two years were considered

Application of the Surtax by Financial Year

  • FY 2024 & FY 2025
    • €1B–€3B turnover: 20.6% surtax
    • ≥ €3B turnover: 41.2% surtax
  • FY 2026
    • €1B–€1.5B turnover: No surtax
    • €1.5B–€3B turnover: 20.6% surtax
    • ≥ €3B turnover: 41.2% surtax

All other aspects of the surtax regime remain unchanged.

Gradual Abolition of CVAE Confirmed by 2030

The Contribution on Companies’ Added Value (CVAE), which forms part of the Territorial Economic Contribution (CET), applies to businesses subject to the business property tax (CFE) with turnover of at least €500,000.

Although an earlier abolition was considered, the 2026 Finance Act confirms that the original timeline remains unchanged. The CVAE will be fully phased out by 2030, following a gradual reduction in rates.

CVAE Rate Schedule

  • 2026–2027: Maximum rate of 0.28%
  • 2028: Maximum rate reduced to 0.19%
  • 2029: Maximum rate reduced to 0.09%
  • 2030: Full abolition

Applicable Rates by Turnover

  • Below €500,000:
    → 0% (all years)
  • €500,000 to €3 million:
    • 2026: 0.094% × (turnover – €500k) / €2.5M
    • 2027: 0.063% × (turnover – €500k) / €2.5M
    • 2028: 0.031% × (turnover – €500k) / €2.5M
  • €3 million to €10 million:
    • 2026: 0.094% + 0.169% × (turnover – €3M) / €7M
    • 2027: 0.063% + 0.113% × (turnover – €3M) / €7M
    • 2028: 0.031% + 0.056% × (turnover – €3M) / €7M
  • €10 million to €50 million:
    • 2026: 0.263% + 0.019% × (turnover – €10M) / €40M
    • 2027: 0.175% + 0.013% × (turnover – €10M) / €40M
    • 2028: 0.087% + 0.006% × (turnover – €10M) / €40M
  • Above €50 million:
    • 2026: 0.28%
    • 2027: 0.19%
    • 2028: 0.09%

Pillar Two: Integration of OECD June 2024 Guidelines and DAC9 Directive

Following the implementation of the EU Directive on minimum taxation (Directive (EU) 2022/2523) in the 2024 Finance Act, France introduced:

  • A Domestic Minimum Top-Up Tax (DMTT)
  • The Income Inclusion Rule (IIR)
  • The Undertaxed Profit Rule (UTPR)

The 2025 Finance Act incorporated OECD administrative guidance issued in December 2023. However, the June 2024 OECD guidelines are now integrated into the 2026 Finance Act.

Key Updates from OECD Guidelines

  • Adjustment mechanism for deferred tax liabilities not reversed after five years, with category-based tracking
  • Adaptation of definitions (e.g., ultimate parent entity, consolidated financial statements) for mutual banking and insurance groups using combined accounts
  • Rules for allocating Qualified Domestic Minimum Top-Up Tax (QDMTT) among group entities when standard allocation is not feasible
  • Clarifications on taxation of investment entities and insurance investment entities under QDMTT
  • New reporting obligations for joint ventures

DAC9 Directive Transposition

The Directive of April 14, 2025 (DAC9) on automatic exchange of tax information is also transposed. It allows French tax authorities to request amended global information returns in case of obvious errors in initial filings.

Introduction of a Tax on Small Imported Parcels:tax 2026 france

A new temporary tax is introduced on low-value imports:

  • €2 per item for parcels valued under €150
  • Applies to goods imported from outside the EU

Timeline

  • Effective from March 1, 2026
  • Applies until the introduction of an EU-wide mechanism for customs cost coverage
  • Latest end date: December 31, 2026

New Tax on Non-Operational Luxury Assets Held by Holding Companies

A new 20% tax targets non-professional, high-value assets held by holding companies, as part of anti-tax optimization measures.

Scope of Application

Applies to:

  • French companies subject to CIT
  • Foreign companies subject to an equivalent tax or structured as limited companies, where at least one shareholder is a French tax resident

In the latter case, the French resident shareholder is liable for the tax.

Conditions (All Must Be Met)

  • Total asset value ≥ €5 million
  • A single individual (or family group) holds ≥ 50% of voting or financial rights, or exercises effective control
  • Passive income (dividends, interest, royalties, etc.) exceeds 50% of total income

Tax Base

The tax applies to the market value of non-operational “luxury” assets, including:

  • Vehicles
  • Yachts and aircraft
  • Jewelry
  • Wines and spirits
  • Residential properties reserved for personal use

Entry into Force

Applies to financial years ending on or after December 31, 2026

Individual Tax Measures: Extension of the 20% Minimum Tax:tax 2026 france

The 2025 Finance Act introduced a temporary minimum tax for high-income individuals.

Scope

Applies to French tax residents with:

  • Income exceeding €250,000 (single)
  • €500,000 (married or jointly taxed)

Mechanism

If the effective tax rate is below 20%, the taxpayer must pay the difference between:

  • Their actual income tax, and
  • 20% of their adjusted taxable income

Extension

This measure is extended until France’s public deficit falls below 3% of GDP.

Payment Terms

  • Mandatory advance payment between December 1 and December 15 each year

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