Finance Act for 2026: Main Provisions concerning Companies

Below is a summary of the main measures in the 2026 Finance Act concerning businesses. A future article will present the main measures concerning individuals.

This text is marked by a tax effort requested from the largest groups to contribute to the recovery of public accounts as well as by the maintenance or extension of incentive schemes for investment and competitiveness.

Given the number of secondary provisions that may only be relevant to a small number of taxpayers, we have had to select specific articles. Please contact us if you require further information on any measure not included in this document.

I- DETERMINATION OF TAX RESULT AND CALCULATION OF CORPORATION TAX:

Exceptional tax on the profits of large companies:

Created by the 2025 Finance Act, this exceptional tax is payable by companies subject to corporate income tax (IS) that generate turnover in France equal to or exceeding €1 billion for the fiscal year in which the tax is due or for the preceding fiscal year. This tax has been renewed in 2026. The rate varies according to the company’s turnover and is as follows:

-20.6%, for turnover equal to or exceeding €1.5 billion and less than €3 billion;

-41.2% for turnover equal to or exceeding €3 billion.

Amendment to the mechanism for limiting interest payments to related companies:

A company may deduct from its taxable income interest on sums made available to it by a company directly or indirectly related to it, up to the limit of the rate set for shareholder current accounts.

For fiscal years ending on or after December 31^st 2025, the option of using the market rate, if higher than the rate set for shareholder current accounts, is extended to interest paid to minority shareholders with the status of companies.

Increase in accelerated depreciation rates for “green” ships:

An exceptional deduction applies to equipment enabling cargo or passenger ships to use clean energy.

The exceptional deduction rates are increased:

– by 20% for medium-sized enterprises as defined in Annex I to the General Block Exemption Regulation (EU Regulation 651/2014 of 17 June 2014, as amended);

– by 30% for small enterprises as defined in the same Annex I.

LMP-LMNP status: foreign business income is included in the calculation of the status:

To determine the status (professional or non-professional) of a landlord renting furnished accommodation, the Finance Act specifies that when the taxpayer is not a tax resident of France, the income taken into account includes all income of the same nature, whether taxed in France or subject to an equivalent tax abroad.

This measure applies to income earned in 2026 and subsequent years.

Raising of thresholds from 2026:

Restructuring of sole proprietorships that have opted for corporate income tax (I.S.):

The finance law legalizes the deferral of capital gains tax for individual entrepreneurs’ options for corporate income tax from January 1^st 2026.

The entrepreneur must opt ​​for this tax regime. The consequences of this option are as follows:

• capital gains on contributions of non-depreciable assets are deferred until the date of disposal of these assets;
• Capital gains from contributions of depreciable assets are taxed in the name of the company treated as an EURL (or EARL), they are reintegrated into the profits of the company in equal parts over a period of 5 years (or 15 years for buildings).

The same principle of deferral now applies in the case of a contribution to a company of a sole proprietorship or EIRL which previously opted for IS.

Several measures are extended:

• The depreciation allowance for goodwill is extended until December 31^st
• Special deduction for businesses that purchase original works of art by living artists or musical instruments. This measure is extended until December 31^st

II- MEASURES CONCERNING AGRICULTURE:

Agricultural tax credits:

Agricultural businesses where at least 40% of revenue comes from organic farming activities are eligible for a tax credit. This measure has been extended and will apply to each year from 2011 to 2028.

Agricultural businesses with “High Environmental Value” (HVE) certification are eligible for a tax credit related to this certification. This tax credit has been extended to 2026.

A new tax credit for collective mechanization expenses is being introduced. It applies to agricultural businesses taxed on their actual profits that are members of an agricultural equipment cooperative (CUMA). The tax credit amounts to 7.5% of the expenses incurred by agricultural businesses for the use of agricultural and forestry machinery and equipment invoiced to them by the CUMAs of which they are members. Its amount is capped at €3,000 per company and per calendar year.

Deduction for precautionary savings:

This deduction can be claimed by farmers or agricultural companies subject to income tax under an actual tax regime. In favorable years, this scheme allows for a tax deduction of up to €50,000. This law introduces two changes:

• the measure is extended until December 31^st 2028;
• the reintegration of precautionary savings is partially taxed in the event of economic unforeseen circumstances or the emergence of an outbreak of animal or plant disease.

III- TAX ON THE NON-COMMERCIAL ASSETS OF HOLDING COMPANIES:

This new tax applies to French and foreign companies whose assets have a market value of at least €5 million and whose passive income represents more than 50% of their total revenue. It applies to financial years ending on or after December 31^st 2026.

The conditions for applying this tax are as follows:

• an individual and members of their family circle must hold, directly or indirectly, 50% of the voting rights (or financial rights) in this company;
• passive income received by the company (dividends, interest, royalties, copyrights, rents, etc.) represent more than 50% of the company’s total income.

The tax amount is 20% of the market value of non-professional luxury assets recorded on the company’s balance sheet.

The luxury assets targeted by this tax are mainly goods used for fishing or hunting, passenger vehicles, yachts, jewelry and precious metals, racehorses, wines and spirits, and accommodations used by the person subject to the tax (with the exception of those who are assigned to a professional activity).

The tax must be declared according to the rules applicable to corporate income tax for companies headquartered in France. When the head office is abroad, it must be declared on the income tax return of the individual domiciled in France.

We are of course willing to prepare this declaration for you if you encounter any difficulties in completing it.

IV- TAX CREDITS:

Green industry tax credit:

This applies to investment expenses for activities related to the production of batteries, solar panels, wind turbines, or heat pumps.

This tax credit is extended until December 31^st 2028, the conditions for granting approval are stricter and its rate is increased from 15 to 20% (or 35% in certain areas of regional aid).

Tax credit for expenses related to the production of audiovisual or cinematographic works:

This tax credit is subject to numerous changes (we can provide details upon request).

Two tax credits are extended until December 31^st 2028:

• Tax credit for collaborative research;
• Tax credit for investments in Corsica.

V- V.A.T.:

VAT tax audit when companies have opted for group VAT:

Further details are provided regarding the data processing that may be requested during a tax audit of a representative of a single taxable person. Tax officials have access to all data and data processing, as well as any documentation used to prepare the VAT return.

If computer processing is required, the representative of the single taxable person may:

• either carry out all or part of this computer processing himself: the administration specifies in writing the work to be carried out as well as the deadline granted for its completion;
• either provide the administration, within 15 days, with copies of the documents, data and processing operations subject to control. These copies must be produced on any computer media that meets the standards established by the administration.

Small Parcel Tax:

Effective March 1^st 2026, a €2 tax will be levied on small parcels imported into France. This tax applies to the pre-tax value of each item in a low-value shipment (€150 or less excluding VAT).

The party liable for this tax is the same party responsible for import VAT.

Note: If a low-value shipment contains multiple items, each item will be subject to this tax.

VAT rates:

• Installation of eco-rated air-to-air heat pumps eligible for the 5.5% rate: The reduced rate of 5.5% applies to energy renovation work carried out in premises completed at least 2 years ago. These premises must be used, or intended to be used, after the work is completed, for residential purposes.

The 2026 Finance Law extends the benefit of the reduced VAT rate of 5.5% to the installation of air-to-air heat pumps when their characteristics meet certain environmental performance and sustainability objectives.

This measure applies from February 21^st 2026.

• Delivery and installation of electricity production equipment using solar radiation energy: From now on, the installation, fitting and maintenance services for such equipment (photovoltaic panels) must be carried out by a person with a valid professional certification or qualification corresponding to the type of installation carried out and the size of the site and meeting the technical requirements.

Right to deduct VAT:

As of February 21^st 2026, a new provision clarifies that goods and services used for advertising are not subject to any exclusion or restriction of the right to deduct VAT.

Cash register software:

Any person subject to VAT who records payments with software or a cash register must use software or a system that meets the requirements for data integrity, security, retention and archiving for tax administration control purposes.

The law reinstates the possibility of demonstrating the security of software or point-of-sale systems by producing an individual certificate issued by the software publisher and conforming to a template established by the government.

Note: This possibility had been eliminated by the 2025 Finance Act.

VI- VARIOUS MEASURES:

Here are some of the many diverse measures included in this finance law.

Abandonment of the CVAE reduction project in 2026:

The rates for 2026 will be as follows:

• the tax payable is calculated according to the scale in effect on January 1^st 2026, with a maximum rate of 0.28% for companies with a turnover exceeding €50 million;
• the tax relief amount for companies with a turnover below €2 million is increased to €188;
• the rate of the additional tax for chambers of commerce and industry expenses is reduced to 9.23%;
• the CET cap rate is set at 1.531% of the value added.

Exemption schemes by zone:

Here is a list of the main measures included in the law on this subject:

• The tax regime for urban business zones (Z.F.U.) has not be extended beyond December 31^ST 2025;
• creation of a tax exemption on profits in priority urban areas (QPV): Taxpayers who, between January 1^st 2026 and December 31^st 2030, create or take over activities in priority areas of the urban policy are exempt from income tax or corporation tax (in full for 5 years and then partially for the following 3 years) on profits from these activities.

The activity created or taken over must be a commercial or craft activity or consist of the practice of a healthcare profession and the company must employ fewer than fifty employees.

An exemption from CFE for the same period is applicable unless the municipality or inter-municipality decides otherwise;

• tax breaks applicable in the new generation of business zones will be increased in disadvantaged municipalities in La Réunion;
• exemptions in priority development zones (Z.D.P.) and the temporary measure for municipalities in the former rural revitalization zones (Z.R.R.) will be extended.

Exemption from Housing Tax for “Rural Gîtes”:

The Finance Act provides for a new exemption from housing tax. This applies to “rural gîtes” as defined by the Tourism Code, which also meet the following criteria:

• they must be a detached house or an apartment located in a building containing no more than four dwellings;
• and they must not be located within the territory of a metropolitan area.

Removal of the requirement to send certain formal notices by registered mail with return receipt requested:

This requirement is removed in the following cases:

• formal notice for failure to file, within the prescribed deadlines, a declaration or document containing information relevant to the tax assessment or calculation;
• formal notice for failure to file the declaration of venture capital fund management companies, professional private equity funds, etc.;
• taxpayer appeal in the event of a decision refusing a deferral of payment of the portion of taxes whose validity they dispute.