VAT 2026: calculation, declaration and new obligations for businesses

VAT 2026: calculation, declaration and new obligations for businesses

VAT remains the most collected tax in France, generating approximately 200 billion euros in annual revenue. In 2026, several major changes will simultaneously modify the calculation rules, reporting obligations and audit procedures. Between the extension of mandatory e-invoicing, the rollout of e-reporting and tax rate adjustments stemming from the Finance Act, accounting and finance departments must prepare now. This article covers everything you need to know: tax base, applicable rates, reporting timetable and non-compliance risks.

The fundamentals of VAT calculation in 2026

The VAT mechanism operates on an unchanged principle: the business collects the tax on behalf of the State from its customers, then deducts the VAT it has itself paid on its purchases. The difference is remitted to the Public Treasury — or refunded if deductible VAT exceeds collected VAT.

The taxable base: what enters into the calculation base

The VAT base is the price excluding tax of the transaction, increased by all accessory charges invoiced: transport costs, packaging, insurance, deferred payment interest and subsidies directly linked to the price. Since European Directive 2006/112/CE transposed into French law, early payment discounts granted at the time of invoicing may be deducted from the base, provided they are actually granted.

Important: late payment penalties and damages are not subject to VAT insofar as they do not remunerate the delivery of goods or the provision of a service.

The VAT rates applicable in 2026

France maintains its four-tier rate structure in 2026:

• Standard rate of 20%: applies to the vast majority of goods and services, including digital services and SaaS.
• Intermediate rate of 10%: on-site dining, renovation work, passenger transport, hotel accommodation.
• Reduced rate of 5.5%: essential foodstuffs, books, gas and electricity subscriptions, equipment and services for disabled persons, energy renovation work.
• Particular rate of 2.1%: medicines reimbursable by social security, periodical press registered with the Joint Commission.

The 2026 Finance Act did not modify the nominal rates, but it clarified the conditions for applying the 5.5% reduced rate to certain thermal renovation work, requiring the provision of a certificate of conformity with the energy performance criteria defined by Decree No. 2025-421.

VAT on intra-Community operations

For exchanges within the European Union, the intra-Community acquisition regime remains based on the destination principle: VAT is due in the country where the goods arrive. For B2B services, the general rule sets the place of taxation where the recipient is established, in accordance with Article 259 of the General Tax Code (CGI).

Since 1 July 2021, the One Stop Shop (OSS) single window has enabled businesses to declare and pay VAT due in all Member States via a single interface. In 2026, this mechanism is fully operational and its use is increasing significantly, particularly for e-commerce platforms.

The new VAT reporting obligations in 2026

2026 marks a turning point in reporting procedures, driven by two convergent reforms: the extension of mandatory e-invoicing and the rollout of the e-reporting system.

Mandatory e-invoicing and its link to VAT declaration

From 1 September 2026, all businesses registered for VAT established in France — including sole traders — are required to receive electronic invoices. The obligation to issue, meanwhile, applies progressively according to size: large businesses and mid-caps switched in September 2026, SMEs and micro-enterprises will follow according to the timetable detailed on the e-invoicing calendar 2026-2027 page.

The direct consequence for VAT declaration is considerable: the Directorate General of Public Finance (DGFiP) recovers transaction data from each invoice via partner digitalisation platforms (PDP) and the public invoicing portal (PPF). Eventually, the administration will have near real-time visibility of VAT flows, which will enable pre-completion of VAT returns — similar to what already exists for income tax.

To understand the precise role of these platforms in the reporting chain, consult our guide on approved PDP platforms.

E-reporting: a new data transmission obligation

E-reporting complements e-invoicing by covering operations that fall outside its direct scope: transactions with individuals (B2C), exchanges with non-resident foreign businesses, and operations outside the scope of French VAT.

In practice, businesses must transmit aggregate data to the tax authority covering these operations according to a schedule aligned with their VAT regime:

• Monthly regime: transmission within 10 days following the close of the period.
• Quarterly regime: transmission within 10 days following the end of the quarter.

Failure to meet these obligations exposes businesses to fines of up to €15 per missing invoice, capped at €15,000 per year per filer. For a comprehensive presentation of the system, our article on e-reporting and transaction data transmission details the expected file formats and deadlines.

Reporting regimes and their deadlines in 2026

The choice of reporting regime depends on annual turnover excluding tax:

Simplified real regime (RSI): available to businesses with annual turnover excluding tax below €840,000 for commercial activities and €254,000 for service provision. Two semi-annual instalments (55% in July, 40% in December) and an annual CA12 declaration to be filed within 3 months of the close of the financial year.

Normal real regime (RRN): mandatory above RSI thresholds or on election. Monthly CA3 declaration, due on the 19th of the following month for businesses whose annual exigible VAT exceeds €4,000.

VAT exemption for small traders: maintained for micro-enterprises whose annual turnover excluding tax remains below €37,500 for services and €85,000 for trading. These thresholds were increased by the 2025 Finance Act and remain applicable in 2026.

Impact of the reform on accounting and internal processes

Adaptation of IT systems

The convergence between e-invoicing, e-reporting and VAT pre-completion requires businesses to align their management tools. An ERP or invoicing software that does not produce files in Factur-X or UBL format — the structured formats recognised by the administration — is now a blocking point.

The Factur-X format deserves particular attention: it is a PDF enriched with an embedded XML file, readable by humans and exploitable by machines. To verify the compliance of your invoices, our free Factur-X validator allows you to instantly check the structure of files before they are issued.

Management of mandatory invoice particulars

In 2026, the mandatory particulars on invoices subject to French VAT have been expanded. Besides standard particulars (SIREN number, intra-Community VAT number, date of chargeable event, applicable rate, amount excluding tax and including tax by rate), electronic invoices must now include:

• The SIREN number of the recipient (mandatory for B2B).
• The delivery address if different from the recipient's address.
• The category of the transaction (delivery of goods, provision of services, mixed).
• The purchase order number if mentioned in the contract.

The absence of one of these particulars may result in rejection of the invoice by the recipient's PDP, delaying payment and the right to deduct VAT.

VAT deductibility: rules and restrictions

The right to deduct VAT remains subject to three cumulative conditions: holding a proper invoice, VAT being chargeable on the supplier's side, and the good or service being used for the purposes of taxable activity. The exclusions from the right to deduct codified in Article 206 of Annex II of the CGI concern in particular:

• Passenger vehicles (except for hire or transport activities).
• Housing expenses for managers and employees.
• Business gifts with a unit value exceeding €73 (including tax) per year per recipient (2026 threshold).

In the event of a tax audit, the DGFiP has since 2026 had easier access to data transmitted via the PDPs, which reinforces the need for perfect consistency between invoices issued, invoices received and amounts declared.

Tax audit and risk of reassessment in 2026

Enhanced tax audit thanks to data

The generalisation of e-invoicing provides the administration with an unprecedented audit tool. By cross-referencing data submitted by invoice issuers and recipients, the DGFiP can automatically identify inconsistencies: invoices recorded as expenses without VAT collected on the supplier's side, multiple deductions of the same invoice, rate applied incompatible with the nature of the transaction.

Tax audits concerning VAT already account for approximately 40% of adjustments resulting from accounting checks. In 2026, accountants anticipate intensification of algorithmically generated targeted audits, similar to those practised in the Netherlands and Spain for several years.

The main risks of VAT reassessment

The most frequent reasons for VAT reassessment are:

1. Wrong rate: application of the reduced rate to a standard-rated transaction, particularly for building works or take-away catering.
2. Badly identified chargeable event: confusion between delivery date and invoice date for goods, or between receipt of payment and invoice date for services subject to VAT on accruals basis.
3. Omission of VAT on benefits in kind or transactions between companies in the same group.
4. Undue deductions on invoices not respecting mandatory particulars or from suppliers in an irregular situation.

For businesses engaged in complex transactions (intra-Community, reverse charge, special schemes), a prior compliance audit often proves cost-effective given the penalties at stake: 40% increase in the case of culpable non-compliance, 80% in the case of fraudulent conduct, on top of late payment interest of 0.20% per month.

The connection between electronic signature and tax compliance is direct: an invoice electronically signed in accordance with eIDAS standards guarantees the authenticity of origin and the integrity of content, two of the three conditions laid down by the VAT Directive for deductibility. To go further, our comprehensive e-invoicing guide 2026-2027 presents the full regulatory ecosystem.

Legal framework applicable to VAT and e-invoicing in 2026

French VAT is part of a multi-level legal framework, European and national, whose mastery conditions the validity of deductions and robustness against audits.

VAT Directive 2006/112/EC: founding text harmonising VAT rules within the European Union. It sets the principles of base, minimum rate (5% for reduced rate, 15% for standard rate), deductibility and chargeable event. Any national rule must comply with it.

General Tax Code (CGI): Articles 256 to 293 organise the French VAT rules. Article 289 defines mandatory invoice particulars. Articles 271 to 273 govern the right to deduct. Article 283 sets the reverse charge rules.

Ordinance No. 2021-1190 of 15 September 2021: relating to the generalisation of e-invoicing in B2B transactions. Amended by the 2024 Finance Act, it sets the deployment timeline by wave and e-reporting obligations.

Decree No. 2022-1299 of 7 October 2022: clarifies the technical formats of electronic invoices (Factur-X, UBL, CII) and the minimum data required for e-reporting.

eIDAS Regulation No. 910/2014 of the European Parliament and of the Council: establishes the legal framework for qualified electronic signatures, whose evidentiary value is equivalent to a handwritten signature throughout the EU (Article 25). A qualified electronic signature affixed to an invoice satisfies the requirement of authenticity of origin laid down by the VAT Directive, provided it is issued by a qualified trust service provider (QTSP) registered on the national trust list.

GDPR No. 2016/679: the transmission of invoicing data between businesses and to the tax authority involves the processing of personal data (names, contact details). The data protection officer (DPO) must be involved in e-invoicing compliance projects.

NIS2 Directive (2022/2555/EU): transposed into French law by Act No. 2023-703, it imposes enhanced security requirements on essential service operators and digital service providers, including PDPs. Businesses that outsource their invoicing flows via a PDP must ensure contractually that it complies with NIS2 obligations.

ETSI Standards EN 319 132 and EN 319 122: technically govern advanced electronic signatures (XAdES) and qualified signatures used to time-stamp and secure electronic invoices. Compliance with these standards conditions the admissibility of evidence in the event of dispute or tax audit.

Use cases: how businesses are adapting to VAT 2026 rules

An IT services SME facing e-reporting

An SME with around sixty employees, specialising in managed services and application development, realises approximately 30% of its turnover with customers established outside France (European businesses and individual customers). These flows — not covered by domestic B2B e-invoicing — fall within the scope of e-reporting from 1 September 2026.

Following an internal three-week audit, the accounting department identifies that its ERP generates CSV exports that do not comply with the DGFiP's technical specifications. The update of the PDP connector and the training of two employees represents an investment of approximately €8,000. In return, automatic reconciliation of declared and received data reduces the time to prepare the monthly VAT declaration from 6 hours to less than 1 hour, representing an estimated saving of €3,500 per year in accounting time.

A firm of accountants managing multi-regime clients

A firm of accountants with 25 employees advises a mixed clientele: traders on the simplified real regime, liberal professionals on VAT exemption for small traders and industrial companies on the normal real regime. In 2026, the firm must simultaneously manage three reporting logics and ensure that each client transitions at the right time to the mandatory receipt of electronic invoices.

The firm adopts a centralised e-invoice management solution connected to its case management platform. For clients on VAT exemption for small traders, it documents the obligation to receive even in the absence of an obligation to issue — a point often misunderstood. Collective compliance enables it to negotiate grouped pricing with an approved PDP, reducing the unit cost per client by 35% compared to individual subscriptions.

A B2B distributor facing intra-Community VAT reconciliation

A distributor of industrial equipment with €18 million in annual turnover excluding tax makes intra-Community acquisitions from suppliers in Germany, Italy and Poland, and makes intra-Community supplies to customers in Belgium and the Netherlands. In 2026, the generalisation of e-reporting in these partner countries creates a risk of double reporting if the data transmitted to the respective administrations are not consistent.

By deploying a dedicated module for intra-Community transactions in its management system, the business automates the verification of intra-Community VAT numbers via the European Commission's VIES (VAT Information Exchange System), controls the compliance of partner VAT numbers, and automatically generates summary statements (DEB/DES replaced by the European Statement of Exchanges of Goods). This automation reduces reporting anomalies by nearly 70% over the first six months of operation, according to internal monitoring carried out by the accounting manager.

Frequently asked questions

How do you calculate VAT to be remitted over a given period?

VAT to be remitted equals collected VAT (excluding-tax amount of sales multiplied by the applicable rate) minus deductible VAT (VAT appearing on eligible professional purchase invoices). If collected VAT is higher, the business remits the balance to the administration. If deductible VAT is higher, it may request a refund or carry forward the credit to the next period.

What is the difference between VAT on accruals basis and VAT on cash basis?

VAT on accruals basis is chargeable on invoice issue, regardless of actual payment. This is the default regime for goods supplies. VAT on cash basis, applicable to service provision (unless otherwise elected), is only due on actual receipt of payment. This choice has a significant impact on cash flow, especially in the case of long payment delays.

Which businesses are affected by e-reporting in 2026?

All businesses registered for VAT in France are affected by e-reporting insofar as they carry out transactions not covered by B2B e-invoicing: sales to individuals, transactions with non-resident foreign businesses, or VAT-exempt operations. Micro-enterprises on VAT exemption for small traders do not collect VAT but remain subject to certain transmission obligations if they exceed the transitional thresholds.

Is VAT exemption for small traders modified in 2026?

No. The VAT exemption thresholds for small traders set by the 2025 Finance Act remain unchanged in 2026: €85,000 excluding tax for trading and accommodation supply, €37,500 excluding tax for service provision. Businesses with exemption benefit from a tolerance for maintenance up to €93,500 and €41,250 respectively. They do not collect VAT but are subject to the obligation to receive electronic invoices from September 2026 onwards.

How does electronic signature guarantee VAT deductibility on an invoice?

According to VAT Directive 2006/112/EC, an invoice must guarantee the authenticity of its origin and the integrity of its content to entitle deduction. A qualified electronic signature within the meaning of eIDAS Regulation No. 910/2014 satisfies both requirements: it identifies the issuer with certainty and detects any subsequent modification of the document. In a tax audit, an invoice electronically signed with a qualified certificate constitutes solid evidence that the administration cannot contest.

Conclusion

VAT 2026 is not merely a regulatory update: it is a profound overhaul of calculation, reporting and audit procedures, driven by the convergence between mandatory e-invoicing and e-reporting. Businesses that anticipate these changes — by adapting their IT systems, securing invoice compliance and training their teams — will transform a regulatory constraint into an operational advantage.

Certyneo supports businesses through this transition: from qualified electronic signature of your invoices to the management of document flows complying with DGFiP requirements. Discover how our solution can simplify your compliance and reduce your administrative burden by requesting a personalised demonstration or exploring our pricing tailored to each business size.