Newsletter July 2026

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End of the annual CA12 vat return: moving toward monthly or quarterly returns

The simplified actual VAT regime is set to undergo significant changes under the law on combating social security and tax fraud. Until recently, businesses subject to this regime were able to file an annual VAT return, known as the CA12. However, this had to be accompanied by advance payments made throughout the year.

Effective January 1st, 2027, this provision is expected to be eliminated. As a result, businesses will no longer be able to settle their VAT on an annual basis. From January 1^st 2027 onward, they will be required to file VAT returns on a monthly basis or, in certain cases, quarterly.

Small businesses will need to prepare for significant practical changes, as they have previously benefited from simplified VAT management. In fact, they will need to monitor their collected VAT and deductible VAT more regularly in order to comply with the new filing deadlines.

In practice, these changes will require them to adapt their accounting systems, update their VAT tracking tools, and submit accounting supporting documents on a more regular basis.

Electronic invoicing: which businesses are affected?

Among the upcoming fundamental reforms that will directly impact the business world, electronic invoicing stands out as one of the most significant. Starting September¹, 2026, all businesses established in France will be required to accept electronic invoices. As for issuing electronic invoices, this requirement will not take effect all at once but will be phased in based on the size of the business in question.

This reform will apply to VAT-registered businesses domiciled in France. To this end, a certified e-invoicing platform must be set up to receive all invoices issued.

As previously announced, this reform applies to both small and large businesses. For example, micro-enterprises, even those eligible for the basic VAT exemption, will be required to receive electronic invoices.

Special attention must also be paid to LMNP (non-professional furnished rentals). The reform states that individuals engaged in this activity may be subject to the new requirements if they carry out activities falling within the scope of VAT or conduct transactions with businesses.

Retention of tax documents: the retention period is extended from 6 to 10 years

The retention period for certain documents subject to audit by the tax authorities has been extended under the law on combating social security and tax fraud.

Until now, the retention period was set at 6 years for books, ledgers, accounting documents, and supporting documents. From now on, this period will be extended to 10 years for documents where the tax authorities may exercise their rights to access, investigate, and audit. This includes accounting documents, invoices, ledgers, and supporting documents related to transactions entitling the taxpayer to a VAT deduction, as well as the components of a reliable audit trail.

This measure was introduced to align the retention period for tax documents with certain situations in which the tax authorities already have a 10-year right of reassessment.

The extension of the retention period is intended to apply to documents whose retention period expires after January 1^, 2027.

For example, an invoice issued in 2024 would normally have been retained until 2030, but following the reform, it must now be retained until 2034.

However, the retention requirements remain the same, with documents to be retained in either paper or electronic format to ensure their authenticity, legibility, and integrity.

It is therefore strongly recommended that businesses pay close attention to their archiving policies. Indeed, if documents are destroyed or not retained for the required period, a tax penalty may be imposed.

3% property tax: new reporting requirements

In France, there is an obligation to file an annual return for the 3% tax on the market value of real estate held within French territory. The reporting requirements for this tax have recently been tightened. In practice, this tax applies to French or foreign legal entities that own, directly or indirectly, one or more properties in France. The tax also applies when these same entities hold real property rights related to such assets.

These entities may be exempt from paying the 3% tax if they provide certain information to the tax authorities. Until now, to qualify for this exemption, it was sufficient to agree to provide, upon request by the tax authorities, information regarding the real estate held, as well as information on shareholders and partners.

This option has now been eliminated. The exemption is contingent upon filing a specific annual declaration. This declaration must be filed no later than May 15 of each year and must contain information regarding the composition and value of the real estate held as of January 1 of the current year, as well as the identities of holders of more than 1% of the shares or ownership rights.

However, a special provision applies to foreign entities that do not have a permanent establishment in France: they must appoint a tax representative domiciled or established in France, even if they qualify for a tax exemption. In practice, these new requirements will apply for the first time to returns due no later than May 15, 2027.

Point-of-sale software: the software vendor’s certification is ultimately accepted

Businesses that use point-of-sale software or systems must be able to demonstrate that their system complies with the requirements for data integrity, security, retention, and archiving.

More specifically, point-of-sale software or systems allow a business to record payments received from its customers. This type of tool enables businesses, among other things, to issue receipts, track sales, and maintain a history of payments received.

Provisions in the 2025 Finance Act had planned to eliminate the option of demonstrating software compliance through a simple individual attestation issued by the software publisher. Only a certificate issued by an accredited body would then have been sufficient to prove the compliance of the software in use.

The 2026 Finance Act ultimately reversed this change. Businesses can therefore continue to obtain an individual certificate of compliance issued by the publisher of their point-of-sale software.

However, it is important to remain vigilant. In the event of an audit, the company must be able to present valid proof of the software’s compliance. Failure to do so may result in a fine of €7,500 per non-compliant software program or system, along with a requirement to bring the situation into compliance.

Sale of a real estate-dominated company: stricter formalities

In accordance with the law on combating social security and tax fraud, the rules governing the transfer of shares in real estate-dominated companies have now been strengthened. From now on, such transfers must be formalized by a notarized deed drawn up by a notary, by a deed countersigned by an attorney, or, where permitted by law, by a deed drawn up by a certified public accountant.

This applies to companies whose assets consist primarily, directly or indirectly, of real estate or real estate rights located in France, whether they are holding companies or operating companies.

The objective is to enhance the traceability of transactions, identify the parties and beneficial owners, and limit the risks of tax fraud or money laundering. In the absence of a compliant deed, the tax authorities may refuse to register the transfer, rendering it unenforceable against third parties. It is therefore essential to carefully plan the transfer of shares in a company that owns real estate in France by consulting a qualified professional.