France – 2026 VAT Changes and Finance Act

Finance Act for 2026 and VAT Measures

VAT exemption for the transport of goods in the French Overseas Departments (Article 100(2) of the Finance Act for 2026)

The VAT exemption (Article 295 of the French Tax Code) applicable to the transport of passengers and goods carried out within each of the departments of Guadeloupe, Martinique and Réunion is extended to air transport as from 21 February 2026.

Prior to this date, the exemption applied only to maritime transport.

Extension of the reduced VAT rate to the supply of cooling energy (Article 93 of the Finance Act for 2026)

The reduced VAT rate of 5.5% (Article 278-0 bis of the French Tax Code) is extended to the supply of cooling energy distributed through networks. This measure enters into force on 21 February 2026.

Before this date, the reduced rate applied only to the supply of renewable heating energy.

Extension of the reduced VAT rate for forestry and logging works (Article 96 of the Finance Act for 2026)

The Finance Act extends the application of the 10% reduced VAT rate to forestry and logging works carried out for the benefit of farmers, as well as to forest fire prevention works performed by authorized landowners’ associations, until 31 December 2028.

As a reminder, this measure was initially intended to apply only to works carried out before 31 December 2025.

Clarification on the application of the 5.5% reduced VAT rate (Article 94 of the Finance Act for 2026)

The Finance Act amended Article 278-0 bis of the French Tax Code to specify that the application of the 5.5% reduced VAT rate to the installation of electricity production equipment using solar radiative energy (photovoltaic panels) is conditional on the work being carried out by a service provider holding a certification or professional qualification that meets certain requirements established by ministerial order.

Other VAT Measures from the 2026 Finance Act

• Article 91 of the 2026 Finance Act: Goods and services used for advertising are no longer subject to any exclusion or restriction of the right to deduction. This measure comes into effect on February 21, 2026. We are awaiting an update of the tax doctrine (BOFIP) to assess its concrete impacts.
• Article 92 of the 2026 Finance Act: The reduced VAT rate of 5.5% now also applies to the installation of air-to-air heat pumps that meet environmental performance and durability criteria evaluated over their life cycle.
• Article 126 of the 2026 Finance Act: Article 126 regulates the procedures for accessing and processing digital data during the tax audit of a representative of a single taxable person, specifying the obligations for transmission and the options available to the taxpayer.

Finance Act for 2026 and the Electronic Invoicing Reform

The Finance Act for 2026 takes into account the latest announcements made by the Government in 2024 and 2025 as part of the electronic invoicing and data reporting reform.

Increase in penalties related to electronic invoicing and data transmission (Article 123 of the Finance Act for 2026)

The Finance Act for 2026 (Article 123) amends and introduces certain penalties within the framework of the reform:

• The fine applicable for failing to issue an invoice in electronic format is increased from €15 to €50 per invoice. The annual cap of €15,000 per calendar year remains unchanged (Article 1737 III of the French Tax Code).
• Introduction of a specific penalty for failure to comply with the obligation to use an approved platform for the receipt of electronic invoices. Non-compliance with this obligation exposes the taxable person to a €500 fine after an initial period of three months following formal notice, and subsequently to a €1,000 fine every three months (Article 1737 IV bis of the French Tax Code).
• Failure to transmit invoicing or payment data: each breach is subject to a fine of €500 per omitted or incorrect transmission, capped at €15,000 per calendar year and per category (transaction or payment) – Article 1788 D I and II of the French Tax Code.
• Additional penalties have been introduced for platforms in the event of non-compliance.

Restructuring of the Scope of the Data Transmission Obligation for French Companies (Article 123 I C of the Finance Act for 2026)

The Finance Act restructures the scope of the transaction data transmission obligation (Article 290 of the French Tax Code) into four categories of transactions:

• transactions carried out for the benefit of a person liable to VAT;
• transactions carried out for the benefit of a person not liable to VAT;
• acquisitions of goods or services carried out by a taxable person;
• other transactions.

For each category of transactions covered, the Finance Act lists and identifies in practical terms the transactions concerned.

Please note – the scope of the data transmission obligation for businesses not established in France but VAT-registered there remains unchanged at this stage. Further guidance is expected.

Extension of the Scope of the Payment Data Transmission Obligation (Article 123 I D)

Until now, the payment data transmission obligation (Article 290 A I of the French Tax Code) only applied to transactions falling within the category of services.

The Finance Act for 2026 now provides for the obligation to transmit payment data for all transactions for which VAT becomes chargeable upon receipt of payment.

In practice, this extends the scope of the obligation to include advance payments relating to supplies of goods.

Other Measures – Electronic Invoicing and Data Transmission

• Following the abandonment of a public and free electronic invoicing solution, references to the Public Invoicing Portal have been removed from the French Tax Code.
• Following the change in terminology adopted, the term “Partner Dematerialization Platforms” (PDPs) has been replaced in the French Tax Code by “Approved Platforms” (APs).

Other VAT Changes for 2026

In addition to the measures adopted under the Finance Act for 2026, the year 2026 marks a pivotal turning point with several major developments:

Migration of Tax Provisions from the French Tax Code to the Goods and Services Tax Code (CIBS)

The section dedicated to VAT in the new Goods and Services Tax Code (CIBS) will enter into force and replace the French Tax Code as from 1 September 2026.

New mandatory invoice details, legislative restructuring, codification of case law concepts, clarifications regarding the right to deduct VAT — find out more on our dedicated article.

End of Occasional Fiscal Representation as of 1 January 2026

Since 1 January 2026, the administrative tolerance allowing the use of the occasional fiscal representation regime has been abolished.

As a result, non-EU companies are required to register for VAT in France and appoint a fiscal representative for their imports under customs procedure 42.

To learn more about the abolition of occasional fiscal representation and its practical consequences, please consult our dedicated article

E-invoicing & e-reporting

From 1 September 2026, the obligation to receive electronic invoices will enter into force for all VAT-registered persons in France.

The obligation to issue invoices in electronic format will also become mandatory for certain categories of taxable persons (large enterprises and medium-sized enterprises).

This reform is accompanied by new obligations relating to the transmission of invoicing data and e-reporting to the French tax authorities.

To learn more about the scope and conditions of application, please consult our dedicated article. 

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