From 1 January 2027, France will abolish its simplified VAT regime, known as the régime simplifié d’imposition or RSI. Businesses currently using this regime will move to the standard VAT regime and will be required to submit monthly or quarterly VAT returns using Form CA3.
The reform, introduced by Article 38 of the French Finance Act for 2025, will bring an end to the current system based on an annual VAT return and two advance payments.
How does the simplified VAT regime currently work ?
The simplified VAT regime reduces the reporting obligations of eligible businesses.
It currently applies to businesses whose annual turnover, excluding VAT, falls within the following ranges :
- between €85,000 and €840,000 for the sale of goods, catering and
accommodation activities; - between €37,500 and €254,000 for supplies of services.
To qualify, the VAT payable for the previous financial year must also be below €15,000. Businesses exceeding this amount are generally required to file periodic CA3 returns under the standard VAT regime.
Under the simplified regime, businesses file only one annual adjustment return, using Form CA12 or CA12E. During the year, they make two advance payments calculated on the basis of the VAT payable for the previous financial year :
- 55% in July;
- 40% in December.
The annual return is then used to calculate the final VAT liability, taking into account
output VAT, deductible input VAT and the advance payments already made. The
business either pays the outstanding balance or reports a VAT credit.
What will change in 2027 ?
From 1 January 2027, the annual return and the two advance payments will be abolished. Businesses formerly covered by the simplified regime will instead file Form 3310-CA3 every month or quarter.
Quarterly filing will apply where turnover, including taxable acquisitions, does not exceed :
- €1 million during the previous calendar year;
- €1.1 million during the current calendar year.
If either threshold is exceeded, the business will be required to file monthly VAT returns. Businesses eligible for quarterly filing may also opt for monthly filing by submitting a request to their local tax office.
Automatic transition to the standard VAT regime
The French Tax Administration, or DGFiP, will automatically transfer businesses from the simplified regime to the standard VAT regime. No application will be required.
The filing frequency will be determined using the turnover reported in the latest available annual VAT return. If no return is available, the business will be placed under the quarterly standard VAT regime by default.
Businesses will still need to prepare for the operational impact. Depending on their position, they will move from one annual VAT return to four quarterly returns or twelve monthly returns, requiring more regular bookkeeping and faster transmission of accounting documents.
Key transition dates
For businesses whose financial year ends on 31 December, the first CA3 return will cover either January 2027 or the first quarter of 2027.
A final CA12 return covering the 2026 financial year must be filed by 4 May 2027.
For businesses with a financial year that does not match the calendar year, the new regime will apply after the end of the financial year that includes 31 December 2026.
Their final CA12E return must be filed within three months of that financial year-end.
Direct impact on cash flow
The new filing frequency will affect how businesses manage their cash flow. Under the current simplified regime, VAT collected from customers may remain within the business for several months before the July or December payments become due.
From 2027, VAT will be paid to the tax authorities more frequently. Businesses that currently rely on this timing difference as a short-term source of working capital will need to adjust their cash-flow planning and ensure that VAT collected is kept available for payment.
The reform may, however, benefit businesses that regularly report VAT credits. Monthly or quarterly returns will allow these credits to be identified, carried forward or potentially refunded more quickly than under an annual reporting system.
Link with electronic invoicing
The change will coincide with the French electronic invoicing and e-reporting reform. From 1 September 2027, SMEs and micro-businesses will be required to transmit transaction and payment data according to a frequency linked to their new VAT filing regime.
How should businesses prepare?
Businesses currently using the simplified VAT regime should :
- confirm their current VAT regime through their professional account on the French tax authority’s website;
- estimate their 2026 turnover to determine whether monthly or quarterly filing is likely to apply;
- organise more frequent collection and processing of invoices and supporting documents;
- assess the effect of monthly or quarterly VAT payments on cash flow;
- notify their tax compliance partner of their new tax plan
The reform will not change the basic principles used to calculate VAT. Its main effect will be to increase the frequency of VAT reporting and payment. Businesses currently managing their accounting records on an annual or irregular basis will therefore need to maintain more up-to-date bookkeeping before the new rules take effect.
MaVat can support businesses throughout the transition to the new VAT reporting regime. Our teams can help you assess the impact of the reform, determine the applicable filing frequency, adapt your VAT compliance processes and prepare monthly or quarterly CA3 returns.
Contact MaVat to ensure a smooth and compliant transition before 1 January 2027.