The simplified VAT regime will disappear from 1 January 2027. The companies concerned will automatically switch to the normal actual regime, with a monthly or quarterly reporting frequency based on the increased turnover of taxable acquisitions, and no longer on a threshold of €4 000 of VAT due.
Companies must now anticipate the impact on their accounting processes, the monitoring of their turnover and their reporting obligations to secure their tax compliance.
As of 1 January 2027, the simplified VAT declaration regime will disappear definitively. This reform will apply to companies whose accounting year coincides with the calendar year from this date onward. For companies with a staggered financial year, it will apply to transactions carried out from the first day of the financial year beginning in 2027. Beneficiaries of the simplified agricultural scheme are not affected by this reform.
This development is part of a broader movement to modernize VAT management. It comes in a context marked by the reform of electronic invoicing and the prospect of increased pre-filling of VAT returns. It thus contributes to the objective of developing new reporting mechanisms and making the data declared more reliable.
For the companies concerned, the challenge does not lie solely in the disappearance of a historical reporting regime. This reform is likely to change the frequency of reporting obligations, the methods of monitoring turnover and, in some cases, the organization of accounting and tax processes.
A reform that goes far beyond the disappearance of the simplified regime
With the abolition of the simplified regime, all taxable persons who do not – or no longer – benefit from the exemption from VAT will now be subject to the standard actual regime. Taxable persons established in France as well as taxable persons not established but with VAT obligations in France will be concerned.
The administration hence is pursuing several objectives through this reform: to simplify the architecture of the reporting regimes, to reduce certain specific situations that are currently sources of complexity and to have more regular data to support the ongoing transformations in VAT management.
For companies currently placed under the simplified regime, the reform will result in the disappearance of a declarative method to which they have sometimes been accustomed for many years. It will therefore be essential to anticipate the operational consequences of this changeover, which will be automatic, at an early stage.
For operators closing their accounts on December 31, 2026, a final annual VAT return (form CA12/CA12E) must be filed by the deadline of May 4, 2027. For other operators, this final return must be filed within three months of the financial year-end.
A new quarterly or monthly filing frequency based on turnover increased by taxable acquisitions
The maintenance of the quarterly filing will now be based on one main criterion: the turnover achieved. Correlatively, the annual VAT due threshold of €4 000 currently allowing companies under the normal regime to submit quarterly returns will cease to have effect as of the entry into force of the reform.
The quarterly frequency will apply automatically when the annual turnover before tax has not exceeded €1 million for the previous calendar year and €1.1 million for the current calendar year.
Beyond that point, a monthly frequency must be applied, in year N+1 or immediately (if the €1.1 million threshold is exceeded during the year).
These thresholds will be indexed to inflation every three years.
To assess these thresholds, the following must be taken into account:
• taxable intra-community acquisitions;
• transactions subject to the reverse charge of VAT, including imports; and
• the exit of goods or petroleum products placed under a suspensive regime.
However, companies eligible for the quarterly regime will be able to opt for a monthly filing, via their secure messaging system. This option, which will take effect from the first day of the following calendar quarter (or a later quarter upon choice by the declarant), will be valid for a minimum period of four calendar quarters.
At the time of the changeover, the tax administration will determine whether the monthly or quarterly regime applies based on the turnover reported in the last annual return filed (failing which, the quarterly scheme will apply). The first declaration will then be the one January or the first quarter of 2027 (where the financial year coincides with the calendar year), or the first month or quarter following the financial year-end (where the financial year does not coincide with the calendar year). For companies currently applying the simplified tax regime, no VAT installment payments should be due in July and December 2027 (except for companies closing their financial year between July and November 2027).
It will be necessary to pay attention to the consequences where the thresholds are exceeded. Indeed, when the above-mentioned threshold of 1.1 m€ is exceeded, the company will have to switch to the monthly declaration regime from the first day of the month in which the overrun occurs.
The first monthly declaration must then include all the transactions carried out since the beginning of the quarter in question.
This mechanism will require increased vigilance from companies whose activity is growing rapidly or has significant seasonal variations. In some cases, insufficient monitoring of turnover could lead to the late identification of the change in the applicable reporting regime.
Finally, the distinctions currently made according to the nature of the activity carried out will be abolished. The rules applicable to sales, accommodation, catering or service provision activities will give way to a unified system based on the same turnover thresholds.
Through this harmonization, the legislator has chosen a more readable declaratory regime, based on criteria common to all sectors of activity.
Even if the reform will come into force in 2027, companies concerned must assess its practical consequences as from now
In addition to the change in the reporting periodicity, this reform is part of a rapidly changing environment, marked by the increasing digitization of tax obligations and the development of increasingly detailed use of VAT data by the administration.
Companies currently subject to the simplified regime would thus benefit from identifying their future reporting frequency, checking the adequacy of their turnover monitoring tools and ensuring that their internal procedures will be able to meet potentially more frequent obligations.
They must also ensure they inform their approved platform of their VAT status, as well as any subsequent changes, so that the platform applies the appropriate frequency for transmitting e-reporting data to the tax authorities.
Our team is at your disposal to support you in this transition and secure compliance of your VAT procedures.