France: A Tax Overview

As we enter 2026, the uncertainty that dominated the previous year has not dissipated; rather, it has evolved. While some of the anticipated shocks of 2025 have materialised, others have merely shifted form, reinforcing the sense that unpredictability has become a structural feature of the economic, political and tax environment. The year just ended confirmed that neither businesses nor public authorities could afford to remain passive, even in periods of institutional fragility. The year ahead will once again demand adaptability and foresight.

From a macroeconomic perspective, 2025 failed to deliver a clear consensus. The United States demonstrated resilience, albeit with growing internal imbalances, while Europe navigated a fragile recovery marked by uneven growth across EU member states. China’s rebound, long anticipated, proved more gradual and selective than expected, reminding observers that structural transitions rarely follow linear paths. Analysts continue to caution against reading too much into short-term market movements, instead pointing to longer-term fundamentals such as demographic trends, productivity gains and the reconfiguration of global supply chains.

Interest rate movements over the past year have further illustrated this complexity. After a period of gradual easing in Europe and stabilisation in the United States, monetary policies now appear to be entering a phase of fine-tuning rather than broad directional shifts. In this environment, tax policy has once again emerged as a potential lever to support growth or restore fiscal balance. Yet the tension between short-term budgetary needs and the desire for long-term tax stability remains unresolved, particularly in an increasingly harmonised international framework.

In France, public finances remained under significant pressure throughout 2025. With no eventual adoption of the Finance Act last December, debates surrounding its content, scope and constitutional robustness highlighted the persistent difficulty of reconciling fiscal consolidation with economic competitiveness. The level of public debt continues to constrain policy choices, making further tax adjustments a recurring topic of discussion as 2026 begins. As in previous years, tax practitioners have been called upon to interpret rapidly evolving rules and assess their practical implications with ever-greater speed.

On the political and geopolitical fronts, the landscape has also continued to shift. The first year of the new US administration set the tone for a more assertive approach to trade, taxation and industrial policy, with ripple effects well beyond American borders. In France, political stability remained fragile, and fiscal issues quickly returned to centre stage, underscoring the central role of taxation in broader economic and social debates.

Mergers and acquisitions activity throughout 2025 proved more resilient than initially feared, supported by improved financing conditions and a gradual return of investor confidence. However, underlying trends point to a more cautious market: longer holding periods, increased reliance on continuation funds, broader use of net asset value (NAV) financing and a sustained rise in deferred consideration mechanisms. At the same time, refinancing and restructuring situations became more visible, confirming that the cycle is entering a more selective phase. In this context, tax expertise remains a key component in structuring transactions and managing emerging risks.

More broadly, taxation in practice has been characterised by heightened scrutiny. Tax audits, information exchanges and contentious proceedings have continued to increase, reflecting both the enhanced tools available to tax authorities and their growing willingness to use them. At the same time, co-operative compliance mechanisms have gained further traction. The continued development of advance rulings, transfer pricing agreements and international assurance programmes suggests a parallel desire, on both sides, to secure positions and reduce uncertainty. Two sides of the same coin?

Indirect taxation has also remained a focal point. The gradual rollout of electronic invoicing in France and across Europe has moved from planning to implementation, requiring significant operational adjustments. Customs taxation has likewise attracted renewed attention, against a backdrop of evolving trade policies and ongoing discussions around tariff reform. Developments in this area will be closely watched in the year ahead.

Artificial intelligence, long discussed, has begun to move from experimentation to more concrete applications. Tax authorities have expanded their use of data analytics and AI-driven tools, particularly in audit selection and risk assessment, even if their full impact has yet to be measured. Businesses and advisers, for their part, continue to explore AI’s potential, aware that sustained investment and careful governance will be essential to harness its benefits without losing control.

Finally, reporting obligations have continued to proliferate. The implementation phases of international initiatives such as Pillars 1 and 2, alongside European directives and transparency regimes, have translated into an increasingly dense compliance landscape. As 2026 begins, the prevalence of regulatory acronyms with an explicitly “anti-abuse” focus remains striking, raising ongoing questions about balance, proportionality and the preservation of fundamental freedoms within the internal market.

In conclusion, uncertainty has become less of an exception than a constant. Yet if 2025 has shown anything, it is that anticipation, technical expertise and engagement remain the most effective responses. For tax specialists, the challenge is clear: to continue supporting their clients through change, helping them navigate complexity and avoid the only true risk – inaction.