Fiscal & social Obligations
For more information on the Tax Regime applicable to your situation THE FAIR COMPANY invites Owners to consult the website of the French tax administration and more particularly the following web page:
https://www.impots.gouv.fr/portail/node/10841
All of the thresholds mentioned herein may change each year depending on the finance law applicable for the coming year.
THE FAIR COMPANY invites you to check the applicable thresholds each year according to the finance law.
THE FAIR COMPANY only provides a description of the different tax regimes applicable to the seasonal rental (for short stays and whose tenants do not establish their main residence there) of a furnished property located on French territory ( excluding DOM-TOM).
This note does not present the tax and social legislation applicable to bed and breakfasts.
THE FAIR COMPANY recommends that each of its Owners seek legal advice to ensure the compliance of their tax situation.
The elements defined below are applicable to metropolitan France (excluding overseas territories).
Income generated by the seasonal rental activity is subject to income tax.
It is up to each owner to declare this income when preparing their tax return.
* Renter of seasonal furnished accommodation: Professional or non-professional
Any seasonal furnished rental activity (in our case), whether it is an entire property, a bungalow, a lower part of a villa, or a single room in the house (without this list is exhaustive) is considered from a tax point of view as a commercial activity.
Renting a furnished property means that the property is furnished with the usual furniture for living (chair, bed, tables, cutlery, plates, etc.).
Any profit from a commercial activity must be mentioned when filing income tax.
The profits received as a result of this activity must be entered in the category of industrial and commercial profits (BIC). A progressive scale is applicable with a maximum rate of 45% (professional lessor or not).
Certain aspects of the tax regime of the furnished rental company differ according to the professional status or not of the rental company. (Article 155, IV, 2. of the General Tax Code)
Criteria to be considered as a professional furnished rental company (the conditions mentioned below are cumulative):
- the annual income resulting from the activity of furnished rental company must be greater than €23,000 (a pro rata temporis is applied if the activity begins during the year),
- the annual revenue generated by this activity must represent at least half of the resources of the tax household subject to income tax,
- the professional must be registered as such in the trade and companies register.
Several differences exist taking into account the quality of professional or non-professional:
- the professional furnished rental company can set off its deficits against its overall income, with no time limit;
- the non-professional lessor can only set off his deficits against profits of the same nature made in the same year or the following ten years;
- under certain conditions and if the activity has been carried out for more than 5 years, the professional lessor can benefit from an exemption from income tax;
- the non-professional lessor may, under certain conditions, benefit from a tax exemption in the event of the rental of his main residence.
Article 35 bis of the General Tax Code:
“I. Persons who rent or sublet furnished one or more rooms of their main dwelling are exempt from income tax for the proceeds of this rental provided that the rented rooms constitute for the tenant or the sub- tenant in furnished his principal residence or his temporary residence, since he justifies a contract concluded in application of 3° of article L. 1242-2 of the labor code, and that the rental price remains fixed in reasonable limits.
II. From 1 January 2001, persons who habitually make one or more rooms of their main residence available to the public are exempt from income tax on the income from these rentals when this does not exceed €760 per year.
This exemption cannot be combined with the provisions intended for micro-enterprises mentioned in the HYPERLINK article l'articleHYPERLINK "https://www.legifrance.gouv.fr/affichCodeArticle.do?cidTexte=LEGITEXT000006069577&idArticle=LEGIARTI000006302438&dateTexte=&categorieLien=cid" 50-0. Of the General Tax Code »
FRENCH TAX REGIMES
Attention: Foreign users, if you generate a profit with an activity on French territory, you must declare these sums to the French tax authorities.
Certain bilateral tax treaties may be applied.
THE FAIR COMPANY invites you to get in touch with a tax lawyer to find out about your rights and obligations in terms of tax declarations.
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You will find below a brief description of the different French tax regimes:
THE FAIR COMPANY nevertheless invites you to contact a legal advisor to find out which tax regime is best suited to your situation.
1. The MICRO-BIC diet
To benefit from this regime, the turnover generated by the seasonal rental activity must not exceed €70,000 excluding tax. (Article 22 of law no.
Pursuant to Articles L.324-1 and L.324-3 of the Tourism Code, for guest rooms and furnished tourist accommodation, a profit threshold of €82,200 is applicable with a reduction of 71% and applies up to €170,000 in revenue per year.
The reduction is 50% for “classic” furnished accommodation.
For more information THE FAIR COMPANY recommends that you consult the following web page:
https://www.service-public.fr/professionnels-entre...
2. The simplified real or normal real regime
If the turnover achieved by the seasonal rental activity (other than bed and breakfast and furnished tourist accommodation) is greater than the threshold mentioned above and less than €236,000 excluding tax, the simplified real tax regime is intended to apply.
Expenses are deducted at their actual value.
3. The status of micro-entrepreneur
It is possible to opt for the status of micro-entrepreneur when the annual turnover does not exceed €70,000 for a service provision activity (€170,000 for the sale of goods). For activities created during year a pro rata temporis is applied.
Taxation is a percentage of turnover (defined each year).
The micro-entrepreneur must declare monthly or quarterly the turnover achieved.
The amount of the tax for the year 2018 is 22%.
Taxation includes income tax but also social security contributions.
Below €32,900 VAT is not applicable.
The costs incurred for the realization of the activity as well as the VAT paid are not deductible but an abatement of 71% of the turnover is applied by the tax authorities with a minimum of clothing of 305 €.
For more information THE FAIR COMPANY invites you to consult the public service page:
https://www.service-public.fr/professionnels-entreprises/vosdroits/F23267
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Penalties in the event of non-declaration of income to the tax services
Article 1728 of the General Tax Code:
- "Amended by LAW n°2017-1837 of December 30, 2017 - art. 31 (V)
1. Failure to produce, within the prescribed time limits, a declaration or an act containing the indication of the elements to be taken into account for the basis or the payment of the tax entails the application, on the amount of the duties imposed payable by the taxpayer or resulting from the declaration or the document filed late, an increase of:
a. 10% in the absence of formal notice or in the event of filing of the declaration or deed within thirty days of receipt of formal notice, notified by registered letter, of having to produce it within this time limit ;
b. 40% when the declaration or the document has not been filed within thirty days of receipt of formal notice, notified by registered letter, to have to produce it within this period;
c. 80% in case of discovery of an occult activity.
2. For the declarations provided for in l'article 800, the 10% increase shall apply from the first day of the seventh month following that of the expiry of the periods of six months and twenty-four months provided for respectively in Articles 641 and 641a.
The 40% increase applies when this declaration has not been filed within ninety days of receipt of a formal notice, notified by registered letter to have, to produce it within this period.
3. In the event of delay in carrying out the merged formality provided for in l'article 647, the period between the filing of the refused document and the new presentation for the formality shall not be taken into account if this This occurs within one month of the notification of the refusal.
4. When the overall income statement provided for in l'article 170 filed out of time includes items from one or more categorical income statements also filed out of time and several different rate increases are incurred, the latter are applied. income tax distributed in proportion to the income representative of each offence. However, the rate of the increase incurred in respect of the overall declaration of income applies to all of the tax when it is higher than that applicable in respect of the other declarations.
5. For the declarative obligations provided for in Article 982, the 10% increase provided for in a of 1 of this article is increased to 40% when the filing follows the disclosure of assets abroad which have not not been subject to the reporting obligations provided for in articles 1649 A, 1649 AA et 1649 AB.
NOTE:
In accordance with the provisions of 1 and 2 of B of IX of article 31 of law n° 2017-1837 of December 30, 2017, the provisions of article 1728 resulting from the provisions of 29° of B of I of the same article 31 apply in respect of real estate wealth tax due as of January 1, 2018. The provisions amended by said B of the aforementioned article 31 continue to apply, in their wording in force on December 31, 2017, to the solidarity tax on wealth due up to and including 2017. »
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THE VAT REGIME
Depending on the amount of turnover generated the previous year, VAT may be applicable.
Below a certain threshold, the declarant benefits from a VAT exemption.
The VAT exemption applies if the annual turnover excluding taxes does not exceed:
- €82,800 for retail and accommodation activities (hotels, bed and breakfasts, rural lodgings, furnished tourist accommodation);
- €33,200 for services and liberal professions under the BNC and BIC;
Since 2018, these thresholds are distinct from those applied to the micro-BIC and micro-BNC regimes.
Professionals, including auto-entrepreneurs, who fall under the VAT exemption must invoice their services excluding tax.
On each invoice must appear the mention "VAT not applicable - article 293 B of the CGI".
The turnover to be taken into account to assess the VAT thresholds over the year corresponds to:
- for income of industrial or commercial origin (BIC): the amount excluding tax of the deliveries of goods made or the provision of services performed; for non-commercial income (BNC): the receipts actually collected.
If the activity is created during the year, the thresholds must be adjusted in proportion to the time of exercise of the activity.
THE FAIR COMPANY invites you to get in touch with a legal adviser to know all the terms and conditions attached to the repayment of VAT.
The thresholds mentioned below may change, THE FAIR COMPANY invites you to check these thresholds each year by consulting the finance law.
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INFORMATION ON THE TOURIST TAX
Most French municipalities collect a tourist tax from travelers staying in their municipality.
The collection of the tourist tax is governed by the General Code of Territorial Communities and by the Tourism Code.
It is important that each Owner or Agent mentions on his advertisement the amount of the Tourist Tax collected from the Traveller.
The tourist tax is applied per traveler staying in the town and per night.
Certain other taxes may be added, to do this THE FAIR COMPANY invites each Owner or Agent to familiarize themselves with the legislation applicable to their municipality and to contact a Legal Advisor to find out the extent of the taxes to be applied by traveler and /or per stay.
For more information, please read the public service interest site, the link to which you will find below:
https://www.service-public.fr/particuliers/vosdroits/F2048
“The amount of the tax is available at the town hall of your municipality or at the tourist office The tourist tax must be paid by the holidaymaker who is staying in one of the following accommodations:
- palace,
- tourist hotel,
- tourism residence,
- furnished accommodation or vacation rental between individuals,
- bed and breakfast ,
- holiday Village,
- outdoor accommodation (camping, caravanning, marina, parking area),
- youth hostel.
It is paid to the landlord, the hotelier or the owner/agent who transfers it to the municipality. It can also be paid to the professional who provides the online reservation service on behalf of the landlord, hotelier, owner/agent.
Some holidaymakers may be exempt from tourist tax, depending on the decision of the municipality or the EPCI:
- people under the age of 18,
- holders of a seasonal employment contract employed in the municipality,
- beneficiaries of emergency accommodation or temporary rehousing,
- people occupying premises whose rent is less than an amount determined by the municipal council,
- owners of secondary residences for which they pay the housing tax. » *
To find out if a tourist tax or other additional taxes must be added to the amount of the seasonal rental offered, THE FAIR COMPANY invites each Owner to consult the site:
http://taxesejour.impots.gouv.fr/DTS_WEB/FR/
* source : https://www.service-public.fr/particuliers/vosdroits/F2048
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COMPANY PROPERTY CONTRIBUTION (CFE)
The furnished seasonal rental activity is a commercial activity subject to the business property contribution.
Persons having such an activity, even if it is not in a professional capacity, are subject to payment of the CFE.
However, you can benefit from exemptions, namely:
-
“general exemption:
- occasional rental, which is not intended to be repeated, of part of your personal residence (main or secondary);
- rental or subletting of part of your principal residence at a reasonable price to a tenant or sub-tenant who makes it their principal residence.
-
exemption except deliberation of the local authorities where the furnished accommodation is located:
- rental of all or part of your personal home (main or secondary residence) in furnished accommodation;
- rental or subletting of all or part of your personal home (main or secondary residence) if you are neither in the case of general exemptions, nor furnished tourist accommodation. »*
*source : https://www.impots.gouv.fr/portail/particulier/qu...
For more information THE FAIR COMPANY invites you to consult the website:
https://www.impots.gouv.fr/portail/particulier/que...
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SOCIAL OBLIGATIONS
The information provided below is general information.
To ensure that your seasonal rental activity complies with French social legislation, THE FAIR COMPANY invites each Owner to seek legal advice.
For more information on the social obligations applicable to your situation, THE FAIR COMPANY invites Owners to consult the social security website and more particularly the following web page:
http://www.securite-sociale.fr/IMG/pdf/eco-social-logement-meuble.pdf
The elements mentioned below concern non-professional furnished rental companies.
* Annual revenue not exceeding €23,000
In such a specific case, the taxpayer does not have to pay social security contributions for the income derived from the rental activity of furnished property rented to transient customers (daily, weekly or month establishing their domicile).
The same applies when a member of the tax household is registered in the trade and companies register as a professional lessor.
The revenue from this activity must necessarily appear in the income tax declaration as income from assets.
Social security contributions will be made at the same time as income tax.
All the elements mentioned above do not concern guest rooms and rural lodgings.
*Annual revenue over €23,000
Any renter of furnished accommodation for short-stay customers who do not take up residence there must be affiliated with the RSI and pay social security contributions if these annual revenues exceed €23,000.
Non-professional furnished rental companies can choose to join the general social security scheme if their annual income does not exceed €82,800 per year.
For any additional information and to ensure the compliance of your statements and others, THE FAIR COMPANY invites you to contact legal counsel.