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Non-professional furnished rental

FBA team — Tue, 15 Jul 2025 12:51:02 +0000

Article of 15/03/2024 updated on 15/04/2026

Non-professional furnished rental (LMNP) is a tax status applicable to people who rent out one or more furnished accommodations, without carrying out this activity professionally.

It meets a precise definition and is subject to a particular tax and social regime but it offers attractive tax optimization, without the constraints of professional status.
We will briefly describe the rules related to this activity.

We will first give a definition of classified tourist accommodation, but you can however refer to our article entitled “The different categories of tourist accommodation and their regulations” on this website, in order to better understand the various forms of tourist rental.

To designate non-professional furnished rental, we will use the acronym “LMNP” throughout this article.

I-DEFINITION OF L.M.N.P:

• This is the rental of apartments equipped with furniture and sometimes accompanied by services (guest rooms, residential hotels …). In those of an apartment rental, it must include all the elements necessary for normal occupation by the tenant. The list of these elements is provided by the decree N ° 2015-981 of July 31st 2015.

• Furnished tourist accommodation means: Individual accommodation such as a villa, apartment or furnished studio offered for rental. It must notably include the following equipment:

Furniture
Bedding
Gas stove or hotplates
Fridge
Cooking tools.

• The contractual obligations of the furnished rental company: The French Housing Act (ALUR) extended the following obligations, previously limited to unfurnished rentals, to furnished rentals for primary residences: Provision of “decent” housing, establishment of a written lease, provision of a technical inspection report to the tenant, and preparation of an inventory of fixtures.

However, a few specific rules for furnished rentals were introduced by the ALUR Act. These relate to the duration of the lease (one year for furnished rentals instead of three years for unfurnished rentals), the amount of the security deposit (two months’ rent for furnished rentals instead of only one month for unfurnished rentals), and the notice period to be observed by landlords and tenants giving notice.

It should also be noted that there is a “mobility lease”, lasting a minimum of one month and a maximum of ten months, to allow rentals for people looking for temporary accommodation (apprentices, trainees, employees on temporary assignment, etc.).

Regarding these matters, the relationship between landlords and tenants of tourist accommodation continues to be largely governed by contractual freedom. However, the legislation requires landlords to provide prospective tenants with very detailed information about the property itself, its amenities, and its surroundings.

• To obtain the classification of a furnished tourist accommodation: You must make a request to the accredited or approved assessing body of your choice (appearing on the lists on the “Atout France” website) using form No. 11819* 03.

It allows you to benefit from an additional tax reduction on rental income under the micro-enterprise scheme. It also allows you to join the National Agency for Holiday Vouchers (ANCV).

The assessing body visits the accommodation. In the month following this visit, he will give you a visit certificate including the inspection report as well as the proposed decision to classify the furnished accommodation for the category mentioned in the inspection report.

• Reporting obligations and administrative authorizations:

- Individuals renting out furnished accommodation intended to be occupied as a primary residence by their tenant are not required to make any prior declaration to the town hall. However, some municipalities may establish a procedure for declaring the rental of accommodation for use as a primary residence, which applies to both unfurnished and furnished accommodation.
- Regarding short-term or tourist rentals:
  - If the tenant rents guest rooms (bed and breakfast), his administrative obligations are limited to a declaration at the town hall;
  - If the tenant rents furnished tourist accommodation (i.e., independent housing), two situations are possible:
- If the premises in question constitute their primary residence (i.e., accommodation occupied at least eight months a year), no declaration at the town hall is generally required (except in municipalities that have implemented a prior declaration procedure for furnished tourist accommodation).
- If the premises in question are not their primary residence, a “simple” declaration or a declaration subject to registration is required in any case.

• In terms of income tax, the furnished residential rental activity is carried out on a professional basis (LMP) when the following two conditions are met (CGI article. 155, IV.2):

The annual income (incl. VAT) withdrawn from the furnished rental activity by all the members of the tax household must exceed € 23,000;
This revenue exceeds the other income of the fiscal household subject to income tax in the categories of salaries and wages within the meaning of article 79 of the CGI (i.e. allowances, emoluments, salaries, pensions, life annuities as well as retirement benefits paid in the form of capital) , industrial and commercial profits other than those derived from the rental activity furnished, agricultural profits, non-commercial profits and the income of managers and associates mentioned in article 62 of the CGI.

As a result, any person who rents furnished dwellings and who does not meet one of the conditions listed above is qualified as L.M.N.P.

• Nevertheless, L.M.N.P. must register as a non-professional at the registry of the commercial court on which the property depends.

• Distinction between long-term rental from seasonal rental:

A furnished rental is said to be seasonal when the accommodation is rented per night, week or month, and for a maximum period of 90 consecutive days, to passing customers who do not take up residence there.

When the accommodation is rented for a period of one year (or 9 months for a student) and the tenant makes it their main residence, this is referred to as long-term rental.

For residences with hotel services rented to an operator via a commercial lease, the owner of the accommodation is deemed to be doing long-term rental.

II-TAX CHARACTERISTICS:

1. Exemption cases:

Income from the furnished rental of part of the principal residence is not taxable in the following cases:

When the rented rooms do not constitute the main residence of the tenant if the annual rental income does not exceed € 760. It can be an occupation by the day, the week, the month, etc.
When the rented rooms are the main residence of the tenant. In this case, the rental price must be lower than a threshold published each year by the administration.

2. Taxation schemes:

All furnished rental income is taxable in the category of Industrial and Commercial Benefits (B.I.C.).

Micro scheme: The turnover thresholds below which BIC taxpayers are automatically eligible for this scheme, as well as the applicable tax reduction rate, are set respectively at:
- €15,000 and 30% for lessors of unclassified furnished tourist accommodation;
- €83,600 and 50% for other lessors of furnished accommodation.

Thus, the €83,600 threshold and the 50% tax reduction rate particularly concern owners of furnished accommodation rented as a primary residence, owners of classified furnished tourist accommodation, owners of guest rooms, and taxpayers renting condominium units to operators of serviced residences.

The micro scheme only ceases to apply if the threshold is exceeded for two consecutive years.

Precision: The 30% and 50% deductions include all expenses including depreciation allowances. It cannot be allowed to result in a fiscal deficit.

• Real scheme: This regime can be applied compulsorily (see above) or optionally. This can be exercised within the deadline for filing the overall income tax return.

This tax system allows the operator to deduct all expenses actually incurred as well as, when the building is listed as an asset, depreciation charges on all investments. The basis for calculating depreciation is the cost price of the rental accommodation, excluding the value of the land on which it is based.

There are two points to note, however:

With the exception of lessors covered by the para-hotel regime (for whom the depreciation recorded is deductible without limitation of amount), the depreciation charge cannot exceed the difference between the total rents collected and the total of other expenses. This means that depreciation cannot generate a deficit. The non-deductible portion of depreciation can be carried forward without limitation.
In the event of a deficit, when the expenses are higher than the rents collected, this one can only be carried forward on the profits of the 10 following years of L.M.N.P.

3. Capital gains taxation:

Capital gains made on housing transfers, only by furnished rental companies who do not have the status of professional furnished rental company are subject to the real estate capital gains regime. On the other hand, capital gains relating to other fixed assets such as furniture, as well as all capital gains made by furnished rental companies which fall under the para-hotel regime are subject to the professional capital gains regime.

Capital gains subject to the real estate capital gains regime: Capital gains on real estate are subject to tax calculated at a rate of 19% as well as social security contributions applicable to income from assets (currently 18.6 % in total).
The gross capital gain is calculated as the difference between the transfer price stipulated in the deed of sale or contribution to the company and the purchase price. From this amount, the acquisition costs are deducted (these can be assessed at a flat rate of 7.5% of the purchase price).
In addition, construction or expansion expenses can also be deducted provided they have not already been deducted from taxable rental income.
Since February 15th 2025, the amount of the purchase price must be reduced by the amount of depreciation deducted during the rental period (for taxpayers subject to the real system).
The net amount of the capital gain thus determined is subject to a tax reduction based on the length of time the property has been held. This tax reduction results in a total exemption after 30 years of ownership.
It should also be noted that an additional tax applies to capital gains exceeding €50,000.
Capital gains subject to the professional capital gains regime: These capital gains are determined by the difference between, on the one hand, the sale price of the asset (or its estimated value in the event of transfer to private assets) and, on the other hand, its acquisition price reduced by the amount of depreciation applied since the beginning.

4. V.A.T:

The rules for professional and non-professional renters are the same.

The rate is in principle 10%, but the furnished rentals of dwellings are exempt from V.A.T.

Only the following rentals are subject to V.A.T:

Accommodation in classified residences or tourist hotels;
The provision of a furnished room with services similar to those offered by the hotel establishments (see our article named “Hotel or hotel-type accomodation services”),
Rental of bare premises to the operator of a hotel establishment.

There is a VAT exemption on furnished rentals subject to this tax, when the total rent received by the lessor during the previous year does not exceed the threshold of 85,000 euros (excluding taxes).

5. Various taxes:

C.F.E: All furnished renters are indebted. However, exemptions exist in the following cases:
- Occasional rental of part of the main residence,
- Current rental of part of the principal residence at a reasonable price,
- Rent of all or part of the main residence in furnished tourism. In this case the local authority may oppose the exemption.
Taxe d’habitation sur les résidences secondaires (THRS): It is established in the name of the persons who have the taxable premises. It is due for all furnished residential premises other than as a principal residence, even if they are also subject to the business property tax (CFE). On the other hand, premises used exclusively for professional purposes are not subject to it.

If a taxpayer requests to be relieved of the THRS, he must establish that he rented out his property for the entire year and was not able to use it outside of these periods.

Municipalities may exempt from THRS, for the portion that falls to them, furnished tourist accommodations and bed and breakfasts.
It should also be noted that from January 1st 2026, rural guesthouses are exempt from this tax.

Tax on real estate fortune (I.F.I.): Since the activity is not professional, the value of the premises must be included in the I.F.I base. However, in certain cases, buildings owned by the taxpayer and assigned (by him or by an intermediary company) to his furnished rental activity are totally or partially exempt from IFI if the following conditions are cumulatively met:
- the owner, a natural person, carries out this activity as his main activity and generates more than €23,000 in annual revenue;
- and he withdraws from this activity more than 50% of the income of his tax household subject to income tax under the following categories: salaries and wages, industrial and commercial profits, agricultural profits, non-commercial profits, income of managers and associates.

III-SOCIAL REGIME:

1. Activity carried out as a sole proprietorship:

• Social scheme on rental income:

The LMNP is not subject to social security contributions on labor income if it meets the conditions set by the tax administration (income less than € 23,000 including tax and less than other professional income of the tax household).

If he is a seasonal rental company, the sole condition of achieving an annual turnover not exceeding € 23,000 is sufficient to be exempt from social security contributions on earned income.

In these two cases, the income from the furnished rental is taxed with social security contributions on income from assets (at the rate of 18.60%).

• Social regime on capital gains:

The LMNP is taxed under the real estate capital gains regime for individuals with some particularities (see above) on real estate capital gains realized within the framework of this activity.

2. Activity carried out in a tax-transparent company:

These companies are those for which the partners are taxed with income tax on the amount of their remuneration and on their share of profit. The company is not taxed in corporation tax. This mainly concerns the partnerships (S.N.C.), the E.U.R.L. and the family S.A.R.L.

Here the criteria for distinguishing between professional and non-professional lessor are at the level of management, depending on whether it is majority manager or not.

Majority managers are subject to all social security contributions from self-employed workers calculated on their share of the profit, whether or not it is distributed and, where applicable, on the remuneration allocated by the company.
Minority managers are subject to employee social security contributions excluding unemployment insurance on the basis of their remuneration. On the other hand, their share of the BIC is taxed as social security contributions on income from assets.
The other partners are taxed with social security contributions on income from assets of 18.60% on their share of BIC.
Regarding capital gains, the criteria are identical to those for furnished rentals in a sole proprietorship. It is therefore necessary to determine whether each partner is professional or non-professional according to the criteria used for the calculation of income tax (see above: Definition of L.M.N.P.).

3. Activity carried out as a company subject to corporation tax:

In this hypothesis, there is no specificity linked to the furnished rental activity carried out by the company. Income and capital gains fall within the scope of corporation tax. The question of the social system is irrelevant.

IV-THE SITUATION OF NON-RESIDENTS AT THE TAX LEVEL IN FRANCE:

1. Definition of L.M.N.P. for non-residents:

The non-resident working in a sole proprietorship will have LMNP status within the meaning of income tax if he meets the following two criteria:

the worldwide receipts from the furnished rental activity are less than or equal to € 23,000 including tax;
the annual income withdrawn from the furnished rental activity by all members of the tax household must not exceed the household’s other activity income, whether taxed in France or subject to an equivalent tax abroad.

2. Social scheme for rental income:

As we saw above, LMNP income is not subject to social security contributions. Thus, as soon as a non-resident receives less than €23,000 from furnished rental products, he will most of the time be exempt from social security contributions. Indeed, other income from French sources is often low for non-residents.

Regarding social security contributions, people residing outside the European Economic Area or Switzerland are subject to a levy at the rate of 18.60%. On the other hand, non-professional renters who are covered by the social security regime of an EEA state (European Union, Iceland, Norway, Liechtenstein) or Switzerland, bear a levy whose rate is reduced to 7.50%.

Indeed, LMNP residing in one of these States are exempt from paying the CSG and CRDS, but remain liable for the solidarity levy.

3. Real estate capital gains tax regime:

A withholding tax at the rate of 19% is applicable on the taxable capital gain calculated according to the rules applicable for private real estate capital gains.

The status of L.M.N.P. responds to a very large number of particular rules that we cannot expose here in their entirety. Do not hesitate to contact us for any question on this subject.

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L’article Non-professional furnished rental est apparu en premier sur FBA - French Business Advice.

News on revenue declarations for 2023

FBA team — Wed, 15 May 2024 10:13:31 +0000

The tax returns must be subscribed as every year, the deadlines for filing declarations with the tax department are as follows:

For “paper” deposits (only in certain exceptional cases):
- Tuesday May 21^st 2024 at midnight.
For taxpayers who submit their 2023 tax return in 2024 on the impots.gouv.fr website, the deadline is set depending on the department of residence:
- Thursday May 23^th 2024 for departments n° 01 to 19, as well as for non-residents;
- Thursday May 30th 2024 for departments n° 20 to 54;
- Thursday June 6^th 2023 for departments n° 55 to 974 / 976 as well as for declarations transmitted by EDI.

The main news concerning the declarations 2042, 2042 C PRO, 2042 RICI and 2044 are shown below.

You can, at the same time, refer to these four articles, published in previous years on our website:

I – News concerning all income statements

1 – Online declaration

Taxpayers must complete their tax return online on the website impots.gouv.fr (or in EDI-IR mode through a third party such as a chartered accountant), regardless of their reference tax income.

Taxpayers can, however, exempt themselves from this online declaration obligation if they are unable to do so or if they reside in an area in which no mobile service is available.

Clarification: From 2024, a new service allows you to subscribe to the tax declaration on the impots.gouv mobile application (click on the link to download the app). This declaration on smartphone or tablet is however limited to simple tax situations and, in particular, to taxpayers who have not experienced any change in their family or tax situation during the year.

2 – Pre-filled information on the online declaration

The 2023 income already known to the administration (salaries for example) appears on the declaration, other information is subject to automatic carryover from one year to the next (marital status of dependents, details actual costs, childcare costs for young children, certain information relating to property income, etc.).

The online declaration can be corrected as many times as necessary before the declaration filing deadline.

Furthermore, if after receiving their tax notice, an error is noticed by taxpayers, they can access an online correction service “Correct my online declaration for 2023”, from their “Individual space”.

Remarks:

Overtime hours and exempt monetized RTT days are also pre-filled in box 1 GH or 1 HH. On the other hand, the exempt value sharing premium is not pre-filled.
Information relating to the professional income of non-employees should also be pre-displayed, as part of the merger of the social and tax declarations of the self-employed.
The withholding tax deducted by the employer or pension fund is displayed on the online declaration (as well as on the pre-filled paper declaration). The amount of withholding tax can be modified when declaring online, at the level of each employer or pension fund. A missing employer or pension fund can also be added.

3 – Declaration of real estate

This is a simple reminder about a declaration different from those concerned by this article.

As we announced last year, all owners must indicate to the tax administration, before July 1^st in what capacity they occupy each of the premises they own (main or secondary residence) and, when they do not occupy it themselves, the identity of the occupants.

From 2024, the declaration must only be made (for occupancy on January 1^st 2024) in the event of a change since the previous declaration. The administration has set up a declaration interface in “Gérer mes biens immobiliers” on the impots.gouv.fr website.

II – Update concerning 2042 and 2042 C forms

1 – Wages (2042 form)

kilometer scale: the mileage scale applicable to the 2023 income declaration is unchanged compared to last year.
Volunteers from associations who have expressly waived the right to be reimbursed for vehicle costs can assess their costs at a flat rate according to the mileage scale, subject to providing proof, to the association, of the reality and number of kilometers traveled.
If the taxpayer opts for the actual costs but the standard deduction of 10% is more favorable to him, the latter will be automatically applied by the administration.

Exemption from tips: tips received in 2023 (and in 2024) by employees in contact with customers, and whose remuneration for the months concerned does not exceed 1.6 times the monthly minimum wage, are exempt from tax on Income.

Value sharing bonus (PPV): the exemption limit increases from €3,000 to €6,000 if the bonus is paid within the framework of an incentive agreement or a participation agreement when the participation is not obligatory. A check mark appears in the declaration for the case where the threshold for exemption from the value sharing premium is increased.

Adjustments to the transport cost exemption ceilings: exemption from the advantage resulting from the optional payment by the employer of fuel costs, similar costs and the price of public transport subscription tickets exceeding the mandatory support is extended until December 31^st 2024.

Allowances covering teleworking costs: the income tax exemption for allowances paid by the employer covering teleworking costs is maintained for 2023. These costs may take the form of allowances, lump sum reimbursements or reimbursements of real costs. They are exempt from income tax, up to €2.60 per day and €57.20 per month.
When employees choose to deduct actual costs from their salary, costs related to teleworking from home can be deducted at a flat rate as indicated above. Employees retain the possibility of deducting these expenses for their exact amount, particularly if this is more favorable to them, provided they can justify them.

2 – Income from securities and movable capital

PFU of 12.8% by default or option for progressive income tax scale:
[Reminder] Income from movable capital received is in principle automatically subject to the single flat-rate levy (PFU) of 12.8% (7.5% in certain cases). The deduction made at source by the paying institution as a deposit on the final tax is in principle pre-filled in box 2 CK of the 2042 declaration.
The taxpayer can irrevocably opt to submit this income to the progressive IR scale. The taxpayer who intends to exercise this option must check box 2 OP of the 2042 declaration.

Imputation of capital losses from “minibons”: the possibility of issuing “minibons” that can be exchanged on crowdfunding internet platforms has been removed for “minibons” subscribed after November 10^th 2023.

3 – Gains from the sale of transferable securities and corporate rights

Capital gains from the sale of digital assets: Gains from the sale of digital assets made by individuals domiciled for tax purposes in France, as part of the management of their private assets, are subject to taxation at 12.8% increased by social security contributions.
By way of derogation, gains made since January 1^st 2023 may be subject to the progressive IR scale, upon express and irrevocable option of the taxpayer. This global option must be exercised by checking box 3 CN.

4 – Income of the self-employed (BA, BNC, BIC) 2042C form

Profit increase, applied to companies that do not belong to an approved management organization (O.G.A.) or do not use the services of a professional accountant: this increase has now been removed. The income of self-employed people must now be declared in the dedicated sections, without distinction depending on their situation with regard to approved management organizations or their use of an approved visor.

Furnished rental of part of the main residence and guest rooms: the tax exemption measure, under certain conditions, for income from furnished rental or subletting of part of the main residence has been extended until December 31^st 2026.
For 2023, the average annual rent ceilings per square meter admitted by the tax administration is set at €199 in Île-de-France and €147 in other regions.

Furnished tourist rentals: the main tax developments concerning this category of income were presented in the article entitled Non-professional furnished rental since the Finance act for 2024 published on our website.
However, we provide the following clarifications:

- Concerning the furnished tourist accommodation regime, the finance law for 2024 limited the application of the micro-BIC regime to €15,000 in annual revenue with the application of a 30% reduction.
  However, the administration admits that taxpayers can continue to apply the previous rules to 2023 income. Thus, renters of unclassified furnished accommodation can continue to benefit from the limits of €77,700 and the 50% reduction for their income for the year 2023.

- Companies which fall under the micro-BIC regime also benefit from a new additional reduction of 21% on the turnover relating to their activity of renting premises classified as furnished tourist accommodation when the latter are not located in geographical areas characterized by a significant imbalance between supply and demand for housing (the zones targeted should be zones B2 or C as set by the decree of October 2^nd 2023 modifying the decree of August 1^st 2014).

Daily allowances paid to certain agricultural operators: daily allowances paid under a compulsory insurance scheme against work accidents and occupational diseases to agricultural operators subject to a real tax regime are exempt up to 50% of their amount.

Transactions for the purchase, sale and exchange of digital assets: following an update of the BOFiP database on June 28^th 2023, the tax administration confirms the application of the BIC regime to individuals exercising a profession consisting of the purchase and resale of digital assets.
Consequently, the BNC regime (which was planned to apply from January 1^st 2023 on this type of activity) only applies to exceptional cases involving the non-professional exercise of an activity in similar conditions to those of a professional.

III – Real estate income update – N° 2044 form

The only modification concerning the property income declaration for 2023 consists of the creation of an additional line of charges (line No. 224 bis).

This line concerns taxpayers who carry out energy renovation work allowing a home to move from an energy class E, F or G to an energy class A, B, C or D (within the meaning of article L. 173- 1-1 of the construction and housing code). This system concerns energy renovation expenses which were the subject of a quote accepted from November 5^th 2022 and which are paid between January 1^st 2023 and December 31^st 2025.

Entering the expenses indicated above in this line is optional; it has the effect of increasing the limit for deducting property deficits from overall income to €21,400 (instead of €10,700).

IV – News on tax reductions and credits -N°2042 RICI

Donations to organizations helping people in difficulty: as of the 2023 income tax, the tax reduction at the rate of 66% is extended to donations and payments made for the benefit of works or organizations of general interest contributing to equality between women and men.

Subscription to the capital of SME, FIP or FCPI: for payments made between January 1^st and March 11^th 2023, the rate of the IR reduction is 18% (report in box 7 CI of form 2042 RICI). For amounts paid from March 12^th to December 31^st 2023, the reduction rate is increased to 25% (report in box 7 CH of form 2042 RICI).

Payments made, in 2023, for the cash subscription to the capital of solidarity real estate companies carrying out an activity in the field of social or agricultural housing entitle you to the tax reduction at the rate of 25%, whatever the date of payment.

End of devices: the following devices no longer apply for the calculation of the 2023 income tax:
- old Besson device;
- tax credit for students to finance their higher education.

We can of course help you to complete these declarations to the best of our ability: contact us!

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L’article News on revenue declarations for 2023 est apparu en premier sur FBA - French Business Advice.

Overview of the principal information to be indicated on the 2042-IFI print (tax on real estate fortune)

FBA team — Fri, 26 Apr 2024 17:38:47 +0000

Article written on 2020, updated on April 2024

The 2042-IFI declaration only concerns people who own real estate assets whose value is greater than €1,300,000. This declaration must be filed according to the same terms and within the same deadlines as the 2042 income declaration, of which it constitutes an annex.

The taxpayer benefits from the same reporting procedures as for his income. Online declaration is in principle compulsory for all taxpayers whose main residence is equipped with internet access. Taxpayers who indicate to the administration that they are unable to submit their income tax return and its annexes electronically can, however, use a paper declaration.

We are going to show you the main information that should be mentioned in the 2042-IFI form and its various appendices. We will not expose all the details and specific cases. For these, you can contact us for useful information.

I – 2042-IFI Form

It should first be specified that a single 2042-IFI declaration is filed when the person liable also subscribes an income declaration. The IFI taxpayer who does not file a tax return must file a 2042-IFI-COV identification declaration accompanied by a 2042-IFI-SK declaration, he must check box 9GN of the IFI declaration to indicate that he is not filing an income tax return in France.

1 – Page 1

Identification of the person liable:

Marital status and address: These elements are in principle already indicated, any errors must be corrected.

The partner linked by a PACS or the partner must also register his civil status. The debtor whose identity must appear in this frame is the deceased when the declaration is made by the estate.

In the event of cohabitation, the entire property portfolio of the two cohabiting partners must be declared on a 2042-IFI declaration to be filed with one or the other income declaration. The cohabitation situation must be indicated by checking box 9GL on page 1.

In case of marriage or PACS during the year, and option for a separate declaration of income in N+1 year, box 9 GM must be ticked.

Identification of minor children:

This section is reserved for the identity of minor children of the debtor or of his spouse, partner or cohabiting partner on January 1^st of the year the declaration his filed. These are the children whose declarant, his spouse, his notorious cohabiting partner has legal administration.

Signing of the declaration:

The declaration must contain a single signature if the person liable is single, divorced or separated from the body by virtue of a judicial decision.

For married persons not subject to separate taxation and for persons linked by a PACS the declaration must include the joint signature of both spouses or partners.

For people living in a well-known cohabitation, the signature of the one of the two cohabitees who is responsible for the declaration must be affixed, this formality can be accomplished indifferently by one or the other.

2 – Page 2

The sums appearing on the annexes numbered from 2 to 6 (which we will see in detail) are shown on this page on the lines bearing the same references.

The calculation elements shown in this page will be used as a basis for the calculation of the amount of the IFI carried out by the tax administration.

II – Appendix 1: Properties assigned to professional activity

The taxpayer must complete this annex 1 if he owns, individually or within the framework of a company, goods used for professional activity, exempt from IFI.

Must be mentioned:

the exemption linked to the sole condition of exercising a professional activity primarily in a company (individual or company), mention should be made of the name, the Siren number, the address and the activity of the company;
the exemption related to the function and the possession of social rights for the leaders. Must be mentioned, the name, address and activity of the company, the function exercised in the company, the percentage of capital that the debtor and the members of his family group, hold directly or by company interposed in the company.

III – Appendix 2: Properties held directly (buildings and lands)

This document is made up of two parts. The first page is devoted to the declaration of built buildings and non-built buildings that are not exempt, this concerns:

built buildings;
buildings under construction;
real estate rights relating to built buildings;
buildings or fractions of buildings represented by shares or shares of real estate co-ownership companies;
agricultural land used for agriculture as well as crop land;
rural properties;
building land;
historic monuments.

On the second page, have to be declared, timber and forests, shares of forest groups, rural property leased on a long-term lease, shares of agricultural land groupings (GFA) and GAF partially exempt.

1 – Part 1 of Annex 2 (buildings and lands)

Column 1 Numbering of goods: A number must be assigned to each good indicated on each of the annexes. The primary residence must be listed in the appropriate column on the first line.
Column 2 Date and purchase price: For each building, you must indicate the date of purchase and the purchase price.
Column 3 Nature of the property and location: It is necessary to indicate here the nature of the building: individual house, apartment in a collective building, collective apartment building (if you own the whole building), isolated room, box or garage space, shop, office, workshop, shed.

The nature of taxable lands must be specified (building land, cropland, meadow, orchard, vineyard, woods and forests, wasteland, moors, ponds, marshes, etc.).

Property located abroad. Natural persons having their fiscal domicile in France are also taxable on their immovable property and property rights located outside France.
Column 4 Characteristics of the property: This is the area and the number of rooms. For the main residence and built buildings, it is necessary to indicate:
- the total area of the land,
- the total living area in square meters.
Column 5 Taxable fraction of mixed properties: This concerns properties that are partially used for professional activity, only the percentage or non-professional fraction of their value should be mentioned here.
Column 6 declared value:
- Main residence: Its value must be subject to a reduction of 30% on the market value of the property free of any occupation.
- Other buildings: The value of buildings is indicated in the first column and land in the second.
  The value to be declared is in principle the market value on January 1^st. Discounts may be applied to the market value of the property when it is rented or jointly owned.
  In order to determine the market value to be declared, the administration makes available to the taxpayers the property values declared on the occasion of transactions which have occurred during the last 5 years (consult the PATRIM service for this).
Column 7 Nature of the rights held: This only concerns taxpayers who do not have exclusive ownership of the property (joint possession) or if they do not have full ownership of it.

2 – Part 2 of Annex 2 (rural goods, timber and forests… partially exempt)

Column 1 Numbering of goods: Each good is normally the subject of an article number. However, can be grouped together, several plots even non-contiguous located in the same commune, the woods and forests of a single holding all the parts pertaining to the same grouping.
Columns 2, 3, and 4 Nature of goods, location and characteristics: As above, the information concerns the nature, address, surface of the land or the names of the land groups.
Columns 5, 6 and 7 Declared value: Timber, forests and shares of forestry groups benefit, under certain conditions, from an exemption of three quarters of their value. The taxpayer must indicate column 5 their value before deduction of 75%.
Rural properties leased on a long-term basis GFA and GAF shares which cannot be considered as professional assets are exempt up to 75% of their value if it does not exceed 101,897 €, and 50% beyond this limit.
Column 8 Nature of the rights held in the property: This column the nature of the rights when the person liable does not hold full ownership (usufruct, right of use, bare ownership, etc.).

IV – Appendix 3: Properties held indirectly

This appendix must include the fraction of the value of the securities of companies representative of real estate property and rights, regardless of the number of interposition levels.

It also includes property and property rights held via investment funds and collective investment schemes or housed in life insurance contracts.

Consequently, it is necessary to enter in this annex the value of the titles representing real estate and real estate rights held via:

a society;
investment funds and collective investment organizations (OPCI, OPCVM);
a redeemable life insurance contract expressed in units of account or, under certain conditions, a PER invested in units of account;
a capitalization voucher or contract expressed in units of accounts.

Columns 1 to 4 relate to the article number: The name of the company or body, the Siren number of the company or body and the percentage of capital held.
Column 5 Market value of the rights, shares or stocks: If the assets of the company or the organization whose debtor holds the titles includes buildings, it is necessary to indicate the market value of these titles. The person liable is taxable at the IFI on the fraction of the market value of these securities representative of taxable immovable property and rights, up to the amount of its shareholding in the company or organization.
Clarification: from the IFI due for 2024, for the valuation of taxable shares, debts contracted by an organization or a company owned by the taxpayer which are not relating to a taxable asset are no longer taken into account.
Column 6 declared value: To determine the taxable fraction, a coefficient corresponding to the ratio between, on the one hand the market value of taxable property or property rights and, where applicable, the value of shares or shares representing these same goods and, on the other hand, the market value of all the assets of the company or organization.
The amount obtained is multiplied by the participation rate held in the company or organization.
Column 7 Nature of rights held over the property: If the property is held in divided ownership, the status of usufructuary or bare owner of the debtor should be indicated.

V – Appendix 4: Liabilities and other deductions

Column 1 numbering of articles: As in the other annexes, each article is numbered in column 1.
Column 2 Nature, object and date of the debt: The date of the contract, deed or court decision from which the debt results, the nature of the debt, must be indicated.
The following are deductible:
- the co-ownership charges due on January 1^st of the tax year;
- the loans contracted for the acquisition repair or maintenance of taxable property as well as shares of companies or organizations (deduction in proportion to the value of taxable assets);
- the capital constituting the life annuity;
- the property tax (excluding tax on household waste);
- the tax on vacant premises;
- the tax on offices in Île de France and departments of Bouches-du-Rhône, Var and Alpes-Maritimes;
- the theoretical IFI;
- gift or inheritance tax pending payment on January 1^st.
Columns 3 and 4 name and address of the creditor and amount due on January 1^st: Note that column 4 is divided in two. The first must contain the amount due on January 1^st of the taxation year for the repair, maintenance and improvement, construction or enlargement of taxable property. The second must contain the amount remaining due on January 1^st of the taxation year of other debts.
Clarification: The IFI due for the year is to be deducted from the assets. For the calculation of the theoretical IFI, taxpayers have a calculation help sheet.

VI – Appendix 5: Calculation of the elements of the ceiling

Persons concerned: Benefit from the cap on those liable for the IFI who have their tax domicile in France and non-residents established in another State of the European Union when the latter derive all or almost all of their income from France .

The cap system allows taxpayers of the IFI to spend no more than 75% of their income on paying their taxes. If this percentage is exceeded, the amount of the IFI is reduced by the excess.

Annex 5 contains two tables:

A table A which makes it possible to determine the amount of taxes due in France and abroad in respect of income from the past year and used for the calculation of the cap. This amount must be reported on line 9PR, page 2 of the 2042-IFI declaration;
A table B which makes it possible to determine the amount of income to be taken into account for this same calculation, amount to be reported on line 9PX, page 2 of the 2042-IFI declaration.

VII – Appendix 6: I.F.I. paid outside France

This form is used to calculate the wealth tax paid outside France, which will be chargeable to the IFI due in France.

Only persons who, domiciled for tax purposes in France on January 1^stof the declaration is filed, own immovable property and property rights located outside France must complete this annex if they have paid tax outside France, the characteristics of which are similar to those of the I.F.I.

Foreign taxes comparable to French local taxes are not deductible. The amount of attributable tax is limited to the fraction of French tax relating only to property located outside France.

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Tax on Real Estate Fortune (Impôt sur la Fortune Immobilière)

FBA team — Fri, 26 Apr 2024 17:13:32 +0000

Article written on 2018, updated on April 2024

The real estate wealth tax (I.F.I.) is an annual tax payable by individuals holding, on January 1^st of the tax year, net taxable real estate assets greater than an amount set at €1.3 million.

The taxpayers affected by this tax are the following:

Individuals having their tax domicile in France, on their real estate and real estate rights, held directly and indirectly, located in France or outside France;
Individuals who do not have their tax domicile in France, on their real estate and real estate rights, held directly and indirectly, located in France.

Individuals who transfer their tax domicile to France after having been tax domiciled abroad for the previous 5 calendar years are only temporarily taxable on their property and real estate rights located in France.

I – The definition of the tax household concerned by the I.F.I.

Only natural persons are taxable at the I.F.I. The declaration must be made at the tax household level including:

Married couples, regardless of their matrimonial regime with the exception of spouses separated by property and not living under the same roof and spouses undergoing legal separation or divorce and residing separately;
People linked by a PACS;
People living in notorious cohabitation.

Property belonging to minor children are taxed with that of their parents who have legal administration of their property.

II – I.F.I. Bases

1 – Tax base

Real estate and real estate rights:

The tax base is the net value on January 1^stof the tax year of all real estate owned by a person (or two persons living together married or not) and their minor children.

The tax administration extends the notion of ownership of property to real estate rights held through companies or any other structures, French or foreign, without legal personality.

The following are thus assimilated to the direct ownership of real estate:

The holding of shares in joint ventures;
The holding of shares in real estate co-ownership companies for the buildings corresponding to the rights of the taxpayer in the company;
The holding of assets through trusts.

Shares of companies:

Definition: These are shares of companies or any other body established in or outside France belonging to taxable persons, representing real estate held directly or indirectly by the company or the body. Only the value of shares represented by taxable real estate is kept in the base of I.F.I.

Exclusion of buildings assigned to a professional activity: For the calculation of the taxable portion of the shares of companies, we do not retain properties held by the company or the rights held when these buildings or rights are allocated to the commercial, industrial, artisanal, liberal or agricultural activity of the company holding them.

Definition of the professional activity:

The professional activity defined by the law (which exonerate the buildings concerned) includes operational activities. Thus, a company engaged in its own asset management is not considered as professional.

Holding companies are considered as commercial companies when they actively participate in the conduct of the corporate group policy and render administrative, accounting, legal and other services to their subsidiaries.

Special cases:

The assets encumbered with a usufruct are taxed at the usufructuary for the freehold value.
Assets placed in a trust are included for their market value in the assets of the settlor (or of the beneficiary deemed to be a settlor).

2 – Evaluation rules

Buildings and real estate rights must be valued according to their market value on the day of the event giving rise to the tax, i.e. on January 1^st of each year.

A 30% deduction is made on the market value of the property when it is occupied as a principal residence by its owner.

Likewise, a discount of 20% to 40% on the market value of the property may be applied when this property is rented or, under certain conditions, held in joint ownership.

Listed securities must be valued using one of the following two methods:

spot price of the last quotation of the year preceding the year of filing of the declaration;
or average of prices over the last thirty days of trading.

Unlisted securities are in principle valued at their market value determined primarily by reference to the price set during another comparable transaction.

3 – Liability deductible from the tax base

Only certain debts relating to taxable assets are allowed as deduction, in proportion to the fraction of their taxable value.

To be deductible, debts must exist on January 1^st of the tax year, be contracted and paid by the taxpayer and be related to taxable property.

The debts must correspond to expenses of acquisition of real estate or shares of companies, to expenses of maintenance of repair or extension. We can also deduce due taxes, these taxes must be generated by the property.

Finally, the theoretical IFI is also part of deductible debts.

4 – Exempt assets

Property allocated to a professional activity:

Assets must be allocated to the taxpayer’s core business. Partnership shares are likewise exempt if the taxpayer carries on his principal activity (industrial, commercial, craft, liberal or agricultural) in that company.

Buildings held directly or owned by the taxpayer and used for its furnished rental activity are totally or partially exempt from IFI if the following conditions are met:

the owner, who carries out this activity as his main activity, generates more than €23,000 in annual revenue;
and he withdraws from this activity more than 50% of the income including the tax household, within the meaning of the IFI.

Taxpayers who carry out the activity of renting commercial or industrial establishments equipped with the furniture or equipment necessary for their operation are exempt on the value of these buildings. This activity must constitute their main activity.

Properties held by companies subject to corporation tax and securities representing these same properties are exempt if the property is allocated to the professional activity. The exemption is subject to conditions of exercise of management function within the company by the owner of the shares and a minimum percentage of ownership of the capital. We are at your disposal, if you think you hold exempt units, to study your particular situation in order to confirm or not the exemption.

Other properties:

Other real estate may be totally or partially exempted, these are:

Wood and forests;
Properties leased by long term rural lease;
Actions of farmland groupings.

III – Calculation of I.F.I. tax

1 – Tax scale

The rate based on the taxable net worth of the assets is as follows:

-Until € 800 000……………………………….…………………………….0%

-Greater than € 800 000 and up to € 1 300 000………………0.50 %

– Greater than € 1 300 000 and up to € 2 570 000….………0.70 %

-Greater than € 2 570 000 and up to € 5 000 000……..……1.00 %

-Greater than € 5 000 000 and up to € 10 000 000…………1.25 %

-Greater than € 10 000,000………………………………………….…1.50 %

2 – Tax reductions and caps

The taxpayer may deduct 75% of the donations made to bodies defined by law up to the limit of € 50,000.

Taxpayers domiciled in France may reduce I.F.I. of the amount of the difference between:

The total amount of taxes paid in France and abroad on the income of the previous year, and,
75% of the previous year’s global revenues.

The amount of taxes equivalent to I.F.I. Paid outside France on real estate located outside France is deductible to this tax in France.

IV – Reporting obligations

Taxpayers filing a tax return in France must file a 2042-IFI or 2042-IFI-K declaration. Non-resident taxpayers (or adults attached to their parents’ tax household) who do not file a tax return in France must provide a 2042-IFI or 2042-IFI-SK declaration, accompanied by a 2042-IFI-COV declaration.

Regarding the information to be provided in each of these declarations as well as the filing deadlines, we suggest you consult our article entitled OVERVIEW OF THE PRINCIPAL INFORMATION TO BE INDICATED ON THE 2042-IFI PRINT (TAX ON REAL ESTATE FORTUNE) in this same website.

Our chartered accountants are of course at your disposal to answer any question concerning this new tax that concerns any resident or non-resident who owns real estate in France.

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The different categories of tourist accommodation and their regulations

FBA team — Thu, 14 Mar 2024 13:54:11 +0000

Article published on 15/12/2020 and updated on 14/03/2024

Tourism activity is highly developed in France and the number of accommodation categories provided for by law is also important so that there is a regulation adapted to all types of tourist reception.

On the other hand, this quantity of different denominations of accommodation structures creates a disturbance among the creators of companies who launch out in the tourist activity.

Also, we will give below a definition of the main categories of accommodation as well as an overview of the measures taken in terms of alleviating the security conditions with respect to very small structures.

I – Definition of accomodation categories

“Petits hotels”

This category concerns establishments that can accommodate a maximum of 100 people on all levels. Staff are not taken into account in the calculation of the workforce and the rules on security obligations are lightened. The relatively heavy safety and accessibility standards were provided for by a decree of July 24th 2006.

“Très petits hotels”

The safety regulations against the risks of fire and panic in small hotels provided for by the decree of July 24^th 2006 proved to be too heavy for very small structures. A new regulation was drafted on October 29^th 2011 with a view to offering simpler regulations to hotels accommodating less than 20 people and whose lower floor of the highest storey is located less than 8 meters from the ground. The operators of these very small hotels are not required to comply with the requirements set out in the 2006 decree. They can, for example, install simple smoke detectors.

“Chambres d’hôtes” (Gest rooms)

The rental of a guest room necessarily includes the group supply of one night (including the supply of linens) and breakfast. Reception must be provided by the lessor, who lives on the premises.

The rooms and bathrooms must be cleaned daily at no additional cost.

The capacity is limited to 5 rooms and 15 customers at the same time. If the operator rents more than 5 rooms or accommodates more than 15 customers simultaneously, this activity corresponds either to the running of a hotel or to the rental of rooms in private homes. It is then necessary to respect the regulations of establishments open to the public (ERP) and the rules of accessibility for people with disabilities.

It is possible to provide an additional service called “table d’hôtes”. The table d’hôtes is not a restaurant, it is a service that comes in addition to the accommodation, reserved only for the occupants of the guest rooms. The meal must be taken at the family table. It must consist of a single menu.

“Meublés de tourisme”

The “Meublés de tourisme” is a villa, an apartment, a “gîte” or a furnished studio, for the exclusive use of the tenant, offered for rent to a passing clientele who makes a stay characterized by a day rental, weekly or monthly, and who does not take up residence there (Tourism Code-Art D324-1). Like hotels, they are classified by the number of stars increasing according to their comfort fixed by a decree.

The “Meublé de tourisme” is seasonal, that is to say that the lessor must not rent to the same person for a period exceeding 90 days or 12 consecutive weeks.

Classified accommodation must be for the exclusive use of the tenant, without passage of the owner or other tenants, throughout the stay.

The “Meublé de tourisme classé” is defined as follow: “To obtain the classification of a furnished tourist accommodation, you must make a request to the accredited or approved assessing body of your choice (appearing on the lists on the “Atout France” website) using form No. 11819* 03”.

The classification varies from 1 to 5 stars depending on comfort elements such as the surface area of the various rooms, the general layout and the various equipment (electrical, communication, wifi, television, stereo, comfort equipment).

II – A brief overview of security and accessibility conditions

“Petits hotels”

Since 2011, small hotels must meet certain standards and are in principle, co-checked every year.

This concerns:

a) Regular maintenance and checks of installations, in particular automatic doors, electricity, heating and air conditioning, elevators, cooking appliances, extinguishers and fire safety systems, etc.
All technical installations must be checked by a competent technician every 2 years, with the exception of electrical installations and fire detection systems, which must be checked annually.

b) Safety instructions, signage and displays in each room and in the entrance hall.

c) Staff training: Staff must participate twice a year in instruction and training sessions, receive information on fire hazards. He must also receive very precise instructions in order to limit the action of the fire and ensure the evacuation of the public.

d) Surveillance: The on-call service must be provided in a room equipped with either a warning sign or an alarm report. The staff present can move away from it while remaining in the establishment, if they have an alarm transmission to an autonomous alarm receiver.

e) Safety equipment:

With the exception of the sanitary facilities, all rooms must be equipped with 1/2 hour flame arresters fitted with a door closer or E30-C;
The use of network gas or liquefied hydrocarbons is only authorized in the rooms if the distribution is collective;
Automatic fire detectors, appropriate to the risks, must be installed in areas at particular risk (boiler room, kitchen, storage, laundry, etc.);
The stairs must be protected as soon as the establishment has more than one floor on the ground floor;
Two stairs minimum are required for hotels accommodating more than 50 people and having more than one floor on the ground floor, except if the rooms are accessible by the fire brigade ladders and these floors accommodate less than 50 people;
For hotels with only one floor on the ground floor, the staircase may not be protected provided that all rooms are accessible to the fire brigade ladders.

f) Alarm system: The electrical cables used for the alarm system must be independent of other electrical conduits, be away from other electrical devices and not pass through rooms at particular risk or be protected by fire walls of degree 1 hour.

Reduction of security obligations enjoyed by “Très petits hotels”

These establishments benefit from special provisions:

They are exempt from the enclosure of the stairs;
Fire-rated door sets must be generalized;
The establishment must be equipped with a category A fire safety system. Automatic fire detection must be installed in horizontal circulation areas where they exist and in all premises, with the exception of bathrooms. However, when the director of the establishment favors the enclosure of the staircase(s) leading to the rooms, the automatic fire detection remains limited to common horizontal circulation and / or private spaces;
They are exempt from the installation of autonomous housing blocks (BAEH).

Accessibility for disabled people in hotels

All hotels are considered as establishments open to the public (ERP) and therefore subject to the regulations in force concerning accessibility.

“Chambres d’hôtes” (Guest rooms)

The standards to be observed

The regulatory minimum surface area of each room must be 9 m² (excluding toilets), with a ceiling height of at least 2.20 m;
Each room must give access (directly or indirectly) to a bathroom and a toilet and be in compliance with regulations on hygiene, safety and sanitation;
The rooms and bathrooms must be cleaned daily, at no additional cost;
The price is free but the operator is however subject to certain obligations in terms of price display.

Each accommodation, whether it is in an individual dwelling or in a collective dwelling, is equipped with at least one standardized smoke detector. Article R129-13 of the construction code specifies: “The responsibility for the installation and maintenance of the standardized smoke detector referred to in R129-12 lies with the occupant of the accommodation.” However, it lies with the owner for seasonal accommodation…

The operator must of course also take out an insurance contract covering this activity.

Safety and access for people with disabilities

No rule of access to disabled people is required as long as the accommodation capacity (limited to 5 rooms and 15 people at the same time) is not exceeded.

If this is exceeded, the operator of the guest room must comply with the regulations for hotels and establishments open to the public as well as the regulations in force on accessibility for people with disabilities.

“Meublés de tourisme”

There are no specific regulations for this type of accommodation. Housing must meet the minimum standards set by Decree No. 2002-120 of 30 January 2002 relating to the characteristics of decent housing.

As in any home, the premises must be equipped with at least one standardized smoke detector.

In addition, it is of course necessary that the home insurance covers the seasonal rental.

There is no capacity limit. However, buildings or premises used as accommodation which can accommodate more than 15 people are to be considered as establishments open to the public (ERP) and become subject to the regulations concerning accessibility and prevention of fire risks.

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Property tax “Taxe foncière” and Housing tax “Taxe d’habitation”

FBA team — Fri, 15 Sep 2023 11:04:29 +0000

Article updated on 15/09/2023

Every owner, whether they are residents or not, of a professional or residential building in France, currently receive a notice of “Taxe foncière”. Similarly, people who have secondary residences or furnished housings not assigned to the main residence will soon receive a notice of “Taxe d’habitation”.
Here are the main details about the features of these two taxes as well as the housing tax on vacant housing.

I – “Taxe Foncière”: Property Tax

1. Taxable persons

The taxpayer is anyone who owns a built or unbuilt property (in the case of bare land). It is the owner on January 1^st, who receives the tax for the entire year.

Both spouses are eligible, but not jointly. When a property is held in joint ownership by several owners, the tax is assessed in the name of all the joint owners, and payment must be agreed between them.

In the event of dismemberment of ownership, the usufructuary is liable.

If a property is sold during the year, the seller may request that the amount be shared with the buyer on a pro rata temporis basis, provided this is stipulated in the deed of sale.

2. Taxable real estates

Property tax on buildings:

Constructions fixed to the ground in perpetuity
Commercial or industrial installations assimilated to constructions (workshops, hangars, industrial buildings, etc.)
Storage facilities
Masonry works which have the character of real constructions
Bridges and communication channels
Boats used at a fixed point
Lands forming an addiction with a construction
Certain uncultivated land assigned to industrial or commercial use, except for land assigned to the practice of golf
Land used for advertising
Light leisure dwellings resting on a masonry base, and which cannot be moved without being demolished
Yurts used for housing built on concrete pads which include fittings

Property tax on unbuilt estates:

Bare land used for agriculture
Mines and peat bogs
Ponds, salt pans and salt marshes
Lands occupied by greenhouses used for agricultural purposes
Golf courses, whatever their operating conditions

3. Tax calculation

Property tax on buildings:

The basis of calculation is the “Valeur Locative Cadastrale” (Cadastral Rental Value) which is determined as follows:

For premises allocated to housing, the rental value is determined by comparison with that of reference premises chosen, in the municipality, for each type and category of premises.

The rental value of the reference premises is determined according to a fixed rate, by municipality or sector of municipality, for each type and category of premises, based on the rent of the premises rented freely under normal price conditions.

This rate is applied to the weighted surface area of the reference premises. This price is corrected to consider the nature of the different parts of the premises, its location, its importance, its condition, and its equipment.

New rental values will be put in place from 2028. The finance law for 2020, amended by the finance law for 2023, determined the terms and timetable for the revision of rental values. The rental value of each property or fraction of property will be determined based on the state of the rental market on the reference date, i.e., January 1^st, 2025, subject to an annual update.
For professional premises (commercial and liberal professions) other than those allocated to housing or to the exercise of a salaried activity at home, the rental value of these professional premises is calculated considering 3 criteria:
- Weighted surface area of the room: the overall surface area of the premises is weighted according to the use and physical characteristics of the different parts of the premises for the activity carried out (1 for the main surfaces of the premises, 0.5 for the secondary covered surfaces and 0.2 for the uncovered secondary surfaces).
- Category of premises (and its dedicated rate): each premises is attached to one of 38 categories, depending on the use of the premises (i.e., store, office, depot, hotel, etc.) and its physical characteristics. Prices per square meter have been determined in each sector.
- Local location coefficient: this coefficient takes different values between 0.70 and 1.30. It applies to the rate per square meter of the category of each professional premises. It is linked to the geographical location of the premises.

For industrial establishments and industrial lands and buildings, the rental value is established essentially on accounting data, based mainly on the cost price of soil, land, buildings, materials, and tools.

This “Valeur Locative Cadastrale” is then multiplied by 0.5 and the result gives the “Revenue Cadastral”.

At the request of the taxpayer, the rental value of the premises assigned exclusively to the accommodation of seasonal agricultural employees and apprentices is reduced in proportion to the period during which these premises remained vacant during the year preceding the tax year.

The tax rate for each local authority is then applied to the “Revenue Cadastral” to determine the amount to be paid.

The main territorial authorities are the commune, the intercommunity, the department, and the region.

The tax also includes an element named “Taxe Ordures Ménagères”, the refund of this amount can be claimed by the owner to the tenant when it is a property for the purpose of a lease. Special equipment taxes and the tax for the management of aquatic environments and the prevention of flooding (GEMAPI) may also be added.

Note: The municipalities and other territorial authorities may institute, upon deliberation, an abatement on the rental value, of which here are three examples:

30% on certain social housing in priority neighborhoods of city policy (QPV)
30% for industrial or commercial premises converted into housing, located in collective buildings and in a municipality on whose territory one or more QPVs are located
50% for buildings assigned directly to research operations

Property tax on unbuilt estates:

The calculation mode is identical but the “Valeur Locative Cadastrale” is reduced by 20% except for building land or land used for hunting, to give the “Revenue Cadastral”.

Concerning building land located in tense areas, a flat rate increase of €3 per m² (which can be modulated) can be decided upon by local authorities.

4. Payment date

The payment of local taxes for individuals (property taxes, in particular) is due 30 days after the date of collection of the role. Any payment made 45 days after this collection is subject to a 10% increase for late payment.

The tax notice is usually received by the taxpayer in the month of September and the payment deadline is October 15^th.

In case of payment by internet, the delay is postponed to October 20^th (or 25^th in case of bank levy).

The taxpayer may request the monthly levy of his tax.

5. Discounts and exemptions

There are many cases of exemption, here are the most common.

Property tax on buildings:

A mandatory permanent exemption applies to state property, rural buildings used by farmers and buildings used to produce photovoltaic electricity.
New constructions are temporarily exempt (usually 2 years) but subject to declarative obligations. However, the municipality may, by deliberation and for its share, limit the exemption to 40%, 50%, 60%, 70%, 80% or 90% of the tax base. The EPCI may, by deliberation and on its part, remove this exemption.
Optional exemption from 2 to 5 years in favor of companies benefiting from a tax exemption on profits (new companies created in AFR zones – companies created to take over a company in difficulty).
Optional exemption of 50% or 100% for 3 years, decided by municipality, for dwellings completed before 1989 subject to energy saving works.
Optional exemption of 50% or 100% for 5 years, decided by municipality, for new homes completed from 2009 meeting a level of overall energy performance higher than that imposed by the legislation in force.
Certain social housing financed using regulated loans benefit from exemptions of 10, 15, 20 or 25 years.
People over the age of 75 whose reference income for the previous year does not exceed certain limits are exempt from tax on their residence (primary and secondary).
There is also an exemption for people with low incomes. We can provide you, at your request, with the amount of income thresholds.
Anyone over 65 and up to 75 years of age can benefit from a €100 discount.
Recipients of the solidarity allowance for the elderly (ASPA) or the supplementary disability allowance (ASI) regardless of their age.
Recipients of the allowance for disabled adults whose income for the previous year does not exceed certain limits, regardless of their age.

Property tax on unbuilt estates (TFPNB):

Permanent exemption of soils and land subject to property tax on built properties (soils of buildings and land forming an essential and immediate dependence on constructions).
Optional exemptions (decided by municipalities and other local authorities) for 5 years for certain plots operated according to an organic production method.
Exemption for a maximum of 8 years for orchards, fruit crops, trees and shrubs and vines.
Agricultural operators are exempt from 20% of the TFPNB. This exemption does not apply to properties which benefit from total exemptions.

II – “Taxe d’habitation sur les résidences secondaires” (Housing tax on secondary residences) THRS

Since January 1^st, 2023, the housing tax on the main residence has been abolished for all taxpayers. However, it is maintained on second homes. Similarly, a new reporting obligation must be completed each year in principle before June 30^th.

1. Taxable persons

The tax is due by natural or legal persons (owner, tenant, free occupant) who have the disposal or enjoyment of the premises on January 1^st of the tax year.

Companies allocating buildings for timeshare use are liable for the THRS relating to the premises allocated for use to their members.

Note: People who retain the exclusive use of the home which constituted their main residence before being permanently accommodated in an establishment or service welcoming the elderly or an establishment providing long-term care are exempt from THRS.

2. Taxable premises

Are subject to housing tax on second homes and other furnished premises not assigned to the main dwelling (THRS):

All furnished premises assigned to the dwelling other than those assigned to the main dwelling
Premises furnished in accordance with their purpose and occupied privately by entities (associations, in particular) which are not subject to the business property tax (CFE)
Furnished premises without an industrial or commercial character occupied by state bodies, departments, and municipalities, as well as by public establishments, other than those referred to in article 1408, II.1° of the CGI.

3. Exempt premises

Are exempt from THRS:

Premises liable to the CFE when they are not part of the taxpayers’ personal residence
Buildings used for rural operations
Premises intended for the accommodation of pupils in schools, boarding schools, and summer camps
The premises allocated to student accommodation in university residences.

4. Tax calculation

The basis of calculation is, as for the “Taxe foncière”, the “Valeur Locative Cadastrale” housing.

This amount is then multiplied by the tax rates of the various local authorities (commune, inter-municipal, department, region) to calculate the tax due.

At the request of the taxpayer, the rental value of the premises assigned exclusively to the accommodation of seasonal agricultural workers and apprentices may be reduced in proportion to the number of days of occupation of the accommodation the year preceding that of taxation.

Statement: We remind you that, under penalty of a fine, owners of premises used for housing must declare to the tax authorities, before July 1^st of each year, the nature of the occupation of the premises for which they reserve the use, or, for premises occupied by third parties, the identity of the occupant(s). However, owners of premises for whom no change in the information transmitted has occurred since the last declaration are exempt from this declaration.

5. Payment date

The tax notice is usually sent by the administration between late September and early October, it is payable on November 15^th.

This tax may be paid by monthly levies upon request of the taxpayer.

In municipalities in geographical areas where the annual tax on vacant housing is established (see below), the municipal council may, by deliberation, increase by a percentage between 5% and 60% the municipal share of the housing contribution. THRS due for furnished accommodation.

III – Taxes concerning vacant housing

There are two different taxes depending on the geographical location of the accommodation.

1. Vacant housing tax (TLV)

Tax definition:

Vacant housing located in municipalities belonging to an urban area of more than 50,000 continuous inhabitants where there is a marked imbalance between supply and demand for housing is subject to an annual tax.

The tax is due for each accommodation, habitable and unfurnished, vacant at the same time:

On January 1^st of the year preceding that for which the tax is established
On January 1^st of the tax year
Who has not been employed for more than 90 consecutive days during the year preceding that of taxation

It is not due in the event of a vacancy beyond the control of the taxpayer. Housing belonging to HLM organizations and semi-public companies, intended to be allocated subject to means testing, does not apply.

Annual tax calculation:

The tax rate is 17% of the rental value of the housing (determined as for housing tax) the first tax year (and each time the premises re-enters the scope of the tax), and 34% from the second year.

2. Housing tax on vacant housing (THLV)

Tax definition:

Municipalities and other local authorities (other than those referred to above) may decide to establish, for their share, the housing tax on premises for residential use, habitable and unfurnished, vacant for more than 2 years on January 1^st of the tax year. These local authorities may subject these premises to housing tax on second homes from the 2023 taxation.

Calculation:

The rate applicable for the housing tax on vacant housing (THLV) corresponds to the rate of the council’s housing tax, increased, where applicable, by the rate of the EPCIs without their own taxation of which it is a member.

Exemption cases:

As for the TLV, housing inhabited for more than 90 consecutive days in the year or undergoing an involuntary vacancy (the owner is looking for a tenant or a buyer), requiring significant work to be habitable (more than 25% of the value of the housing) and furnished second homes subject to housing tax are exempt.

Housing owned by HLM organizations and semi-public companies, intended to be allocated subject to means testing, are exempt.

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News on revenue declarations for 2022

FBA team — Sun, 30 Apr 2023 14:42:21 +0000

Tax returns must be completed, same as every year, and the deadlines for filing them with the tax department are as follows:

By paper declarations (only in some exceptional cases):
- Monday, May 22nd, 2023 at midnight.
By e-declaration on “impots.gouv.fr”, the deadlines are set based on the region of residence:
- Thursday May 25th, 2023, for regions n° 01 to 19, as well as for non-residents;
- Thursday June 1st, 2023, for regions n° 20 to 54;
- Thursday June 8th, 2023, for regions n° 55 to 974 / 976 as well as for EDI declarations (Electronic Data Interchange).

The main changes regarding the declarations n° 2042, 2042 C PRO and 2044 are listed below.

For further information, do not hesitate to check our articles from previous years which are still relevant:

I – News about all income statements

1. Calculation of the overall net taxable income and methods of applying the ratio system

The following order lists the possible deduction from the total categorial net income:

Previous global deficits that can be carried forward to the global income. On the other hand, the ordinary deficit realized in the category on which the exceptional income depends must not be deducted from the global net income, this deficit having already been absorbed for the determination of the categorical net income;
Deductible fraction of the CSG (Generalized Social Contribution);
Deductible expenses from the overall income of the fiscal year (e.g. alimony);
Allowances for elderly or disabled;
Allowances for fiscally connected adult children (above 18).

These tax deductions are implemented in the exact order listed above.

As from now, the overall deficit or, when applicable, the negative overall net income (taking into account the overall deficits of the previous six years, deductible expenses and specific allowances) is deducted from the amount of exceptional or deferred income before application of the system of the ratio.

2. Reassessment of the mileage scale

The mileage scale is revalued at 5.4% in 2023 to take into account the 2022 inflation.

3. Abolition of the TV license fee

The abolition of audiovisual contribution in 2022 leads to the disappearance of the RA box, which was used to report whether a person owned a television, which served to avoid having to pay the television license fee needlessly.

4. Increase in the tax credit for childcare expenses

For amounts paid from January 1st, 2022, expenses are deducted within the annual limit of €3.500 per dependent child or €1.750, in the event of separation or divorce between the parents, when the child alternately resides between its parents’ homes.
The limit of €3.500 (or €1.750) is not subject to any reduction prior temporis when the child:

Is below 6 years old or reaches 6 during the fiscal year of reference;
Was given custody for only part of the year.

5. New reporting obligation for your real estate for residential use

Although it is not related to the declaration of income, you must be aware that in this new declaration, especially for all real estate owners. For each of their properties, owners must indicate the use they make of them. If they do not occupy the property themselves, they are required to provide the identity of all occupants as well as the duration of their stay (on date January 1st, 2023) in the declaration filed by latest, June, 30th, 2023.

II – Update regarding forms n°2042 and n°2042 C

1. Wages (2042 form)

Reassessment of the mileage scale: the mileage scale is revalued at 5.4% in 2023 as stated further above.

Exemption from the Value Sharing Bonus (PPV): the PPV is exempted from income tax and social security contributions when paid between July 1st,2022 and December 31st, 2023, up to a limit of €3.000 per year and per beneficiary for employees whose remuneration is less than 3 times the minimum wage during the 12 months prior to the payment of the bonus. This ceiling increases to €6.000 for:

Companies with a profit-sharing agreement;
Companies with less than 50 employees applying a voluntary participation scheme;
Some associations (NGOs) and foundation;
Disabled workers under supported-contracts and help through work in ESAT.

Increase in the exemption ceiling for overtime and additional hours: overtime and additional worked hours paid from January 1st, 2022, are exempted from income tax, up to an annual limit of €7.500 (against €5.000 the years before).

Exemption from tips paid in 2022 and 2023: they are usually taxable, for their actual amount. However, tips paid during 2022 and 2023 are excluded from the social security contribution base and are exempt from income tax. However, this reported and exempt income is taken into account in the calculation of the reference tax income, consequently, to benefit from it, you will have to be very careful when filing your tax return and correcting the corresponding boxes. The exemptions apply on the condition that the remuneration of the employees concerned does not exceed the amount of the minimum legal wage (SMIC) increased by 60%.

2. Self-Employed Income (2042C form)

Profit increase, applied to companies that do not belong to an approved management organization (O.G.A.) or do not use the services of a professional accountant: for the calculation of income tax at a progressive scale, the result declared for self-employed, professional and non-professional activities may be subject to an increase. Taxpayers who use the services of a chartered accountant or a management association approved by the tax authorities are exempt from this increase. Incomes that are not subject to the increase must be mentioned in the boxes of the 2042 C PRO declaration provided for this purpose (OGA columns).
The previously mentioned increase applies for the last time to incomes for 2022. It is 10% this year (compared to 15% for income in 2021).
The tax reduction for membership fees to an approved organization and bookkeeping is not affected by this measure.

Merged tax and social declarations: the income used as a basis for the calculation of social security contributions and contributions is now collected directly from the income tax declaration. This declaration is supplemented by a social component and replaces, since the 2020 income, the social declaration of the self-employed (DSI). This merging was effective only for self-employed workers carrying out a craft, industrial, commercial, or liberal activity, the merged declaration is extended to two new populations:

Approved medical practitioners and life support workers (PAMC);
Self-employed agricultural workers (MSA).

Tax compliance review (E.C.F.): as part of the development of the relationship of
trust and in line with the principle of the right to make mistakes, companies are offered an option for the tax compliance review (ECF).
For companies subject to a real regime, the option for the ECF is materialized when filing the declaration of results. The 2042 C Pro form includes new sections dedicated to taxpayers covered by a micro scheme in order to materialize their option for the ECF and the designation of the service provider in charge of carrying out the ECF:

Boxes 5 AC to 5 CC for micro-entrepreneurs who have opted for the withholding of income tax;
Boxes 5 AG to 5 CG for micro-BA (agricultural benefits);
Boxes 5 AX to 5 CX for professional BIC income (Industrial Benefits);
Boxes 5 AT to 5 CT for professional BNC income (Non-Commercial Benefits).

III – Real estate income update – Form n° 2044

1. Property income

Property income collected by an intermediary assimilated to collection by the owner: the property income to be declared for a year, during the given year, was made available to the taxpayer. Thus, when a taxpayer entrusts a third party with the task of collecting his property income on his behalf, the sums collected by the latter are deemed to be immediately made available to the owners, by the mere fact of their collection by the intermediary. The taxpayer may, however, provide proof that it was impossible to dispose of the sums. These are then not considered as revenue received and do not constitute gross taxable property income.

Occupancy allowances: the allowances received by the renter, in addition to the annual rent, constitute taxable land revenue whether they are received by compensation or collected by the renter.

Sales of buildings to be renovated: the works carried out by the seller in a contract for the sale of a building to be renovated constitutes an element of the acquisition price of the building. Therefore, the cost of this work cannot be deducted from the property income from the rental of the property thus acquired.

2. Land deficit

Increase in the ceiling for charging the deficit to overall income in the event of energy renovation: the property deficit resulting from deductible energy renovation work expenses for which the taxpayer proves the acceptance of an estimate from November 5th, 2022, and paid between January 1st ,2023, and December 31st, 2025, benefits from a limit on the total income of €21.400 instead of €10.700.
This increased ceiling applies when these expenses allow the property to move, no later than December 31st, 2025, from an energy classification E, F or G to an energy performance classification A, B, C or D.

Land deficits created within the framework of a family SCI (real-estate company structure) and fraud against the law: abuse of rights may be retained by the administration when the conclusion of a residential lease is only intended to generate land deficits attributable to other property income.
Constitutes in particular an abuse of right the device leading the spouses to deduct from their total income the land deficits resulting from works, within the framework of the transfer of movable property to a family SCI.

3. Assisted rental investments

Extension of the “Malraux” system: the components of the tax benefit system in favor of buildings located in an old, degraded district or in a so-called “NPNRU” district, which were to end on December 31st, 2022, are extended for one year by the finance law for 2023.

Tax reduction rate in the “Pinel” system: the extension of the “Pinel” system by the finance law for 2021 comes with a gradual reduction in the tax reduction rates in 2023 and 2024.
The rates applicable to investments made until December 31st, 2022, however, continue to apply in favor of certain properties, meeting the minimum quality requirements.

Regulatory clarifications concerning the “Loc’Avantages” scheme: the 2022 finance act replaced the “Cosse” deduction with a tax reduction for rental investment at affordable rent, known as “Loc’Avantages”, the terms of application of which have been specified by regulations. These details concern the methods for setting and the values of the monthly rent ceilings excluding charges to be respected, the tenant’s resource ceilings, the level of energy performance to be respected and the reporting obligations of taxpayers.

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Hiring of employees by bed and breakfast operators

FBA team — Mon, 17 Apr 2023 15:33:04 +0000

Bed and Breakfast operators often encounter great concerns when they need to hire staff due to their lack of knowledge when it comes to applicable social law regulations within this sector.

Here is an overview of the applicable legislation in terms of employment contracts, working hours and remuneration within this sector of activity. This is, nonetheless, a set of rules, feel free to reach out for more specific details.

I – Definition of the bed and breakfast activity

1. Definition

The activity of bed and breakfast (B&B) rental and its conditions of practice are defined by the French tourism code: Article L.324-3 specifies that “guest rooms are furnished rooms located in private homes to welcome tourists, in exchange for a fee, for one night or more, including services”.

In addition, article D.324-13 specifies that this activity consists of the “bundled supply of overnight stay and breakfast. It is limited to a maximum number of five rooms for a maximum capacity of fifteen people. The reception is done by the B&B host”.

The law insists on the consequences for the renter if the number of rooms or customers authorized is exceeded. In this case, the renter cannot practice its activity under the name “chambres d’hôtes” (known as bed and breakfast). The host is no longer subject to the obligation’s incumbent on any operator of bed and breakfast, particularly in tax and social matters, and becomes subject to the regulatory provisions relating to fire safety in establishments open to the public, applicable to any accommodation including sleeping areas for more than 15 people.

On this subject, you can consult our article titled: “The different categories of tourist accommodation and their regulations”.

1. Some consequences of this definition

Anyone who exercises the activity of B&B renter must have previously made a declaration to the municipality’s mayor of the place of residence. Failure to report is liable to a penal sanction.
The B&B activity carried out on a regular basis constitutes a commercial activity. Thus, the operator must register through “Guichet Unique” (which is competent for all companies located or having an activity in France), whatever the nature of their activity (commercial, artisanal, agricultural, independent) or their legal status (sole proprietorship, micro-enterprise, company, etc.).
In tax matters, the B&B activity comes under a hotel system, and not as furnished rentals.
This activity is listed by INSEE under the NAF-code 55.10 Z: Hotels and similar accommodation.
The applicable collective agreement is the national agreement for hotels, cafés and restaurants (HCR) from April 30^th,1997, extended by decree of December 3^rd, 1997.

II – The different types of employment contracts within the HCR sector

1. The apprenticeship contract

The essential characteristics of this contract: An apprentice is a young person (from 16 to 29) whose time is divided between the job, where he learns professional skills, and a training center (CFA) where he prepares a diploma.
An apprenticeship grant is given to companies that recruit apprentices preparing for a diploma or a professional qualification at a lower level than or equal to a high-school baccalaureate. This grant is paid monthly for the whole duration of the contract. The company benefits from an exemption from employee contributions specific to apprenticeship employment contracts within the private sector. This exemption of contributions is limited to 79% of the SMIC (minimum legal wage).
The criteria for hiring an apprentice: The apprenticeship supervisor must have 2 years of professional experience relevant to the qualification being prepared by the apprentice. If the apprenticeship supervisor has a diploma or professional title in the same area as that being prepared by the apprentice, he must provide proof of one year’s professional practice in relation to the qualification being prepared by the apprentice.
The duration of the apprenticeship and in-company training contract: The contract must have a limited time duration or be part of a permanent contract. In both cases, the apprenticeship period corresponds to the duration of the training cycle.
The training lasts between 6 months to 3 years, depending on the prepared diploma.
The apprentice’s salary: The apprentice benefits from a progressive legal minimum salary, which is based on the implementation of a scale which considers the age and of its progress through the training cycle.

1. The extra employment contract (CDD d’usage)– Specific to hiring extra staff in HCR

Definition: This is a fixed term only contract, which cannot exceed 60 days per quarter. Also known in French as an extra-staff hire contract, which is signed for the duration of a mission of a few hours, a day, or several consecutive days. The “extra” is an employee working on an occasional and irregular basis.
Conclusion of the contract: The employment contract of extra or “CDD of use” must be established in writing and include the precise definition of its grounds, if not, it is requalified an unlimited employment contract (CDI). A contract must be drawn up for each employee’s mission.

The hiring procedures are identical to any other short-term employment contracts.

1. The seasonal employment contract (CDD saisonnier)

Definition: The seasonal contract characterizes the execution of tasks repeated each year, at relatively fixed periods, according to the seasons.
The requirements of the seasonal contract: This employment contract does not necessarily specify the duration, but must mention:
- a minimum duration in the event of an uncertain term contract;
- that the contract is signed for the duration of the season.

In addition, the contract must be done in writing and must contain, among other things, the following mandatory information:

- the compensation.
- the position held.
- the duration of the trial period.

The duration of the seasonal contract: it must be concluded for a minimum period of one month and cannot exceed 9 months.
Working time: a seasonal worker cannot work more than 40 overtime hours per quarter.

1. Permanent contract (C.D.I.)

Definition of a CDI: It is a contract that does not include an end date. It can be terminated by a unilateral decision either from the employer (dismissal for personal or economic reasons, retirement, etc), or by the employee (resignation, retirement, etc.). The termination may also result from a mutual agreement between both parties, drawn up within the framework of the “conventional termination” scheme.

Duration of the trial period:
The HCR collective agreement sets a maximum trial period which cannot exceed:
- Executives: 4 months with the possibility of a renewal of 4 additional months
- Supervisors: 3 months with the possibility of a renewal of 3 additional months
- Other employees: 2 months with the possibility of a renewal of 2 additional months
- Employees level 1, step 1: 2 months without renewal
  
  But employer and employee can agree on a shorter period or no trial period if stated in the employment contract.

III – The particularities of the HCR sector

Working hours:

In the HCR collective agreement, companies can decide to apply the following working times:

- the legal working time = 35h per week or 151.67h per month or
- the conventional duration of 39h per week or 169h per month, where the extra 4 hours.
Overtime increases:

Overtime worked in addition to the legal working week (35 hours) In the HCR collective agreement entitles the employee to an increase of:

- 10% from the 36th to the 39th hour
- 20% from the 40th to the 43rd hour
- 50% beyond the 44th hour.

Maximum working hours: The maximum daily duration is:
- Cook: 11 hours
- Other staff: 11:30 hours
- Night guard and reception staff: 12 hours.

The maximum weekly duration is:
- Average over 12 weeks: 46 hours (daytime) 44 hours (nighttime)
- Absolute duration: 48 hours.

Minimum daily rest: 11 consecutive hours (12 hours for minors)
- Exceptions: 10 hours for seasonal workers.

Weekly rest: Employees under a permanent contract are entitled to two (consecutive or not) rest days a week. However, rest day is not necessarily on a Sunday according to the HCR collective agreement.

Night work: This is any work performed from 10pm. and 7am. Night work results toa compensatory rest equal to:
- 1% per hour worked during a night period.
- Or, if the employee is full-time and works at night all year round, 2 fixed days per year.

IV- Compensation

1. Minimum wages for employees according to the collective agreement’s job classification

The classification criteria are based on:

Skills and technicality
Training
Autonomy
Team building & Management.

The employee must fulfill all 4 criteria in order to qualify for the minimum classification.

Here are some examples of accepted classification by the agreement in the hospitality sector according to the job:

Cook: from level 1 step 3 to level 3 step 3 ;
Waiter: Level I, II or III – Echelon 1 to 3
Housekeeper: Level III – Echelon 1 to 3 or Level IV – Echelon 1 or 2
Night watchman: Level I, II or III – Echelon 1 to 3
Receptionist: Level I – Echelon 3, Level II or III – Echelon 1 to 3 or Level IV – Echelon 1 or 2

A minimum wage per classification category is issued (and often updated) by the collective agreement. The employer may not pay its employees less than this amount.

1. Benefits in kind

The HCR collective agreement sets specific rules for this sector of activity. Thus, an employer will in principle have the obligation to allocate a benefit in the form of a meal to its employees or, failing to do that, will have to compensate them.

The employee must therefore be fed by the employer or receive a compensatory allowance.

Thus, the employer owes a meal-benefit-in-kind food to its employees under two conditions:

The establishment is open to customers at mealtimes.
The employee is present at that time.

When all these requirements are met, the obligation applies to all employees, regardless of their qualification, salary level or working time.

Meal assessment: The amount of a benefit in kind comes on top of the salary which must be assessed:

Flat rate;
Or their real value.

URSSAF sets the value of all meal-benefits-in-kind each year in regard to the calculation of social security contributions. The value of the HCR benefit in kind is assessed at a guaranteed minimum per meal, equal to (January 1^st,2023):

€4.01 for a meal
€8.02 for two meals.

The HCR meal benefit in kind is a variable element of pay since it is allocated according to the number of days worked in a month. The contribution’s base formula includes the amount of the meal’s benefit. The amount of this benefit will also be considered for the calculation of the employee’s paid leave allowance.

1. Tips

The employer has the obligation to distribute the tips between the employees and to keep a registry showing the daily amounts of the tips distributed to each employee with their signatures.

Tips are subject to social contributions:

Based on their actual amount when they are centralized by the employer.
Or on a specific lump-sum basis for hotels, cafes, and restaurants staff.

However, the law applies an exemption from contributions, social security contributions and income tax on tips paid in 2022 and 2023 to employees who receive an income less or up to 1.6 time the legal minimum income (SMIC).

All the team of French Business Advice is at your disposal, so do not hesitate to contact us!

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Real estate: New reporting obligation

FBA team — Thu, 06 Apr 2023 15:42:16 +0000

From this year 2023, any owner of a built property for residential use must make a declaration of his real estate before June 30, 2023. This declaration concerns individuals but also companies (SCI, SARL, SAS, etc.) owning a house, an apartment, a parking lot, a shed, a cellar, a storeroom, etc.This declaration is accessible through the website impots.gouv.fr either on a personal area (“Votre espace particulier”) or on a professional area (“Votre espace professionnel”).

Here are the steps to follow:

On “Votre espace particulier“, you must select the “Biens immobiliers” tab to be able to access all the properties you personally own. You must then select “Déclaration d’occupation“.
On “Votre espace professionnel“, you must select “Démarches” then “Gérer mes biens immobiliers“. Once you have entered your company’s Siret number, all the properties owned by the company will appear. You must then select “Déclaration d’occupation“.

Explanatory notes in English, provided through the website, are available:

for the personal area by clicking on this link
for the professional by clicking on this link

If you would like French Business Advice to assist you with these procedures, please contact your usual accountant in our firm before April 30, 2023, so that he/she can provide you with a precise quotation and a list of the elements he/she will need to establish the aforesaid declaration.If French Business Advice takes charge of the management of this service, it will be invoiced for a property from :

100 € HT on the individual space
150 € HT on the professional space

All the team of French Business Advice is at your disposal, so do not hesitate to contact us!

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The tax and social regimes of professional furniture property rental (LMP)

FBA team — Wed, 30 Nov 2022 14:58:11 +0000

The status of professional furnished rental company (“LMP”) applies exclusively to lessors who rent out furnished accommodation on a professional basis.

We will see in this article the following points:

The conditions for being a professional furnished rental company;
Tax regimes;
Social regimes.

I – The conditions to become a professional furnished rental owner

Today two conditions are necessary to become LMP (professional furnished rental company):

The annual revenue from the furnished rental business by all members of the tax household must exceed €23,000;
These receipts must exceed the income of the tax household subject to income tax in the categories:
Salaries and wages within the meaning of article 79 of the General Tax Code (CGI),
Industrial and commercial profits (BIC) other than those derived from the furnished rental business,
Agricultural profits,
Non-commercial profits and income of the managers and partners mentioned in article 62 of the CGI.

When the two criteria above are met, the lessor automatically benefits from LMP status. On the contrary, if one of these conditions is not respected, he will obtain the LMNP status (non-professional furnished rental company).

II – Tax regimes

1. The micro scheme for furnished rentals

This regime applies when the income for the previous year or the penultimate year does not exceed €72,600 for a classic furnished rental or €176,200 for furnished tourist accommodation or guest rooms.

In this case, the taxpayer only declares his turnover on his annual income tax return and a reduction of 50% for conventional furnished premises (as well as rural lodgings not classified as “furnished for tourism”) or 71% for furnished tourist accommodation and guest rooms is automatically applied to the income derived from this rental. The minimum amount of the allowance is €305.

This flat-rate allowance represents all expenses. It is therefore impossible to deduct any expense from this income.

Income from these rentals is taxed under the category of industrial and commercial profits (BIC). The taxable BIC corresponds to the amount of income declared, minus the allowance (50% or 71%) automatically calculated by the administration. It is added to the other income of the tax household to be subject to income tax at the progressive scale.

1. The real regime of furnished rentals

The real regime applies when the income exceeds the limits indicated in the paragraph above or when the taxpayer opts for this regime in order to deduct the precise amount of the charges or amortize the value of real estate and furniture.

The actual tax regime presupposes keeping accounts. This must comply with the Commercial Code and the general chart of accounts. For this, it is often necessary to call on an accountant. It is mandatory to file a declaration of result N° 2031 (balance sheet and income statement) and its annexes with the tax authorities.

Deduction of charges

The furnished property owner can deduct all charges provided that:

they are incurred in the direct interest of the operation;
they correspond to an effective charge and are accompanied by sufficient supporting documents;
they are included in expenses for the year in which they were incurred.

Deduction of depreciation

The lessor of furnished property taxed according to a real regime can also deduct the depreciation from the purchase price of the goods (movable and immovable) on the condition that these are recorded as assets in his balance sheet.
But, fiscally, for furnished rentals, the deduction of depreciation is limited. The deductible share of depreciation cannot exceed the amount equal to the difference between the total rents and the other charges. This means that depreciation cannot generate a deficit.

Example:
Total rent acquired in the year: €30,000
Total deductible expenses: €20,000
Maximum depreciation allowed as deduction = €10,000
If the annual amount of depreciation is €13,000, only €10,000 can be deducted. The remainder of €3,000 will be deductible in subsequent years.

1. The tax advantages of the professional lessor (LMP) over the non-professional lessor (LMNP)

Deficits

The deficits withdrawn from the furnished rental activity exercised in a professional capacity are attributable to the overall income of the taxpayer without limitation of amount. If the overall income is insufficient, the overall deficit thus generated can be carried forward for 6 years.

On the other hand, for non-professional furnished rentals, losses can be carried over for 10 years exclusively on income from non-professional furnished rentals.

Capital gains

The capital gains of professional lessors benefit (provided that the activity has been carried out for at least five years) from a total exemption when the average of the income derived from the rental for the financial years closed during the two calendar years which precede the closing date of the year of realization of the capital gain does not exceed the threshold of €90,000 excluding tax (or a partial exemption if the receipts are between €90,000 excluding tax and €126,000 excluding tax).

If any of these conditions are not met, they are subject to the professional capital gains and losses regime.

Capital gains made by LMNP (non-professional lessors) on the sale of furnished residential premises are taxed as private capital gains.

Real estate wealth tax and succession

The real estate of LMPs being considered as professional, this allows them to be exempt from IFI (tax on real estate wealth).

In addition, in some cases, the transfer of assets is also accompanied by advantageous conditions within the framework of the status of professional furnished rental company. Do not hesitate to contact us for further details on this subject.

III – Social regime

Since January 1^st 2021, all professional furnished rental companies (LMP) are subject to social security contributions.

1. Long-term furnished rental

If the annual turnover in 2022 is between €23,000 and €72,600 and exceeds the tax household income subject to income tax in the other categories of earned income (wages and salaries, BIC, BA), it is possible to choose between the status of micro-entrepreneur or independent worker.
In this case, the flat-rate contributions are 22% of the amount of gross receipts, to which must be added the contribution to vocational training.
If the annual turnover in 2022 is greater than €72,600 and exceeds the income of the tax household subject to income tax in the other categories of activity income (wages and salaries, BIC, BA) only the status of worker independent is applicable.
In this case, to know the approximate amount of the contributions, we suggest that you refer to the article entitled “Social contributions for independent workers in 2021” on our website.

1. Short-term rental of furnished accommodation

If the annual turnover in 2022 is between €23,000 and €72,600, three social statuses are possible: general scheme, micro-entrepreneur or independent worker.
If the annual turnover in 2022 is greater than €72,600, only independent worker status is applicable.

1. Rental of furnished accommodation for short-term classified tourism

If the annual turnover in 2022 is between €23,000 and €72,600, three social statuses are possible: general scheme, micro-entrepreneur or independent worker.
If the annual turnover in 2022 is between €23,000 and €176,200, it is possible to choose between two social statuses: micro-entrepreneur or independent worker.
If the annual turnover in 2022 is greater than €176,200, only independent worker status remains possible.

1. Bed and breakfast rental

From €5,348 the income from this self-employed activity is professional in nature.

If the annual turnover in 2022 is between €5,348 and €176,200, it is possible to choose between two social statuses: micro-entrepreneur or independent worker.
If the annual turnover in 2022 is greater than €176,200, the only acceptable status is independent worker.

If you want to know more about the Non-professional furnished rental, see our article on this subject: Non-professional furnished rental after the reform of the social security financing law for 2021

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L’article The tax and social regimes of professional furniture property rental (LMP) est apparu en premier sur FBA - French Business Advice.

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Non-professional furnished rental

I-DEFINITION OF L.M.N.P:

II-TAX CHARACTERISTICS:

1. Exemption cases:

2. Taxation schemes:

3. Capital gains taxation:

4. V.A.T:

5. Various taxes:

III-SOCIAL REGIME:

1. Activity carried out as a sole proprietorship:

2. Activity carried out in a tax-transparent company:

3. Activity carried out as a company subject to corporation tax:

IV-THE SITUATION OF NON-RESIDENTS AT THE TAX LEVEL IN FRANCE:

1. Definition of L.M.N.P. for non-residents:

2. Social scheme for rental income:

3. Real estate capital gains tax regime:

News on revenue declarations for 2023

I – News concerning all income statements

1 – Online declaration

2 – Pre-filled information on the online declaration

3 – Declaration of real estate

II – Update concerning 2042 and 2042 C forms

1 – Wages (2042 form)

2 – Income from securities and movable capital

3 – Gains from the sale of transferable securities and corporate rights

4 – Income of the self-employed (BA, BNC, BIC) 2042C form

III – Real estate income update – N° 2044 form

IV – News on tax reductions and credits -N°2042 RICI

Overview of the principal information to be indicated on the 2042-IFI print (tax on real estate fortune)

I – 2042-IFI Form

1 – Page 1

2 – Page 2

II – Appendix 1: Properties assigned to professional activity

III – Appendix 2: Properties held directly (buildings and lands)

1 – Part 1 of Annex 2 (buildings and lands)

2 – Part 2 of Annex 2 (rural goods, timber and forests… partially exempt)

IV – Appendix 3: Properties held indirectly

V – Appendix 4: Liabilities and other deductions

VI – Appendix 5: Calculation of the elements of the ceiling

VII – Appendix 6: I.F.I. paid outside France

Tax on Real Estate Fortune (Impôt sur la Fortune Immobilière)

I – The definition of the tax household concerned by the I.F.I.

II – I.F.I. Bases

1 – Tax base

2 – Evaluation rules

3 – Liability deductible from the tax base

4 – Exempt assets

III – Calculation of I.F.I. tax

1 – Tax scale

2 – Tax reductions and caps

IV – Reporting obligations

The different categories of tourist accommodation and their regulations

I – Definition of accomodation categories

“Petits hotels”

“Très petits hotels”

“Chambres d’hôtes” (Gest rooms)

“Meublés de tourisme”

II – A brief overview of security and accessibility conditions

“Petits hotels”

Reduction of security obligations enjoyed by “Très petits hotels”

Accessibility for disabled people in hotels

“Chambres d’hôtes” (Guest rooms)

“Meublés de tourisme”

Property tax “Taxe foncière” and Housing tax “Taxe d’habitation”

I – “Taxe Foncière”: Property Tax

1. Taxable persons

2. Taxable real estates

Property tax on buildings:

Property tax on unbuilt estates:

3. Tax calculation

Property tax on buildings:

Property tax on unbuilt estates:

4. Payment date

5. Discounts and exemptions

Property tax on buildings:

Property tax on unbuilt estates (TFPNB):

II – “Taxe d’habitation sur les résidences secondaires” (Housing tax on secondary residences) THRS

1. Taxable persons

2. Taxable premises

**The tax advantages of the professional lessor (LMP) over the non-professional lessor (LMNP)**