Furnished rentals and property tax for companies

21 January 2020

Let’s explain more about the rules of furnished rental in France.

In contrast to unfurnished rentals, the activity of furnished rentals constitutes a commercial activity by nature for tax purposes.

As such, an owner-lessor operating a furnished professional (LMP) or non-professional (LMNP) rental business is likely to pay the Cotisation Foncière des Entreprises (CFE), a tax that replaces the business tax.

The CFE is due for the entire calendar year as soon as the activity is carried out on 1 January. It must be paid by electronic payment or deduction before 15 December of each year.

Furnished rental : Can I benefit from an exemption from CFE?

You can benefit from a general CFE exemption in the following cases:

  • In case of turnover or revenue less than or equal to 5,000 €;
  • In case of occasional rental of your personal dwelling (main or secondary);
  • In the case of renting or subletting a part of your main residence at a reasonable price, to a tenant or sub-tenant who makes it his main residence;

Other specific exemptions exist, unless the local authorities where the furnished accommodation is located decide otherwise:

  • In the case of renting all or part of your personal dwelling (main or secondary) as a furnished holiday home;
  • In case of renting or subletting of all or part of your personal dwelling (main or secondary residence) if you are neither in the cases of general exemption nor in furnished accommodation;

Furnished rental : Do I have to pay the CFE and the housing tax?

In accordance with articles 1407-I.1° ET 1408-I of the General Tax Code, the housing tax is due by any person who, for whatever reason, has the use or enjoyment of furnished premises allocated to housing.
Article 1407-II of the General Tax Code provides that premises liable to the business property tax (CFE) are not subject to housing tax when they are not part of the taxpayer’s personal dwelling.

The personal dwelling is defined as any premises occupied by the taxpayer or available to him at any time during the year.

According to established case law, owners who provide furnished accommodation for seasonal rental are liable to pay housing tax if they dispose of it outside the rental periods (CE,28 February 1938, Dame Ruelle, CE n°369073 of 2 July 2014, TA Grenoble n°1403797 of 14/12/2015 and n°1401599 of 14/09/2015).

Thus, owners who reserve the possibility of disposing of furnished property outside the rental periods may be liable for the housing tax relating to the premises, even if they are also liable for the business property tax (EC, 20 February 1991, No 72338).

For example: Mr. X reserves the right to dispose of his apartment for personal use from January 1 to March 1, 2019, with a search for seasonal tenants for the period from March 2, 2019 to December 31, 2019.

In this specific case, Mr. X may be liable for the housing tax, but also for the CFE.

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