Seasonal rentals in France: everything the seasonal renter needs to know in order to maximize the profitability of his rental investment.
In the following lines, you will find a brief summary of the tax regimes and schemes applicable to seasonal rentals in France. You will equally find the novelties in social matters applicable in France since 1 January 2017.
From a tax perspective:
Revenues from the furnished rentals are commercial in nature and fall under the category of Industrial and Commercial Profits.
The profit is taxed according to the scale in force for French residents (+ CSG CRDS of 15.5%). Non-residents are subject to a minimum tax rate of 20% (+ social contributions of 15.5%).
Moreover, if the hirer provides in addition to the rental of para-hotel services, he will have to charge VAT. However, there is a VAT deductible scheme if the para-hotel hirer carries less than € 82,800 in revenue per year.
At the social level
Since January 1, 2017, furnished renters making more than 23,000 € in revenue per year are treated as social professionals and are required to pay contributions.
How are these contributions calculated?
The contribution rate and the basis of calculation depend on the renter’s tax system:
- The landlord is subject to the “micro BIC” scheme: his social contributions will represent 22.7% of his income;
- The lessor is subject to the “real BIC” plan: his social contributions will represent on average 45% of his net result.
Mr. X receives € 25,000 in seasonal rental income. His rents being less than 33.100 € per year, he decides to opt for the “micro” scheme. Its social charges will represent 22.7% x 25.000 € = 5.675 €.
The following year, Mr. X decided to opt for the real regime:
Annual Revenue: 25.000 €
Annual deductible expenses: 16.000 €
The basis for calculating social contributions will be € 9,000, its social security contributions should average € 4,050.
If the result of the rental activity is zero
The renter may find himself in the situation where his rental income will exceed the threshold of 23,000 € but because of the importance of his expenses, his result will be zero. If he is affiliated to the IHR, he will still have to pay the minimum contributions. According to the website of the RSI, these contributions amount to 1,198 € in 2017.
What about non-resident tenants?
Several cases can be distinguished:
- The rented person resides and contributes in a member country of the European Union, Switzerland, Iceland, Liechtenstein, Norway: if the non-resident is already contributing to a social security scheme in his country of residence, He may be exempted from making a second contribution to France under Regulation (EC) No 883/2004.
- The rented person lives and contributes to a country with which France has signed a bilateral social security agreement: the purpose of these agreements is to determine the applicable social legislation in order to avoid double affiliation. Here is the list of countries that have signed an agreement with France: Algeria, Andorra, Argentina, Benin, Bosnia, Cameroon, Canada, Cape Verde, Chile, Congo, Cote d’Ivoire, Croatia, Guernsey, India, Israel, Japan, Jersey, Macedonia, Madagascar, Mali, Mauritania, Monaco, Montenegro, Niger, Philippines, Senegal, Serbia, Togo, Tunisia, Turkey and New Caledonia And French Polynesia.
- The landlord resides in a country not covered by one of these agreements and / or does not yet contribute to a Social Security scheme in his country of residence: if the annual amount of his seasonal rentals in France exceeds € 23,000, Will have to pay social contributions.
For more information, please feel free to contact us :
Cabinet Roche & Cie
Non-resident real estate accountant