Guide to Micro-Entrepreneur Business in France
- What is a Micro-Entrepreneur?
- Business Registration
- Social Security
- Income Tax
- Business Rates
- Status of Spouse
- Should You Elect for Micro-Entreprise Status?
- Payment of Taxes and Social Insurance
- Business Accounting
- Running a Chambre d'Hôte
- Multiple Business Activities
- Professional Insurance
- Second-Hand Sales
11. Running a Chambre d'Hote
There has historically been uncertainty surrounding the legal and fiscal status of chambre d’hôte owners.
The frontier area that they occupy, neither traditional furnished rental accommodation nor hotel, means that they have always been in no man's land between these two statutes.
The legal uncertainty has been accompanied by political controversy, prompted by a series of legal actions brought by the Union des Métiers et des Industries Hôtelières (UMIH), against chambre d’hôte owners, many of whom they claim are flouting the regulations and effectively operating as hotels.
The fact that it is sometimes carried on as an ancillary activity also causes difficulties in defining on what basis the revenues should be taxed.
In recent years there has been some attempt at clearer delineation.
i. What is a Chambre d'Hote'?
The legal definition of a chambre d’hôte is accommodation that comprises furnished rooms in the owner's home to accommodate tourists on a payment basis, for one or several nights, accompanied by services.
The activity consists of the provision of overnight accommodation and breakfast.
It must be limited to a maximum of 5 bedrooms, with a capacity to accommodate no more than 15 persons.
This definition leaves unstated the position of those who own gite accommodation within their chambre d’hôte complex.
In a parliamentary response to this issue in the past the government have stated that the two are treated separately for tax and regulatory purposes.
There still remains a lack of clarity on the distinction with hotel operations, for where at least three services are provided on an habitual basis - breakfast, cleaning, provision of linen and/or reception - then it is possible for the chambre d’hôte to be classified as an hotel. An entirely different regulatory and tax regime operates for hotels.
The law states that only if these services are provided on an 'ancillary' basis would they be considered a chambre d’hôte. In practice, as such services are central to the chambre d’hôte offer, it is difficult to distinguish on this basis.
Perhaps a more pertinent distinction is that a chambre d’hôte owner also lives on the premises, but this characteristic is not used in statute.
It is possible for the owner to offer a lunch/evening meal to their guests, when the offer is then called table d'hôtes. No external diners are permitted and there are licencing requirements concerning the sale of alcohol with the meal.
Some readers may also be interested in reading our newsletter article Chambre d'hote or Hotel?
ii. Business Declaration
The law states that if the owner undertakes the activity on an habitual basis they are obliged to register with the Registre du Commerce et des Sociétés (RCS), with registration to the RCS carried out through the local Chambre de Commerce.
If the activity is supplementary to a main commercial activity currently being undertaken, and registered through the RCS, no registration requirement arises.
It should also be noted that all chambre d’hôte owners, irrespective of business registration, are obliged to make a formal declaration of their activity to the local mairie, a process that is separate from business registration.
The purpose of the registration is not to control the operation of your premises, but to provide the council with information on the number of properties and rooms in the commune available for tourists.
It is also used to ensure the collection of the tourist tax - taxe de séjour - in those communes where the tax is collected.
The declaration you make must state the identity and address of the owner, the address of the property, the number of rooms, the number of bed-spaces and the (estimated) letting periods.
Any subsequent change in this information should also be notified to the council.
There is a specific form (Cerfa N° 14004.01) for you to complete, which you can obtain from your mairie. You would be best advised to send the information by recorded delivery or deliver by hand, in order that you can obtain a formal acknowledgement of receipt of the information.
There is a fine of around €500 if you fail to declare, although the authorities are not particularly draconian in their enforcement procedures.
Farmers who run a chambre d’hôte as a secondary activity register through the local Chambre d'agricuture.
We set out the visa requirements and process for those seeking to run a gite or chambre d'hote in our news article Visas for Running a Gite.
If you are encountering difficulties in business registration as a micro-entreprise we can undertake the process of registration for you for a modest charge. You can contact us at Micro-Business-Registration.
iii. Social Security Obligations
All chambre d’hôte owners are liable for social security contributions, but the basis on which they are liable depends on their status and income.
Those whose net income (revenu imposable) from the activity is at least €5,348 (2022) are required to register as a business, when you will then pay the full range of social security contributions, around 40% of net income, assuming they adopt the tax status of regime réel (profit and loss accounting). A minimum amount is payable of €1,145 (2022).
If you do not adopt the tax status of regime réel, but instead use micro-BIC (standard cost allowance) you will be liable for social security contributions after deduction of a 71% cost allowance. Thus, assuming gross income of €18,500 in the year, this leaves net taxable income of €5,365 (€18,500 x 29%), which would mean you would be required to business register.
Those business registered as an micro-entrepreneur pay social security contributions at the rate of 12.30% (2023) on turnover, whatever the level of their profit, although in the first year an allowance of €5,348 applies (2022). Thus, on income in the first year of €20,000 the social security contributions payable would be €1,875 /(€20,000-€5,348) x 12.8%) and €2,560 in the second year on the same income.
Otherwise, below the annual figure of €5,348, there is no obligation to register as a business and pay business social security contributions.
In such circumstances, an owner with no business registration would then be liable for the social charges CSG/CRDS at the rate of 17.2% on net taxable income. That is to say, after the standard 71% allowance or actual costs, however you decide to be taxed.
iv. Income Tax
Profits from chambre d’hôte revenues are taxed in the category of Bénéfices Industriels et Commerciaux (BIC), according to the particular tax status of the business.
Those registered as a micro-entrepreneur are granted a 71% fixed cost allowance against revenue, after which income tax would be payable, subject to total revenues.
Alternatively, it is possible to opt for a fixed income tax charge, called the versement libératoire de l'impôt sur le revenu, which you can read about in other pages in this guide.
Those who opted for the régime réel form of imposition would be taxed on their net profits after deduction of eligible costs. Adopting profit and loss accounting is not without potential benefits, but is likely to require that you engage a professional accountant.
For a more detailed consideration of the taxation of furnished accommodation refer to our Guide to the Taxation of Furnished Accommodation.
A chambre d’hôte with a turnover of under €91,900 is not obliged to charge VAT. This threshold can be exceeded in a single year to €101,000 without imposing a VAT requirement. (2023)
Since 2018 this threshold is now distinct from that required to maintain micro-entrepreneur tax status. See our page on VAT elsewhere in this guide.
Over this turnover, or by election (subject to tax status), they are obliged to charge VAT, at the rate of 10%, on condition that at least three services are provided.
The courts have ruled that in order to be registered for VAT the chambre d’hôte activity must be undertaken on a regular basis and the owner must have the means of offering the services stated.
vi. Local Rates
Chambre d’hôte and gîte (meublé de tourisme) owners are exempt from business rates, the cotisation foncière des entreprises (CFE), provided the rental accommodation is part of your home, whether principal or secondary residence, and subject to no decision to the contrary by the local council. That is to say, statute grants the exemption, but local councils have the power to remove it.
Where the rental accommodation is not part of your home, whether primary or secondary residence, no automatic exemption exists. Any exemption that may be accorded must, in such circumstances, be at the express decision of the local council for all similar properties in the commune.
However, you will normally be liable for the domestic rates - the taxe d'habitation and the taxe fonciere. In 2022 some tax offices appear to be adopting a new policy on liability to the 'taxe d'habitation', as we set out in our news article Gite Owners and the Taxe d'Habitation.
Nevertheless, within rural development areas (Zones de Revitalisation Rurale - ZRR) chambres d'hôtes (and classed gîtes) can obtain exemption from the taxe d'habitation and the taxe fonciere, for that part of the accommodation that is used exclusively for letting purposes, provided the property is either part of your principle residence or second home. Ask your mairie if you live in an ZRR.
You need to make application by submitting each year Form 1205-GD-SD and Form 6671-D-SD to your local tax office before 31 Dec.
You can read more at Taxes on Rental Properties.
vii. TV Licence
The TV licence (Contribution à l'audiovisuel public) has been abolished from 2022.
viii. Tourist Tax
A tourist tax called the taxe de séjour is collected in around 3,000 communes in France.
The tax is ostensibly paid by the visitors who stay overnight, for the period of their stay, by adding it to the accommodation charge. The tax is then paid to the council.
However, it is not unusually the case that a council decides to simply levy an annual charge on the owner of the premises, based on the size of the establishment and the letting period.
A discount is applied from the base calculation based on duration of opening period.
The amount charged each year for a modest chambre d’hôte is no more than a few hundred euros.
ix. Guest Records
It is obligatory to keep a record of all foreign guests. It is called a 'fiche de police'.
The records need to state:
- Domicile habituel (Permanent address)
- Nationalité (Nationality)
- Numéro de téléphone mobile (Mobile phone number)
- Adresse électronique (E-mail address)
- Date d'arrivée au sein de l'établissement (Date of arrival)
- Date de départ prévue (Intended date of departure) :
- Date et Signature
x. Market Research
Finally, beyond the legal and tax considerations, a word of caution needs to be given.
It is important that you undertake a thorough piece of market research, and that you do not overstretch yourselves, either physically or financially.
Many prospective expatriates to France are under the mistaken belief that running a chambre d’hôte is easy and profitable. This is far from a universal truth.
xi. Capital Gains Tax
You need to consider how you will deal with capital gains tax on the sale of the property as only that part of the property personally occupied by you will be eligible for principal residence relief. We considered the issue in our France Insider article Chambres d'Hotes and Capital Gains Tax.
Next: Multiple Businesss Activities
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