There are a number of different tax regimes for rental profits and the basis on which you will be taxed (including social contributions) will depend on:
i. Furnished or Unfurnished - The major distinction depending on whether you let furnished accommodation or an unfurnished property.
If you let both, then each will taxed on a separate basis, using the applicable tax regime for each type of letting.
ii. Turnover - A second distinction is based on your turnover, with smaller landlords given some choice as to the basis on which they can be taxed.
iii. Business Registered - Whether or not you are business registered (for furnished accommodation) will also affect the nature of your tax treatment.
iv. Classed or Unclassed - Certain types of property given classed status obtain more favourable tax treatment.
v. Resident or Non-Resident - The tax basis will depend on whether you are resident in France.
In the following table we summarise the basic personal tax regimes.
We do not consider the system of company taxation of property profits as this is unlikely to be advantageous unless you have substantial rental or other earnings.
However, it is possible to establish a fiscally transparent French property company, called a Société Civile Immobilière(SCI), and adopt the system of personal taxation outlined below, for use with unfurnished accommodation.
The basic differences in the various income tax regimes are as follows:
The higher 'Micro BIC' figures for furnished accommodation apply if you run a chambre d'hôte, or an accredited gîte rural/meublé de tourisme.
Table: Tax Regimes - 2018 (2017 income)
|Tax Regime:||Micro BIC||Regime Réel|
|Tax Allowance:||50%/71%||Eligible Costs|
|Tax Regime:||Micro Foncier||Regime Réel|
|Tax Allowance:||30%||Eligible Costs|
Separately from these tax regimes there are social charges/social security contributions, which are generally more onerous than the income tax system! These charges may be applied on turnover or profits, depending on your tax status.
We describe each tax regime in further detail in the following pages.
Next: Furnished Lettings