Taxation of Rural Gites
Thursday 04 July 2013
The government have toughened the qualifying conditions on tax allowances for the letting of rural gites.
There are several landlord tax regimes in France, the most common of which is one or another of the micro regimes.
For unfurnished lettings it is the régime micro foncier and for furnished lettings it is the régime micro-entreprises.
Under these regimes owners are granted a fixed percentage cost allowance against their turnover to set against liability to income tax and social contributions.
Those who let rural gites would use the régime micro-entreprises, unless they had otherwise elected to be taxed on the basis of actual profit and loss under the régime reel.
Hitherto, the cost allowance for rural gites under the régime micro-entreprises has been 71%, the same as is available for landlords of chambres d'hôtes.
All other forms of furnished accommodation are entitled to a lower tax allowance of 50% against turnover as a micro-entreprise.
However, last year, in a parliamentary response, the government surprisingly announced that in order to be eligible for the higher allowance the gite would need to be registered with the Gîtes de France.
Despite the reputation and success this body has achieved since its creation in the 1950s (over 50,000 structures currently affiliated), it is not a government agency, only a privately owned guest house network to which owners can affiliate, subject to meeting the eligibility criteria and standards.
It has also previously been successfully sued in the French courts for abuse of its dominant position in the market. Gîtes de France controls around 70% of the market for guest house accommodation, with the other main networks, such as Clévacances et Accueil Paysan, each with only a modest share.
So when the government stated all owners would need to be affiliated to the Gîtes de France in order to obtain the increased tax allowance, it raised some eyebrows in the industry.
Nevertheless, despite the absence of any law being passed, the government have now incorporated this requirement in the tax regulations, as follows:
Pour être qualifiés de gîtes ruraux, les locaux meublés doivent être classés « Gîtes de France ». Cette qualification ne résulte pas d'un classement réglementaire mais est attribuée de manière autonome par l'association le Relais départemental des « Gîtes de France ».
It is a requirement that is of dubious legal validity, which may only be tested should it be challenged in the courts.
Articles 50-0 and 1407 of the Code général des impôts merely states that, amongst those properties benefiting from the higher allowance are ‘les locaux mis en location à titre de gîte rural’.
No definition of 'gîte rural' is given in the legisation. Indeed, even on the government website it states, 'Aucune définition légale ne précise la notion de gîte rural'.
Nevertheless, if you do not have this label for your gite(s) then, as a micro, you would only be entitled to a cost allowance of 50%.
In addition, with the reduced allowance, the maximum turnover permitted under the micro regime also reduces from €81,500 to €31,600.
There is an annual sum payable to the organisation of several hundred euros.