French Furnished Lettings Under the Cosh November 2024
French Furnished Lettings Under the Cosh November 2024
New Legislation “Loi Le Meur”
A new law regulating furnished lettings was voted on 7 November and will apply to 2025 rental income onwards.
There were already various “stabs” at altering the tax regimes for furnished lets at the start of 2024. These changes are mainly aimed at releasing the housing pressures for worst-affected areas.
The 2024 budget introduced changes due to apply to 2023 income but, as a measure of tolerance, this was pushed back to 2024 income. Note this tolerance was cancelled by the Supreme Court so it is unlikely to apply to 2024 income, but we await confirmation on this point.
As a reminder, the Micro BIC turnover thresholds (by reference to either of the preceding two years) and set deductions apply as follows for 2023 and potentially 2024 income:
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For properties classed as Meublé de Tourisme (“MTC”) and Chambres d’Hôtes, the turnover threshold is €188,700 and set deduction is 71%. An extra 21% deduction (so 92% in total) may apply if the property is situated in specific areas known as “Zones non-tendues” (low housing pressure area) and the turnover in the previous year is below €15,000. The extra 21% abatement was not applicable pre-2023.
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For non-classified Meublés de Tourisme, the Micro BIC turnover threshold is €15,000, by reference to either of the two preceding years, with a set deduction of 30%. However, the tolerance referred to above, applicable only to 2023 income, maintained the threshold at €77,700 and the 50% abatement. The position for 2024 income remains unconfirmed.
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Finally, for all other furnished rentals, for instance on an annual lease, the turnover threshold is €77,700 with a set deduction of 50%.
From 2025 income, the “Loi Le Meur”, aligns the Micro BIC conditions applicable to Chambres d’Hôtes, “MTC” properties and all other furnished lets referred to in 3 above, with a turnover threshold of €77,700 and a set abatement of 50%. The extra 21% abatement is cancelled.
The Micro BIC conditions for non-classified Meublé de Tourisme will remain unchanged with a €15,000 turnover limit and a 30% set abatement.
2025 Budget Proposals
However, the 2025 budget also contains measures amending the various regimes. In essence this would only affect the MTC properties, which could end up with a €30,000 threshold limit and a 30% abatement.
It would also introduce a potential extra 41% deduction depending on where the property is situated and as long as the turnover in the previous year does not exceed €50,000.
In Summary
The uphaul to the furnished lettings tax regimes is still ongoing. It has been a messy process so far and we can only hope that the 2025 Budget will account for the measures voted through the Loi Le Meur rather than introduce another layer of confusion for landlords.
Since the threshold limit is applied by reference to the two preceding years, the situation needs to be reviewed on a case-by-case basis, but we recommend this is done once the 2025 Budget is voted.
Applying the itemised regime may not necessarily be detrimental but it does necessitate the preparation and filing of French accounts and a strict record-keeping policy.
Important Items to Review and further Considerations
Furnished letting activities must be registered and attributed a business reference number known as SIRET.
Check your property Deed to ensure that there is no “Clause bourgeoise” which disallows the short-term letting of the property to tourists.
Ensure your rentals activity has been reported to the local Town Hall (change of use) and there are no restrictions to do so. Note that failing to register a change of use may lead to hefty penalties (up to €100,000 instead of €50,000 as increased by the Loi Le Meur).
Remember to collect the local taxe de séjour from your guests to pay this over to the local Town Hall.
Note that and energy performance diagnostic is mandatory for all let properties.
For those letting on an annual basis or longer, verify that you have an adequate lease in place (preferably a written lease).
Depending on the Town’s policy the activity may be liable to the local annual business tax know as CET and which is managed through the business online portal Espace Professionnel. It is usually payable around October.
Furnished lets with a turnover over €23,000 and which represents over 50% of the household’s total income fall under the “professional landlord” remit which leads to social security considerations.
Should you have any queries in relation to your French tax affairs please email French.tax@bdo.gg