Advice Furnished Taxes

Taxation of the Professional Furnished Rental

The regulated classification of seasonal rentals remains marginal. However, it has great financial and fiscal virtues. The goal of this article is to make a simplified point of the LMP tax system and to convince you to be classified.

• • • • • • • • •

The article discusses the tax situation of the Professional Furnished Renter (PFR)classified and unclassified.

If you opt for a seasonal rental, in any case, you are required to declare your income.

To be considered as a Professional Furnished Renter, and no longer as a Non Professional Furnished Renter (NPFR), two conditions are necessary:

Your annual rent is greater than €23,000 per fiscal household.

AND your Turnover generated by this rental is greater than all your other income.

The “Furnished Tourist Accommodation” is a typology of official classification of an PFR (or NPFR), in the same way as the Bed and Breakfast, in parallel with the PFR (or NPFR) not classified.

The Company form is necessarily commercial.

 INCOME TAX

CORPORATE INCOME TAX

SARL

EURL

SAS/SASU

SNC

SOLE PROPRIETORSHIP

In SARL – EURL, you have the advantage of limiting the loss to the amounts of the contributions.

In SA, the regime is heavy unless you have many locations and collaborators to manage.

In SAS – SASU, it is a simple contract between partners.

In terms of social security charges, the general scheme for employees is heavier than the RSI.

The subject has been settled since the regulation of management by the Social Security (between 25 and 30% of social security contributions).

1. PFR Taxation Regimes

MICRO ENTREPRISE

MICRO BIC

Simplified real regime

Normal reel regime

Classified Furnished

Annual turnover excl. taxes

< 170 000 € HT

Annual Turnover excl. taxes

entre 170 000 €

et 789 000 €

Annual Turnover  excl. taxes

> 789 000 € HT

Non Classified

Annual Turnover excl. taxes

< 70 000 € HT

Annual Turnover excl. taxes

entre 70 000 €

et 238 000 €

Annual Turnover excl. taxes

> 238 000 € HT

Micro-BIC taxation regime

You are therefore almost always concerned as soon as you have opted for an official ranking.

You are automatically covered by the flat-rate scheme if your income does not exceed €170,000 per year as a Furnished Tourist Accommodation.

They do not exceed 70 000 € if you are not classified.

The Micro BIC regime is the most readable and most suitable. Its operation is particularly simple.

It requires no accounting skills, no help to fill in the income tax return.

The scheme is very suitable for individuals.

You report the amount of income on the complementary income tax return n°2042 C pro (line 5 NKP to 5 MP).

On these receipts, you benefit from a flat-rate allowance of 71%.

Consequently, only 29% of your income is added back to your total income for the year and then taxed.

Real Plan

As soon as the ceiling as Furnished is crossed up to 170 000 €, or without classification, up to 70 000 €, the real regime is imposed.

You can opt for this regime if your charges exceed 71%.

You are then taxed on the income tax scale on 50% of income (automatic 50% allowance for expenses).

Thus, on these receipts, only 50% of your rents and charges are reintegrated into your total income for the year and then taxed.

You deduct the expenses in reality:

– Ownership and management charges (depreciation, financial expenses, loan interest, major repairs), in proportion to the rental period.

– The expenses related to the rental (advertising costs for example) in full.

You report the amount of the profits on the professional declaration n°2031-SD.

You deduct all expenses for their exact amount on the professional declaration n° 2031-SD.

Under the simplified tax regime (RSI), known as “real simplified”, your tax is based on your actual profit.

You benefit from reduced accounting and reporting obligations and the application of VAT.

It concerns companies subject to Income Tax or Corporate Income Tax.

Within the framework of the normal real regime, it is the ordinary law regime that applies, governed by the Corporate Income Tax (CIT).

It can happen that a rental company strategically decides to opt for the real plan even though it is lucky enough to remain within the Micro Bic framework.

 If he is not classified and his annual income does not exceed €70,000, he can apply for the real plan as an option if his deductible expenses and charges are greater than 50% of his income.

 If it is classified and its annual revenues do not exceed €170,000, it may apply for the optional plan if its deductible costs and expenses are greater than 71% of its revenues.

To opt for the actual scheme, a letter on plain paper to your tax department is sufficient.

The letter must be sent before February 1 of the first year in which you wish to start the actual plan.

It lasts for a minimum of two years, and is then tacitly renewed, unless you give notice of termination.

Case Study

I rent a Furnished Tourist Apartment in Fort-de-France.

I receive 10 000 € of income for the year 2019.

I hesitate to classify it and make a quick calculation.

My taxation :

On (30 000 € x 50%) = 15 000 € will be reintegrated into my income for the year 2019 if it is an undeclared seasonal rental: tax rate 11%.

On (30 000 € x 29%) = 8 700 € will be reintegrated into my income for the year 2019 if it is a Furnished tourist accommodation classified: no tax to pay.

On these results, you apply the allowance corresponding to the income tax bracket.

I encourage you to declare yourself and be classified in order to benefit fully from this favorable regime.

2. PFR Tax Situations

The declaration of activity is unavoidable for PFRs (classified or not) at the Centre de Formalités des Entreprises.

LODEOM

Whatever the application regime, the application of the new overseas LODEOM exemption is effective.

The exemption benefiting employers located in the French overseas territories (except Mayotte) has been completely modified in 2019.

In Guadeloupe, French Guiana, Martinique and Reunion Island, 3 so-called “enhanced competitiveness” scales are now applicable depending on the company’s situation.

Corporate Property Tax (CPT) and Housing Tax.

As a general rule, all Furnished Furniture, carrying out a commercial activity, are subject to the CPT.

Persons who rent furnished premises included in their personal dwelling and classified under the conditions provided for in Article L. 324-1 of the Tourism Code are exempt from CPT by virtue of b of 3° of Article 1459 of the CGI.

Seasonal rentals are nevertheless subject to the CPT as long as they are not a main dwelling.

The renter in Furnished taxable to the CPT is not liable for the housing tax.

Property tax abatement

The exemption applies in the Rural Revitalization Zones (ZRR) mentioned in article 1465 A of the CGI.

List of RRAs in 2019.

Tourist Tax

Bercy had well planned an increase in the tourist tax for the Furnished not classified.

This forecast will take effect as of January 1, 2019, and was voted on by the Finance Committee at the General Meeting.

The amendment considerably increases the tourist tax for unclassified accommodation.

If you are classified, you benefit and make your customers benefit from a fixed tourist tax.

The rates of the visitor’s tax are between €0.20 and €4 per night per person.

If you are not classified, since 01/01/19, the tax is paid as a percentage of the rate per night but remains capped at the lower of the two following rates:

– The highest rate adopted by the community.

– The ceiling rate applicable to the 4-star tourism category (i.e. €2.30 in 2019).

In all cases, the tourist tax is paid to your commune in Martinique by the CACEM.

Tax Credit and Reduction

Structures submitted to income tax

Structures submitted to corporate tax

Tax reduction 25% of the investment cost

minus received public aid

Tax credit 35% of the investment cost

minus received public aid

State aid

The recommendation is to start by exhausting the tax credit or tax reduction (above) and then apply to the State for its investment aid.

For investments below 200 000 €, you can call upon the Territorial Community of Martinique (CTM).

For investments above 200 000 €, you can apply to the European Development Fund (ERDF).

In conditions of eligibility? To be classified in order to benefit from the subsidies and to have a “favorable tourist framework”.

Deficits

Unlike the Non-Professional Furniture Renter (NPFR), the Professional Furniture Renter (PFR) can charge the deficits recorded on the total income of the tax household.

If the overall income is not sufficient, you carry it over to the overall income of the following six years.

The allocation is allowed provided that the deficit does not come from depreciation, which is not tax-deductible.

Capital gains on disposal

Capital gains on disposals are exempt if the activity has been carried on for more than 5 years.

If revenues are less than €90,000: total exemption.

If revenues are less than €126,000: partial exemption.

Invested assets may be exempt from real estate wealth tax (IFI).

In addition to the above-mentioned condition, the professional lessor proves a professional activity whose income is higher than the other incomes of the tax household.

Tax exemption

It must be new.

For the furniture aspect, invoices must be provided to be deducted.

For the real estate aspect, you provide proof of expenses for major renovations.

It is preferable to make an appointment with the administration or a consulting firm to qualify the heavy renovations.

Filing a building permit to modify the structure makes the process easier.

VAT

If your revenue exceeds the threshold of €82,800 and you provide at least three para-hospitality services:

breakfast

daily cleaning of the premises

supply of linen

the reception of the customers,

you charge VAT and deduct it from your purchases and expenses (to avoid unfair competition with hoteliers).

Integrating it into the financing plan, upstream, is a winning strategy for tax optimization but above all for cash flow.

For a selected VAT around 8.50% (accommodation services being taxed at 2.10%), the VAT on the purchase or construction cost of the building, the real estate, can be fully recovered.

Generally, the operator obtains a VAT refund from the tax authorities.

The shell, on a copy of the invoices, is today eligible for tax exemption.

If the furniture has been acquired for 3 years, you can still recover 2/5 of it, according to the 20th real estate rule.

Prefer the simplified system of the 2 installments (July and December) in case of a small structure.

The Must’s

– You cannot classify a SCI as a furnished tourist accommodation, a form of company in its own right subject to the tax.

You create a parallel commercial company that pays rent to the SCI.

These rents must be fixed, because the administration would consider the SCI as having a commercial activity.

– In the context of a high level of depreciation and investments (especially at start-up), it is often more interesting to opt for the simplified real regime.

At cruising speed, the Micro BIC is often more appreciable.

Laisser un commentaire