Article published February 23, 2024, updated March 23, 2024
There is some good news for gîte owners as tax officials say harsh recent taxation changes for furnished holiday letting do not have to apply to revenues from 2023 to be declared this spring.
However, the changes do – at least until further notice – apply as of income starting from January 1, 2024 which will be declared next year.
The recent changes were adopted in France’s finance law for 2024 at the end of last year. They came after a Senate amendment was, according to several French media, reportedly left uncontested by accident in the final version of the finance law.
Adding to confusion, French MPs recently voted through a proposed law, originally put forward in spring last year, that could change the rules on furnished holiday letting yet again, potentially with application to income starting from January 1, 2024. It has yet to go to the Senate.
This proposed law is aimed at discouraging an ‘excess’ of holiday letting at a time when housing is becoming hard to access for locals in some tourist areas. It was put forward by MPs for popular Atlantic coast areas.
All of this will only affect people who let under the simplified micro-Bic tax system, not those who use the more complex réel system.
Also unaffected are people who let out furnished property long-term as someone’s home, unfurnished rental, and chambres d’hôtes.
The micro-Bic does away with the need to routinely show expense bills or use an accountant and is a popular alternative to the réel system, which requires both.
The changes have been described as ‘Airbnb’ laws but Gîtes de France points out that they also affect traditional gîte lets.
It has called the measures unfair and a blow to the tourist industry.
Tax lawyer Paul Duvaux from Paris told The Connexion the situation is “a mess” and it would be much simpler if no changes could apply before income received from January 1, 2025.
We will break down further what this all means.
The ‘old’ rules
The rules before the 2024 finance law are as follows, with differences depending on whether your holiday let is ‘classified’ with a star rating or not.
- Unclassified: Micro-Bic rules apply within a ceiling of €77,700 and there is a 50% fixed allowance for expenses
- Classified: Micro-Bic applies within a ceiling of €188,700 and there is a 71% expenses allowance
A clarification published in the Bulletin officiel des finances publiques – Impôts states that, contrary to what was feared, when people declare their 2023 letting income in April-June 2024, these ‘old’ rules will still apply if the taxpayer prefers this (which is likely to be the case for most people).
Officials have not yet clarified exactly what the tax form boxes will look like to opt for this.
2024 finance law rules
- Ceiling to benefit from micro-Bic reduced to just €15,000
- Expenses allowance reduced to just 30%, apart from for star-rated lets in areas not deemed subject to housing pressure, in which case allowance is 51%
Read more: Many gite owners in France forced into complex and costly tax regime
Officials say that these rules do not have to apply to 2023 income, unless for some reason they would benefit you: this would only be the case if your income went over €15,000 and you would actually prefer to have the réel system applied to your 2023 income (for example because you had major expenses and kept proof of them).
Importantly, however, unless the rules are changed again at a later date, these new rules do apply to income received as of January 1, 2024.
The significance of this is that if your letting revenues in 2024 will exceed €15,000 then you should make sure to be careful with keeping paperwork for this year with regard to your ‘real’ expenses. You may wish to ask an accountant for advice.
Proposed law put forward by MPs from Atlantic coast
- The ‘old’ system should remain in mountain areas or those not subject to housing pressure
- Otherwise, the ceiling should be €30,000 and 50% for classified lets, or €15,000 and 30% for unclassified lets. The latter is the same as the ceiling and allowance for unfurnished rental under the simple micro foncier.
Read more: Ending tax breaks for French gites could ease housing crisis
The Connexion spoke to Mr Duvaux before the new Bulletin officiel clarification, however he said at the time that such a ruling was expected to come, and would at least prevent the finance law rules applying retrospectively to income from 2023.
He said, however, that it would still be problematic if the finance law rules apply from 2024 as people concerned will have little time now to consider if they would want to change over to the réel for 2024 income because they are facing a reduced micro-Bic allowance for 2024 (at the latest, this option is made at the time of declaring income from 2023).
As for the new proposed law, it is unlikely to be voted into law until late this month, he said, but it will also cause problems if it applies retrospectively to income from the start of this year.
Finally, he said there is also a third law in the pipeline, which will aim at reducing some tax advantages linked to property income declarations under the réel.
“It’s all a big mess, and it would be best if nothing could apply before 2025,” he said. “That would be more coherent.”
He said in his view the problem arises from a lack of understanding of the complex rules around furnished letting by politicians and civil servants behind these laws.
“They may be very intellectual, but that doesn’t mean they understand property letting law, which is very sophisticated. I think they may end up having to pass more laws to rectify issues and we won’t really know where we are until the end of next year.
“Whatever happens, we’re not expecting good news, and on top of that we don’t know how and when the changes will apply. The only thing we are certain about is it’s going to be bad.”
Mr Duvaux said the changes are linked to lobbying by mayors from small tourist communes related to ‘over-tourism’ there, as well as the popularity of second homes, including those belonging to better-off French people who he said increasingly like to live between two homes, including one in a pleasant country or seaside area.
He added: “At the same time, it’s true that the rules on furnished letting are too generous compared to those for people who rent unfurnished. So, the latter moan about this, and to some extent, justifiably.”
However, he said there are some illogical aspects, such as the fact that an Airbnb owner who offers a few services such as welcoming the guests, cleaning, and supplying bed linen, could declare as a chambre d’hôtes and retain the advantages. Similarly, he cannot see why the new law exempts ‘mountain’ areas, unless it is due to pressure from mayors from ski resorts.
It is possible this law will end up a little “milder” after changes in the Senate, he added.
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