The French government is in the process of passing new laws, which, if adopted by the Senate, could potentially make running a professional gite business in France very, very different, if not financially unviable.
As you can imagine, this is a complex matter. Here, we outline the basics as things stand at the end of January 2024.
What is the rationale for this change?
France is in the throes of a housing crisis – especially in highly populated areas such as Paris, the cities, and the coast. The argument for long-stay rental housing has been made, and as a result, short-term AirBnb-style rentals have been blamed for a lack of available housing. Because of this, they are set to have their “fiscal niche” (the financially attractive reduction in taxes) dramatically reduced to make the practice of letting out your apartment in these “zones tendues” much more financially unattractive.
What will the impact of the 2024 Loi des Finances?
Currently, none of the expert accountants or legal advisers can be certain as the Senate has not yet voted on this law. It has, however, already passed before the government in the French Assembly.
What are the proposals?
Here is a link to the recent debate in the French Assembly concerning this matter.
1. Tax abatement
Previously, micro-entrepreneurs have benefitted from a 71% tax abatement. This could now be slashed to 30% for virtually everyone running gites.
Remember, as a micro-entrepreneur in France, you cannot offset ANY costs or purchases you make for the business. (That was the reason for the abatement!)
Mountain ski zones and areas “tres peu dense” (sparsely populated) will maintain their 71% tax break and a €50,000 maximum earning ceiling. However, do not be lulled into thinking rural areas such as the Charente may fall into a zone “tres peu dense”. According to the French National Statistics Office, INSEE, there are actually very few areas that fall under this definition.
2. Maximum earnings
For a classified gite (i.e., those with star ratings from Atout France), the maximum ceiling for income in order to benefit from the Micro Entreprise regime was €188,700.
This is being slashed to €30,000 for classified gites, not in mountain ski zones. Curiously, this does not appear to align with other micro-enterprise ceilings. This means that any gite business turning over in excess of €30,000 may need to change fiscal regime. It is currently unclear as to which would be the ‘best fit.’
For unclassified gites, the maximum ceiling is proposed to be cut to a tiny €15,000.
Elloha summarised the proposals for the industry after the debate on the 29th of January, 2024.
Gite owners: what can be done?
If you are a professional gite owner, or you earn over €15,000 per year from your gites, you may wish to write to a Senator, explaining your situation and how this will impact you, your family, and your local economy.
If you are a micro entreprise-BIC, it could be advisable to keep a record of all your outgoings for your business – all receipts and bills since the 1st of January this year in case you need to change your fiscal regime.
If you are considering buying a gite business in France, now more than ever, do your sums and ask to see books for the business you are considering buying. Do remember, these changes, whatever they turn out to be, do not affect Chambres d’Hotes (Bed and Breakfast.)
Gite owners and all the major actors for Tourism in France are currently lobbying the government to be mindful of the impact of such proposed laws on France’s Tourist economy.
In rural areas such as ours, hotels simply do not exist and if gites are forced to close, there will be a tangible impact on local economies. That is certain.
It all seems ridiculous, given that France regained her top spot as the NUMBER 1 Tourist destination in the world this year!
We can only hope that we can trust our Senators to do their research and to listen to facts, not point-scoring political rhetoric. It is true that the housing crisis in France must be tackled, but not at the expense of rural tourism throughout the country.
Bon courage !
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