Are you a gîte owner in rural France? If so then you need to be aware of the changes to the tax regime introduced during 2016. The definition of what is considered a “rural gîte” has been unclear in legal terms and the changes introduced under the new General Tax Code attempt to remove any perceived tax advantages. The changes will also effectively encourage owners to register as a meublé de tourisme classé or become a micro-entrepreneur.
Until this year, rural holiday gîte owners have been taxed under a system called the ‘micro’ (or ‘forfait’) which provided for significant tax exemptions and benefits: for example, a cost allowance of 71% against rental income meaning that tax is liable on only 29% of income; and secondly exemption in rural development areas from the Cotisation Foncière des Entreprises (CFE). Under the new General Tax Code changes, these preferential tax advantages will no longer apply with the cost allowance reduced from 71% to 50%.
To continue to receive the 71% cost allowance it will be necessary to apply for classification under the meublé de tourisme. There are a range of government approved organisations which are authorised to issue a star rating, which will require payment of an application fee, responding to questions about the property and facilities available and finally making the gîte available for inspection. Gîte owners receive a star rating which they can decide whether to use or not: and it will allow you to retain the tax advantages (71%) previously available.
There are however alternatives. Individuals owning gîtes could become classified as a micro-entrepreneur (previously known as auto-entrepreneurs) or can decide to be taxed on the basis of your actual net profits which is called the régime réel. If you would like to explore either of these alternatives please contact us and we shall be pleased to advise you.
The above is a summary of the principal changes but if you would like to know how the tax changes affect you as a gîte owner then please give the team at Fiscaly a call on +33 (0)9 81 09 00 15. You may also wish to visit our website http://www.fiscaly.fr/ . Let Fiscaly help you to take away the headache of tax and administration.