The introduction of tougher rules on the taxation of seasonal lettings has been suspended, but probably not for long.

Last month, a new law passed through the French parliament changing the basis on which rental income from seasonal lettings (meublés de tourisme) is taxed.

Prior to the change, landlords who adopted the ‘micro’ form of taxation had a turnover ceiling of €77,000 and a fixed cost tax allowance of 50% against gross rental income.

The Loi de Finances 2024 dramatically reduced these ceilings for properties in areas of housing stress, by limiting the turnover to a maximum of €15,000 a year and the tax allowance to 30%. This aligns the taxation of furnished seasonal lets with that for unfurnished accommodation

Properties located outside of areas of housing stress have been granted an additional allowance of 21%, taking the total to 51%, although the turnover restriction of €15,000 applies.

UPDATE: The government have subsequently issued further guidance on the new rules, which were ambiguous. The guidance states that the 30% rule applies everywhere but that the allowance for classed seasonal lets outside of areas of housing stress is now 92% (71% +21%) provided the gross income is no greater than €15,000.

These changes apply retrospectively, for 2023 income, taxed in 2024.

Chambres d'hotes using the micro regime continue to benefit from a turnover cap of €177,000 and a tax allowance of 71%.

Similarly, long-term furnished lettings are also exempt from the new rules.

The new law arose from an amendment to the Loi de Finances proposed by several parliamentarians, which did not have the support of the government, but which passed through the chamber inadvertently.

The government subsequently admitted their error and undertook to reverse the change in subsequent legislation.

Although the administrative guidance recently issued by the government falls short of that promise, they have stated that for 2023 income landlords can continue to apply the provisions prior to the change of law.

Those seeking to benefit from the previous allowances will need to expressly opt for it in their tax declaration.

However, it is a respite that may be short-lived, for proponents of the new restrictions have stated that they will challenge in the courts the relief granted by the government, arguing that the law must be respected. UPDATE: The challenge was subsequently thrown out by the courts.

Moreover, as we have reported previously, a root and branch review of the taxation of furnished rental accommodation is currently being undertaken by the government, with the prospect that the new rules will remain in place.

Last year, the removal of the tax advantage for seasonal lettings was strongly recommended by government advisors and it is being ardently canvassed by many parliamentarians.

Further changes may well also adversely impact landlords of furnished lettings who use profit and loss accounting (régime réel), as the favourable allowances on depreciation are under the spotlight.

Advice

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