Non-resident real estate owners beware!
Under French regulations, real estate income generated in France by non-resident private individuals is taxable in France, whatever its legal source:
- rents from a building located in France;
- shares of transparent or civil real estate entities
In either case, pursuant to tax treaties, the French administration is entitled to enforce taxation.
In the first example, taxation principles differ whether the building is furnished or not:
- if your building is furnished the revenues are subject to taxation in the industrial and commercial profits category (called “BIC” in France).
There is a treshold related to the amount of rent revenue generated.
- Either the rent revenues are under 70,000€, where you will benefit from a friendly tax regime called micro “BIC”: 50% rebate on taxable income
- Or they are above and you can deduct all real expenses (renovation or architect fees for example); please note that there is a list of deductible expenses.
- if your building is unfurnished you are subject to taxation in the land revenues (called “revenus fonciers” in France).
There is also a treshold related to the amount of rent collected.
- Either the rent revenues are under 15,000€ where you will benefit from the micro “fonciers” tax regime:30% rebate on taxable income.
- Or the rents are above and you can deduct all real expenses provided for in the official list published by the French tax administration.
These incomes all follow French regular private income taxation. However, should they be in the lower taxation brackets, a minimum 20% tax rate would be applicable.
In the second example, furnished buildings rented by real estate civil entities, this mode makes the revenue considered commercial (and not civil). The owner hence becomes liable to corporate tax and loses its transparency. As a result, the revenues are considered as dividends, thus liable to a withholding tax.
Before jumping in the letting business, let us help you check your taxation regime!
If you have any questions regarding taxation of property incomes in France, do not hesitate to contact us via telephone +33 (0) 1 53 93 94 20 or [email protected]. Our team of experts will happily assist you with any queries you might have.