Gite Owners and the Taxe d'Habitation
20th June 2022
The French tax authority appear to have adopted a new policy on the liability of gite owners to the taxe d'habitation.
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The administrative practices in connection with the local rates on furnished lettings are mired in the usual tangled web of regulations that generally accompanies anything to do with French tax law.
Until recently the general principle that has been adopted is that, depending on the circumstances, a gite owner is liable either for the taxe d'habitation or the business rates, called the Cotisation Foncière des Entreprises (CFE).
That approach that is now being threatened by the tax authority, who appear to be requiring some gite owners who directly manage their gite to pay both taxes.
Under the French tax code, all furnished dwellings are liable to the taxe d'habitation, whether or not they are occupied (albeit the tax is being abolished for principal homes).
There are then various exemptions available, in particular, under Article 1407, to certain properties liable for the CFE, as follows:
'Les locaux passibles de la cotisation foncière des entreprises lorsqu'ils ne font pas partie de l'habitation personnelle des contribuables.......'
So two cumulative tests are used to grant exemption; first that the owner pays the CFE and second that the property is not part of their 'habitation personnelle'.
The definition of the habitation personnelle is a property occupied by the owner, or where they reserve the right to occupation, whether it is a main or secondary residence.
The tax authority appear to be now stating that if the gite is available for use to the owners outside of the letting periods, they are liable to pay the tax, even though they are subject to payment of the CFE.
This is despite the fact that the owners occupy a separate property, with no intention to ever make use of their gite for personal use.
Only where the gite is being managed by an agent, and so ostensibly not available to the owner, are the tax authority maintaining the exemption.
In addition, an exemption occurs under the tax code to gites, called meublés de tourisme, which applies unless the local council have made a contrary decision not to grant it.
However, if it is the view of the tax authority that gites can now be considered part of the 'habitation personnelle' of the owner, then there would seem to be an exemption from the CFE.
This is provided for under Article 1459 of the tax code, which, subject to no contrary decision of the local council, grants exemption from the CFE to such furnished lettings, as follows:
“Sont exonérés de la cotisation foncière des entreprises :
Les personnes qui louent en meublé des locaux classés......, lorsque ces locaux sont compris dans leur habitation personnelle ;
Les personnes ...........qui louent ou sous-louent en meublé tout ou partie de leur habitation personnelle.”
Accordingly, if you are now being asked to pay both taxes, on the basis that the property is part of your 'habitation personnelle' you should be able to obtain exemption from the CFE, if it is not otherwise being granted.
That may well be of only small comfort because the taxe d'habitation is normally higher than the CFE, although as we have stated, from 2023 all principal homes will be exempt from it. Second home-owners will remain liable for the tax.
For some gite owners, therefore, the change in policy by the tax office may soon be of little consequence.
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