Holiday rentals France: change tax rules micro-entreprise

For holiday rentals in France, it is possible to benefit from the ‘micro-entreprise’ tax flat-rate system. Under this, your result of the activity is determined by reducing the turnover by a lump sum for costs where you have an exemption for keeping accounts and preparing annual accounts and the tax business profit declaration. 

However, there are now legislative changes underway that mean you can in certain cases 

• can no longer work on a flat-rate basis (due to exceeding the turnover threshold)

• or it is not interesting to continue working on a flat-rate basis

and you must switch to full accounting (actual cost system).

What will change for income year 2025 ? 

1. Unclassified furnished tourist rentals:

   • The turnover threshold becomes €15,000 with deduction for expenses of 30% (instead of €77,700 and 50%)

2. Classified furnished tourist rental:

   • The turnover threshold becomes 77,700 € and the deduction for costs 50% (instead of 188,700 € and 71%)

3. “Chambres d'hôtes “(*) and other furnished rentals (**):

   • The turnover threshold becomes 77,700 € with a 50% deduction (instead of 188,700 € and 71%)

(*) the turnover from “tables d'hôtes” remains under the previous threshold of 188,700 € and flat-rate costs of 71%. 

(**) this concerns long-term rentals (other than holiday rentals). 

For unclassified furnished tourist rentals (1) and classified furnished tourist rental (2). there is no difference whether or not there are rentals with sufficient hotel services to be covered by VAT. 

More generally, there is a lot of political turmoil on this issue with cancelled and reintroduced legislation, so it is now a matter of waiting for the final confirmation of the turnover thresholds and percentages for cost deduction. As soon as this is confirmed, this article will therefore be updated.

What is important for you?

• Check your income and type of rental to see if the changes apply to your rental activity.

• The above changes should not necessarily be detrimental. When switching to full accounting, you can also deduct depreciation, which will reduce your taxable income or potentially lead to a tax loss.