In more detail
As a reminder, Article 45 of the Finance Act of 2024 amended the tax regime applicable to the rental of unclassified tourism accommodation (furnished) by providing that the "micro" regime will lead to the deduction of a rebate of 30% (instead of 50%) if the income does not exceed EUR 15,000 (instead of EUR 77,700). According to the press, the government had mistakenly maintained this Senate amendment.
As announced by the government, the BOFIP has been updated to allow taxpayers, by way of tolerance, to benefit from the previous tax rules for 2023 income.1 This tolerance will not apply to income received as of 2024.
Indeed, according to the BOFIP, this amendment of the regime would require "the taxpayers concerned to reconstitute a posteriori accounts for the year 2023." To overcome this inconvenience, the BOFIP provides that if taxpayers can apply to their 2023 income the new rules resulting from the Finance Act for 2024, they may also, by way of tolerance, apply the prior rebates and thresholds to the income they received in 2023.
Following this update, some senators and professional organizations filed a plea for summary judgment and a claim for excess of power, aiming to suspend and cancel the application of the tax authorities' tolerance. The French Tax Supreme Court rejected the plea for summary judgment on the grounds that the situation did not appear to be urgent.2 The French Tax Supreme Court also indicated that it will examine the claim for excess of power in the coming weeks.
At this stage, taxpayers are able to invoke against the French tax authorities the tolerance provided by the BOFIP as it was published before the deadline for filing the 2023 income tax return (in May 2024). If the French Tax Supreme Court were to cancel the tolerance of the BOFIP, it would be necessary to analyze the effects of this decision in practice, knowing that taxpayers would probably have arguments for continuing to oppose the canceled BOFIP to the French tax authorities for income from 2023.
In the context of fighting the housing crisis in France, rental taxation is, more than ever, a highly topical issue. A tightening of the tax regime for seasonal rentals can be anticipated in view of current discussions in parliament on the reform of rental taxation, as well as in light of the proposed law aimed at remedying imbalances in the rental sector, voted on by the French National Assembly during the first reading on 29 January 2024. At this stage, this bill provides for a new modification of rebates and thresholds applicable to income under the micro-BIC regime. Furthermore, it provides that when the taxpayer has applied the "actual expenses regime" ("régime réel"), the amortizations deducted from the furnished rental income will increase the amount of capital gain or loss, which would be taxable under the real estate capital gain regime for individuals.
Therefore, a major reform of rental taxation is to be expected in 2024, and taxpayers should follow this topic carefully in the coming months.
1 BOI-BIC-CHAMP-40-20-14/02/2024, No. 55.
2 French Administrative Supreme Court, 18 March 2024, No. 492386.
