When is a gite run as a business?

[Montybird]

Hi everyone,

Just thought I'd post this bit of information as it might help others with the same query or perhaps if anyone else knows different they might like to comment.

We were recently led to believe that if you have more than 1 gite it must be registered as a business. As this would have applied to us next year we decided to pay a visit to our local Chamber de commerce in Périgueux. The lady there told us this is not true. She said it has nothing to do with the amount of gites you have but the amount of revenue that you make from the gite(s), and that you are allowed to earn up to 20,000€ before it has to be registered. She also said (and I find this part hard to believe but she assured us it was correct), that if the income from the gite(s) is less than 50% of any other income you may already have you do not have to declare it.

One other question that I meant to ask was about liability insurance for our gite. Can anyone advise how they go about insuring their gite and potential guests?

Just when you think you know all you need to know you hear something that makes you doubt yourself. Hopefully I'll be up to speed on the pros and cons of running gites by the time ours open for business in June.

[Loiseau]

[quote user="Montybird"]Hi everyone,

...She also said (and I find this part hard to believe but she assured us it was correct), that if the income from the gite(s) is less than 50% of any other income you may already have you do not have to declare it.  [/quote]

 

That sounds a bit strange to me - but then I have only declared tax on gite earnings as a non-French resident and maybe it's different if you live in France full-time.

In the days I used to let one out, you had to declare all the gite income to the French tax authorities. They then knocked off 50% of that figure for your expenses, and taxed you only on the remaining 50% of the gite earnings. Maybe it's changed now.

Angela

[Jo Taylor]

Registering a gîte as a business isn’t necessarily obligatory, but there are many grey areas here. In the past the tax authorities have regarded up to three or four gîtes as non-commercial, any more than that and you would have to register with the Chambre de Commerces. Nowadays, one department might require you to register irrespective of how many you have if they’re your only source of income, but the neighbouring department may be interested only in the tax declaration. Recent reports suggest that the French government and tax authorities are investigating foreign owners and internet property rental sites to enforce the existing laws. As the present situation is so confusing, the best action to take is to visit your mairie, they will advise and direct you to the relevant authorities for your situation in your department.

Your tax status depends on your income. If your net letting income is over €23,000 or comprises more than half the income of your household, you’re considered to be a professional landlord (loueur en meublé professionnel – LMP) and must make a business registration. This will also mean that you will pay higher social security contributions. If your income is less than €23,000 you’re a non- professional landlord (loueur en meublé non-professionnel – LMNP). You may still have a business registration.

You must notify your insurance company that you’re letting the accommodation and obtain appropriate cover for your gîte. It is a legal requirement to have adequate third-party public liability (responsabilité civile) and fire insurance once you’ve bought your property. When you start letting, this should cover the clients – find out whether it includes a guarantee for recours de locataires contre le propriétaire which applies when a client causes water or fire damage. You should also have comprehensive household insurance (assurance multi-risques habitations). It’s wise to ensure that your clients have an adequate comprehensive insurance policy especially with regard to public and third party liability, personal injury and theft of property, also for cancellation and breakdown. (French residents might have a clause "villégiature" in their own fire and risk insurance, which covers them while on holiday.)

HTH
Jo

[Miki]

Jules,

The advice given to you on another forum by two people was the

regulations as they stand today and the link you were offered there

will concur with Jo Taylor's post.

I agree with with you Jo, only one problem, our Mairie would certainly

not know too much and would send you away to seek out the authorities

yourself !!

Two will do, the local Impots and the C de Com. The info you have given

Jo, was more or less, the same as was offered to Jules on another forum

but as is the case sometimes, people will look for the cheap option if

offered it by the man in the pub and then cry foul if it all comes on

top !

Jules, do take note of what has been said on here and the other place,

no one is trying to deliberatley give you bad advice but all too often,

you will be given bad advice, albeit  with good intention.

[Jo Taylor]

Cheers, Miki. Yes, same here, our mairie can be either very, very helpful or totally clueless - ours is open for 2 hours, twice a week (and we can seldom remember which day it's in the morning and which in the afternoon!) but they'll usually be able to veer the enquiry off in the correct direction. Some mairies are helpful, others will be less so; some officials will obfuscate if they don't actually know the answers!

To go back to Jules' original post, it looks as if two separate pieces of information have become confused -

• It's totally untrue that you don't have to declare income under €20,000 - all letting income must be declared in France, whether you are tax-resident here or not. 
  
• You must register as a business if it's over €23,000 or represents more than 50% of your household's income.

Hope that's a bit clearer.

Angela : nowadays, if you're tax-resident and your letting income is less than €76,300 you can use the MicroBic scheme, a forfeit based tax regime where you pay income tax on 28% of your letting income (in addition, of course, to tax on any other income). If you're based elsewhere, you pay a flat rate of 25%. And there are several other tax regimes which my or may not apply according to your income and circumstances. But that's a whole 'nother area to explore...

HTH
Jo

[Will]

One big problem is that there is so much misinformation and half-truths around, and Internet forums are responsible for many of these, as is 'the chap in the bar'. Some forums are more prone to this than others, I'd like to think that Complete France is generally pretty reliable, but we can't check every fact posted.

A lot of this information is given in good faith. Somebody may have been told something by an official - or heard something passed on by a friend. France has few standardised procedures and systems, and much of what happens is up to individual officials, or has been decided on a regional or local basis. Fonctionnaires tend not be as accountable as their equivalents in Britain, and it is not unknown for them to, for example, make up an answer if they don't know and can't be bothered to look it up or ask a superior. Particularly if lunchtime is approaching and they want to be rid of these awkward foreigners. In the unlikely event of any comeback, they can always say that the real facts were lost in translation (which may be true anyway).

When this misinformation is passed around in the English-frequented bars and/or posted on the Internet it quickly gains the status of truth. That is especially so when it potentially enables people to bypass the often tiresome French systems, and also, at the opposite end of the spectrum, when it fuels the imaginations of the doom and gloom merchants and conspiracy theorists who thrive on some Internet forums.

That's why we always encourage people to take proper professional advice. Reading on the Internet that somebody else had been told you didn't need to register a business or have to declare certain incomes is no defence should your financial affairs be investigated (it does happen).

Of course, many officials in France are helpful, and, if approached in the right way, will go out of their way to assist and advise people who want to do things properly.

[Jo Taylor]

[quote user="Will the Conqueror"]That's why we always encourage people to take proper professional advice.[/quote]

Trouble is, it looks as if that's exactly what the OP did do, by visiting their CdC, hence my comment about obfuscation, put more simply by Will : [quote user="Will the Conqueror"]...make up an answer if they don't know and can't be bothered to look it up or ask a superior....[/quote]

Jules, you'll find the rules and regs on official sites such as www.anil.org, www.logement.org, www.snpi.com, www.fnaim.fr www.service-public.fr/ etc. All in French (the last has an English version, but the French one is far more comprehensive). I'm assuming here that you do have sufficient French, having stated that you talked to the lady at your CdC? If not, perhaps you did misunderstand her?

 

[Russethouse]

Jo , did you right the book that has got such a good review in this months LF magazine ?

 

[Montybird]

Hi Jo and everyone else that has replied to my post here,

Firstly, thank you to everboby for all your comments.

Secondly, I would like to assure Miki and Jo that I would never take advise from the man in the pub.  Hence, trying to find out all the facts from official sources and advice from this forum and others.  It appears, having read many articles about this issue that I'm not the only one confused about registering my gites.  The last thing I want is to fall foul of officials etc.

I perhaps did misunderstand the lady at the CdeC regarding declaring income and will be engaging an accountant to sort this out as it appears we've already made a hash of this years French Tax Return form.  Before going to the CdeC I rang and asked if it was possible to arrange an interview with someone that's speaks English that could help me.  Unfortunately I'm still confused as she didn't actually give us anything in writing and with all the information she gave us it looks like we've got some of it wrong. 

So, I apologise if my initial post miss-lead anyone but I did say "I find this difficult to believe"!

Oh well, it hasn't put us off too much yet and we'll plod on with the work....

[Jo Taylor]

[quote user="Russethouse"]

Jo , did you right the book that has got such a good review in this months LF magazine ?

[/quote]

Hello Gay,

I haven't seen the magazine, but the answer's probably yes {{blush}}. I'll send a private message

Good luck Jules!

Cheers,
Jo