tax on gite rentals

[Traceyh]

We live in Calvados, and do not have any income, apart from our two gites. This year, we filled in our french tax return, and where told that as we have a gite rural, that we should put the income down as from a mirco enterprise, despite the fact we have not registered as such, do not have a TVa number, or anything else to say we are a micro enterprise.

Once we filled in the form, our taxable income was reduced by 72%, but having recieved this very welcome reduction, we are concerned that we should have joined the local chamber of commerce, or be paying in to the system with a TVA number, or some other unknown organisation.

One thought is that we may have opened a can of worms by allowing our income to be shown as such on the tax return as a micro enterprise, and we should have shown it a s the same as a rented house.

 

Any thoughts people, has any one else had the 72% reduction?

Thanks

[Eslier]

In short, if you are resident in France, yes you should have registered before you started trading,although it is unlikely that you need to become TVA registerd. There are strict penalties for trading without being registered although these penalties seem rarely to be applied. You should however now take steps to ensure that you are trading legally. To ensure that you do things in the most beneficial way it would be wise to consult a French accountant. In you area I would be happy to recommend Account Revision of Rennes. They have an English chap employed to look after English clients in Normandy. His name is Steve Beckwith and and can be contacted on 02 99 09 12 08 or by e-mail on stevebeckwith@fr.oleane.com He will be able to visit you and sort everything out which means you don't ever have to go to their offices.

[Liz]

[quote]We live in Calvados, and do not have any income, apart from our two gites. This year, we filled in our french tax return, and where told that as we have a gite rural, that we should put the income dow...[/quote]

As far as I know you do not have to register as a business.  This has been raised before and am sure that is correct.  We have a gite and the income from it is treated as 'professionel'.  We fill in form 2042C, of which only a tiny section applies, and form 2042PK which is for a 'Regime Micro Enteprises'.  None of this means to say that you are actually a micro entreprises, you are just taxed as such.  Our only difference from you is that we have a small taxable income from a pension which is treated in the normal way and entered onto the standard form 2042.  You do not have to register for TVA. 

You will be asked to pay two lots of tax, unless you are below the level (plafond) at which it is required, one is the ordinary Impot sur le Revenu and the other is Contributions Sociales.

I am not sure about the 72%; a percentage is allowed before tax but I can't remember what this was.

 

Liz (29)

[Will]

We are exactly the same, our small chambres d'hôtes income is treated as a 'micro bic' and the standard percentage applied (I'm in England, away from our paperwork, so can't confirm what it is). There is no separate registration required.

However, if you have no other earned income apart from the gites then you come in a bit of a grey area and you may be required to register as a business in order that the appropriate social charges can be collected. As we already pay cotisations from another business and from employment we don't have to register again - you might. As suggested, it would be best to take proper advice on this.

[nimportequoi]

You are entitled to be registered as a micro-bic if your turnover is less than 76,000€. You only have to be registered with the RCS if your income is above 23,000€ when you are then considered as 'loueur en meublé professionel' instead of 'non professionel'. You are then obliged to pay the social cotisations. At least that is what my French accountant has told me!