What are the advantages of setting up a French gîte under BIC classification?
Question from the reader: We live in France thanks to British pensions. Are there any tax benefits we should know about before setting up our cottage under the Bic diet, as advised by our prefecture? XL
The Bic reference is a classification of the type of activity of a company, in this case profits from industrial and commercial sources.
The nature of the business activity dictates the classification. The question then is more how to ensure that the best taxation option is used, and there are two options for holiday/tourist rentals.
As long as your income is less than €176,200, you can use the micro system, where you declare your income each year and are taxed on 50% of it, the remaining 50% being considered by the tax authorities as expenses, incurred or not. . If you register your cottage within the framework of the system of tourist classifications, it is possible to increase reduction from 50% to 71%, so only 29% of the income is taxable.
For furnished rentals under the mic, you generally do not need to register a business.
The alternative is to have a company declared under the reel (real) accounting system, requiring proper bookkeeping and an accountant. With this you will also pay full professional payroll taxes (for retirement, health care, sick pay), whereas with the mic you can avoid them, but not the remaining “payroll taxes” ( in fact, a kind of tax) CSG and CRDS and PdS, at 17.2%, which are also due on investment income.
A cottage Is a kind of tourist accommodation (furnished vacation rental). It must be autonomous for the tenant, for temporary use limited to a maximum of 90 days in a row, and furnished, with bedding and the possibility of cooking. Whether it is a request for classification or not, you must declare the rented property to the town hall.
While vacation rental is technically a business, the tax authorities tend to view it more as investment income. Be careful however, this is not the case if you are deemed to exercise it “in a professional capacity”, with income greater than €23,000 per year and greater than household income from other sources. Thus, the easiest way is not to declare a company, but to declare income each year in boxes 5KP/5LP, if the 50% reduction, or 5NP/5OP if the 71% reduction.
The information here is general in nature. You should not act or refrain from acting upon it without taking professional advice on the specific facts of your case. No liability is accepted for these items. These articles are intended as a general guide only. Nothing herein constitutes real financial advice.
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