French Furnished Lettings

Holiday lettings remain popular for individuals relocating to France or French holiday homeowners. Online platforms have revolutionised this sector but increasing housing shortages and hotel industry pressures have led to a surge in regulations and controls.

The Loi le Meur enacted in November 2024 introduced stricter rules, higher penalties for non-compliance and changes to furnished letting tax regimes.

The different categories of furnished lets and tax regimes impact on the taxable rental income.  The latest tax reforms have made it difficult to compare tax liabilities or to decide which regime to apply for. Below is an outline of the main current rules, options, different types of lettings and their tax treatment.

Registration and Disclosures

Before starting a furnished letting activity, it is essential to verify that the property is not encumbered by any restrictions, such as a “clause bourgeoise” stated in the deed or within any property management agreement (“règlement de co-propriété”). Such clause may prohibit seasonal lettings. 

From May 2026, the authorisation for change of use from local Town Halls (“Mairie”) will be extended to all furnished lettings depending on local policies; failing this may trigger a €100,000 fine. Registration is also required for the Taxe de Séjour levy, payable by visitors and collected by landlords for remittance to the Town Hall each year.

All France-based commercial activities, furnished lettings included, must be registered online via the “Guichet Unique” Créer votre entreprise sur le Guichet unique | INPI.fr and be assigned a business registration number known as SIRET.

Regular seasonal lettings are often subject to an annual  local business tax (Contribution Economique Territoriale, “CET”) managed online through the “espace professionnel” on the impôt.gouv.fr French tax website. The CET is voted by the local council and revisited annually. It may be possible to request a CET charge capping, depending on turnover.

Finally, landlords may wish to register their property as a “meublé de tourisme classé” (“MTC”) with Atout France. This entails the following formalities which may sometimes be handled by local estate agents:
  • Appointment of an accredited surveyor to inspect the property.
  • Submission of the survey and application to the Préfecture.
  • If successful, the owner receives a rating to be displayed in the property.
  • The MTC registration is valid for five years.
The MTC as well as Chambres d’Hôtes  labels impact on the tax regime when assessed under the Micro BIC as explained below.

Types of Furnished Rentals

The French system essentially differentiates three main types of furnished lets:
  1. Furnished accommodation let on an annual basis and used by tenants as their main residence. This is mainly intended for students or individuals transitioning  between accommodation.
  2. Registered furnished tourist accommodation known as «meublés de tourisme classés» described above  (« MTC » - via Atout France), or «chambres d’hôtes» for short-term stays, limited to 90 days
  3. And finally, non-classified  general furnished lets for short term stays also limited to 90 days.

Income Tax Regimes 

Micro-BIC – Set Expense Deduction Regime

The Micro-BIC is the simplest tax regime for commercial activities. It offers set deductions covering expenditures. Eligibility to the Micro BIC is subject to annual turnover thresholds in the two preceding tax years.

Landlords reporting under the Micro BIC must still maintain income and expenditure ledgers. The Micro-BIC regime is not usually permitted if the rented property is co-owned. However,  there is a tolerance for spouses in specific circumstances.

Lettings described in i) and ii)  above automatically fall under the Micro BIC regime if their turnover in either of the two preceding tax years is below €77,700. Their expense allowance is set at 50% of the annual turnover.

The set deduction for non-classified short-term lettings is 30% and the turnover threshold in either of the two preceding tax years is €15,000.

Itemised Regime – “Régime Réel Simplifié” (“RRS”)

Activities with a turnover above the set Micro-BIC thresholds automatically fall under the régime réel - itemised regime (“RRS”). 

Taxpayers within the Micro-BIC scope by default may opt for the itemised regime when filing their income tax return. To apply for the RRS in respect of 2026 rentals, the option must be filed before May/June 2026 which is the filing deadline for the return reporting 2025 income.

Furnished lettings carried out by two or more co-owners are treated as a société de fait and assessed under the RRS regardless of turnover levels.

The itemised regime is usually better for taxpayers who maximise rental periods, have a mortgage, wish to record pre-trading losses,  have high rental expenditures and wish to deduct property depreciation. Losses may be carried forward against future profits, for up to ten years. Note that deducted depreciation is reintegrated when computing property gain upon disposal. This also applies to professional landlords taxed under the Micro-BIC regime as the set deductions are deemed to include depreciation.

Expenses and depreciation are prorated to the letting periods if the property is also used privately, otherwise landlords must report the “forfeited” market rent for their own occupation. 

Income Tax Rates and Payments

French residents

The net taxable profit determined as per either of the above methods is added to the French resident taxpayers’ worldwide income and subject to income tax scale rates (“barème”) and to the 18.6% social surcharges (CSG, CRDS and PS).

Non residents

Non-residents are subject to a minimum income tax rate of 20% up to around €29,500  (2025) and  30% thereafter. Claiming a lower tax rate is possible by disclosing the tax year’s worldwide income to apply the scale rates (“barème”) and if the resulting effective rate is lower.

Non-Residents are liable to the 18.6%  French social surcharges (CSG, CRDS and PS ), reduced to 7.5% if affiliated under an EEA or UK social security regime.

Payment of Liability

French income tax is paid by monthly direct debits under the "pay as you go" system. The levies are based on the previous year’s liability and updated every September, once  the return has been processed.

Professional /Non-Professional Landlord Status

Landlords are treated as professional landlords (loueurs en meublé professionnels or LMP) if their furnished letting activity meets the following criteria:
  • The annual turnover exceeds €23,000, and
  • exceeds the household’s other total net earnings (including pensions and annuities). For non-residents of France, this was considered by reference French source income only, so if above €23,000, they were treated de facto as LMPs. With effect from 2026, non residents may consider their worldwide earnings for this 2nd condition, if these are subject to income tax in their country of residence. 
The professional status leads to the following considerations: 
  • Rental losses and pre-letting charges may be set against the rest of the household’s taxable income (for residents only).
  • Pre-letting expenditure may be spread over the first three years of activity.
  • The professional landlord status leads to an irreversible affiliation to French social security (URSSAF) even if future turnover falls below the €23,000 threshold. This was an issue for non-French residents up to 2025, when only their French income was considered to determine if they fell under the LMP category (see above).
  • Wealth tax business asset exemption may apply to the rented properties under certain strict conditions, but in practice this rarely applies.
  • For properties registered as business assets, CGT applies when the activity ceases or if the property is sold, gifted, or if the owner dies.  There may be a partial CGT exemption after five years of activity,  subject to past turnover levels. Any depreciation applied during the ownership is subject to income tax and social security contributions.
  • Professional landlords are subject to social surcharges at 17.2% instead of 18.6%.
Auto-Entrepreneur Regime - set tax and social security contribution rates

Subject to specific turnover limits, French residents may elect to pay their income tax and social security charges at source under the Auto-entrepreneur regime’s Micro Fiscal and Micro Social rules.  Election must be filed before 31 December for the forthcoming year, or within three months of starting the activity.

The micro-fiscal liabilities (tax) and micro-social contributions (social security) apply to the turnover and are paid as a final charge. Taxpayers still need to report their rental income on their tax return. In the absence of any income for 24 consecutive months the Auto-entrepreneur status is forfeited.

The micro-fiscal (tax) and micro-social rates on turnover are as follows:
  • For MTC and chambres d’hôtes : 1% tax and 6% social charges
  • For all other furnished lettings : 1.7% and 21.2% social charges.
Lettings in VAT Scope

The furnished rentals which are within the scope of VAT (10%) are as follows – this list is exhaustive:

i) Classified tourist hotels and registered holiday villages;
ii) Registered tourist residences let under a nine-year lease to an operating company. Landlords directly conducting the activity under the same conditions may also need to register for VAT.
iii) Letting of furnished accommodation where at least three of the following  regular services are provided:  
  1. Breakfast
  2. Daily cleaning 
  3. Household linen
  4. Reception services including non personalised

iv) Unfurnished, partially or fully furnished rentals to an operator which exploits the property for any of three activities described above.

The VAT exemption limits were revisited in November 2025 after the government threatened to introduce a single €25,000 VAT exemption threshold  for all activities, which was met with fierce resistance from small businesses.

The updated exemption threshold are set at:
  1. €93,500 for goods and for meublés de tourisme classés and
  2. €41,500 for all other lettings.
Conclusion

With so many options and ensuing social and tax regimes, the French treatment of furnished lettings has become very complex.

Although it is sometimes possible to change regimes and statuses this can be time-consuming and create extra administration. It is important, whenever possible, to weigh up all the consequences beforehand.

The increased administrative burden for landlords will probably discourage the smaller and more casual rentals in this sector. 

This is only a summary of the main issues. It is strongly recommended to obtain full advice before renting out French properties.

If you wish to receive our French Tax Bulletin updates, please email your request to french.tax@bdo.gg.

Contacts

For more information, please contact Virginie Deflassieux or Catherine Le Pelley.