Thursday, June 15, 2006
Registering a Gite Business
I get quite a few enquiries from readers asking about the requirements for gite registration and various legal obligations for setting up gites in France. I've tried to put what know here based on conversations with the tax authorities, other gite owners and information from the Internet. Note that this is just my understanding of the situation, I am not legally qualified to give advice and you should always take professional advice before taking any action. The other caveat is that the rules seem to change slightly depending on which departement you reside in. The information supplied is not comprehensive and should be used as a starting guide as to your obligations on registering gites.
Gite registration.
You are not obliged to register at the Chambre de Commerce if you receive rental income from gites, and offer no other services such as cleaning etc. In addition your total income must be less than 76,300€
Registration of the business, usually means the creation of a Micro Enterprise with a SIRET (registration) number. This involves the payment of Social Security Contributions (Cotisations) to URSSAF. I have been told that it is possible to get a SIRET number for unregistered businesses by applying to the INSEE. By not registering you do not need to pay these cotisations. However under the CMU rules you do need to make contributions for State health care in another way.
Although it is not necessary to keep accounts, you must retain all your bank statements and every facture (invoice) issued to each client. I would also suggest retaining all your receipts for expenses.
The rental of furnished property is generally considered a non-professional activity. For other types of activities, e.g. building work, the income limit is much lower.
The rules for Chambre d'Hote (Bed and Breakfast) are slightly different in that I believe because a service is provided then it is necessary to register at the Chamber of Commerce.
In all cases it is courteous to inform your local Marie of your intentions to run a gite or B&B business.
Income Tax
Obviously all income, from whatever source, must be declared to the revenue. You must also inform the tax authorities that you are running a gite business to ensure that you are taxed under the correct regime for gite rental income.
If your turnover is below 76,300€ you can use the simplified regime of a Micro Bic. All your rental income is declared using your personal tax return, i.e. the total of all the issued factures. Under this you are automatically given an allowance of 72% of your turnover against expenses, you are subsequently taxed on the remaining 28%. This regime is the same regime used for a Micro Enterprise business.
Residents pay an initial Social Security Tax (this has nothing to do with social security benefits) of 10%, the balance is taxed at your own tax rate based on circumstances and other income. If you turn over more than 76,300€ you will need to supply accounts and be taxed on real net profit/loss and move from a Micro Bic regime to another more costly regime.
Other taxes
In some departements you must pay Tax de Sejour for each guest staying in your gites. The amount payable is very small.
Under normal circumstances Tax d'Habitation is paid on your residence. The amount varies with the surface area of habitable space. For each gite Tax d'Habitation is also payable, but there is an option to pay Tax Professionelle instead. Depending on the size/number of gites it is sometimes preferable to pay this tax instead.
Health Benefits
If your gite business is not registered then you need to apply to CPAM for health benefits as a French resident. The Chamber of Commerce handles health benefit payments for registered businesses.
Insurance
Regardless of whether your gite is registered you should ensure that the necessary insurances are taken out to ensure yourself and your clients from any accidental loss/damage or personal injury. These include things like Public Liability and Third Party Liability.
Alternatives
In our case we decided to create a limited company, an SARL, and register the business with the Chamber of Commerce. The main reasons being that we could offset the large investment and renovation costs against any profits and reclaim TVA (value added/sales tax) on purchases. Running an SARL is more expensive than a Micro Enterprise as you have to keep full accounts, submit end-of-year books, maintain a company bank account, pay additional social charges and employ an accountant. However we felt that on balance, even though our income is well below the registration threshold, keeping the financial sides of our business and personal lives separate felt more comfortable.
With most things, it's swings and roundabouts, everyones circumstances are different and to re-itterate, take professional advice and ask at your local tax office.
Any corrections or updates please don't hesitate to contact me.
Useful Links
- http://www.apce.com/ - APCE
- http://www.impots.gouv.fr/ - Impot (Tax)
- http://www.cci.fr/ - Chambre de Commerce
- http://www.service-public.fr/ - Your Rights
- http://gites-de-france-limousin.tib.cc/PDF/amenager_ch_hotes.pdf - Gite and B&B info
- http://www.insee.fr/ - INSEE
- http://www.cmu.fr/ - CMU
- http://brittany.angloinfo.com/information/2/sci.asp - SCI
Registering a Gite Business
