France Voila travel and French tourism, canal cruisers, boating on the canal du Midi

If you ask the same question of 5 different "experts" in France, you are most likely to get 5 (or more) different answers. In a country where one in eight of the working population is a civil servant this is not surprising. There are many licensed professional bodies and restricted trade associations as well as the chambers of commerce and chambers of enterprise which enjoy legal protection and monopoly status. All carry the threat of criminal action against you if you break their rules.

I have spent two years picking through the minefield of legislation surrounding something as simple as renting out your property in France for a vacation.

There are three main considerations for renting your home in France for a seasonal or short term rental.

1. Income from any property in France must be declared for taxation in France and TAX MUST BE PAID ON THAT INCOME IN FRANCE, you are not likely to be assessed for double taxation as there are many tax treaties, but if you do not declare this income then you are liable for tax EVEN IF YOU HAVE PAID TAX ON THIS INCOME ELSEWHERE.

2. The property must be registered with the local authorities and be compliant with the relevant standards and regulations.

3. If you are renting your own property then all descriptions, contracts and payment terms must be compliant with French laws. If you are renting through a third party they must be licensed in France as an "immobilier" (real estate agent).

You cannot legally rent any other property except your own personal property, if you do you are then acting as a real estate agent and face a large fine and up to 2 years imprisonment. Immobilier in France are a protected, licensed professional body.

There are three main official bodies of real estate agents, the FNAIM (Federation Nationale des groupements d'Agents Immobiliers et de Mandataires en vente de fonds de commerce) and the UNPI (Union National de la Propriete Immobilier) and the Syndicat Nationale de Professionnels Immobiliers. These have excellent websites with a lot of useful information although the SNPI has less advice on legal matters.

http://www.fnaim.fr/
http://www.unpi.org/
http://www.snpi.com/

TAXATION

It does not matter where you live, where you collect any rental for your home in France or where your personal tax is paid. If the house you are renting is in France, then all income from it is considered as being earned in France and tax must be declared on this income in France and tax must be paid, even if you declare and pay tax in another country, you will be assessed on the income if you do not declare it in France and the penalties are heavy.

If you are already making a tax declaration in France then you can add the property income to your declaration, deduct all relevant expenses and you are liable to tax at 25% on the balance. If relevant expenses are greater than your income then no tax is due

If you do not already make a declaration, the simplest system is a "regime micro", for your property you are only liable for tax on 30% of the income and you pay tax at 25% on this, (a tax in effect of 7.5%) however you cannot also claim for most of the outgoing costs such as electricity, maintenance, local taxes etc.

In addition there may be local tourism and occupancy taxes. Your local Mairie or Prefecture can help with this information. These taxes are usually a "forfait" and payable per bed. This is usually around 1 euro per person per night for a fixed 93 day period.

You are not likely to face double taxation if you have paid your taxes in France and then take the balance back home. This is the case in EEC countries and the USA.

You can ask in person what forms are needed at your local Taxation office. They are usually helpful.

More information can be found at a very useful government site.

http://www.service-public.fr/

REGISTRATION

The first place to ask about anything in France is your local Mairie. They should know about the local requirements for registration of your property for seasonal lettings. You can also ask the local office of the UNPI or FNAIM, they are more likely to encourage you to use the services of one of their own members, but they should be able to help, there is a lot of information on their on sites (addresses above).

Assuming you are not running a hotel (more than 14 people) or a bed and breakfast (chambre d'hote) which needs special registration at the local Prefecture, but simply renting out your own private home on a short term basis, then you should find registration simple either at your own Mairie or one in the nearest large town. If there is a good Office de Tourisme (Syndicate d'Initiative) near you then they will also be able to help.

A useful tip for finding you local addresses is to go to the cg (Conseil General) website for your department, for example I live in Herault (34) so if I look for

http://www.cg34.fr

I get all my local information and addresses. Try if for your department (change the 34 to your department number, it is the first two numbers on your post-code), most seem to be working now, although they are, in my opinion, some of the worst websites ever designed.

Finding out the legal and safety requirements may be more difficult, but the same sources should be able to guide you.

RENTING WITHIN THE LAW

Again the UNPI and FNAIM are good sources of information, plus the Service Public site (addresses all above). You will also need to make sure your insurance cover is suitable, you can get more information from the CDIA Centre de Documantation et d'Information de l'Assurance).

http://www.ffsa.fr

All the laws of the French constitution can be researched from their site at

http://www.conseil-constitutionnel.fr/

One of the most useful pages for quick reference - assuming you know what you are looking for as in most French research - is This Table

I have been compiling references to the many laws and decrees relating to property rentals in France. These intertwine with laws about taxation and professional services and are beyond the scope of these notes, but from 1967 to 2001 many laws have been passed which cover aspects of short term and seasonal rentals.

Surprisingly there has never been a legal definition of a "seasonal rental" in France. The existing statement of law of May 16 1967 simply states

..les locations saisonnieres comme etant des "locations consenties a l'occasion des vacance, quels que soient la duree et la mode de location intervenues"...

The supreme court of appeal in July 22 1987 recognised two distinct tourist seasons, one for summer and the other for winter, each with a length of three months (93 days). Also in a judgement of February 8 1993, it defined a villa apartment or studio which is "furnished for tourism" with the purpose of a rental for a fixed short period (day, week or monthly period) and has a determined level of comfort according to the classification 87-149 of March 6 1987.

In general this type of short seasonal rental is not included in the laws relating to most property rentals (the law Mermez of July 6 1989) which are designed to protect the rights of the tenant in "long term" occupancy.

Importantly, it is a legal requirement in any property rental in France, for any duration including all seasonal rentals, that there is a written contract. It is also clear that there are specific "guidelines" for the amount of the deposit an individual can take and the period in advance of the rental this can be demanded. Most of the terms of rentals advertised today are outside these guidelines which would make the contract invalid and often illegal. For example a deposit to secure a booking can be a maximum of 25% of the total rental.

There are many new regulations about to become law. This includes long needed safety requirements for seasonal rental properties. One which I personally welcome is that pertaining to swimming pool safety. I am told this will be enforceable in law by 2003 and this could make over 90% of all swimming pools in France illegal, and it will be against the law to rent these properties. In most cases this will be a simple matter of fencing and gating, plus some extra health and sanitary requirements.

IS IT WORTH RENTING MY HOME

Simple answer - Yes

France is the largest country in Europe - combine this with the climate, food and history plus the fact than France is the most popular tourist country in the world (73 million visitors a year) would seem to make the purchase of a second home in France which can be rented to tourists a good investment.

There are now over 1.2 million properties in France owned as second homes by "etrangers" including 400,000 by UK citizens and 140,000 by the Dutch, this number of privately owned second homes is predicted to double by 2025. Add to this another 2.4 million "maisons secondaires" owned by French residents and this gives an important source of revenue and employment;

Already in the European community 2 million businesses depend on tourism, representing 12% of GNP and 30% of all external trade. As France has 25% of all European tourism you would expect strict controls on the rental of private homes from the county which has "perfected" bureaucracy.

The World Tourism Organisation forecasts a doubling of the number of arrivals to Europe to 720 million per year by 2020. Vacationing patterns are changing with more holidays per year, shorter stays, longer travelling distances and more second homes with low owner-occupancy rates. (World Tourism Organisation - Environmental Signals 2001).

There will be fluctuations in the supply and demand of property, both to buy and to rent and, as in all property the main consideration is - location. If you own a good property in the right place then it will be commercially viable to rent it.

There is a consumer protection department - the DGCCRF (La direction générale de la Concurrence, de la Consommation et de la Répression des fraudes) http://www.finances.gouv.fr/DGCCRF/ which has offices in every department. All cases of non-registered or illegal vacation rentals should be reported to them. Their local address can be obtained from their website.

Whether you decide to go it alone and meet all the necessary taxation and legal requirements, do your own marketing and collect the money from clients, or to use the services of a licensed agency in France who will do all the declarations and permits for you and who is legally bonded to ensure your money is secure, has insurance to protect you and the tenants, invests heavily in marketing and will keep you advised of changes in the laws, is your choice.

One thing is sure. The business of private home rentals is planned to be the largest single sector for tourism accommodation in France. That it will be controlled and regulated is certain. All the legal structure and the penalties for infringement are in place and it only remains for the trade bodies to be empowered to "police" these laws.

My personal experience is that the FNAIM is now very active in the investigation of all websites (including mine), agencies and advertisers, in every country, who are involved in renting private homes in France. All private properties which are advertised in publications, catalogues or in the Internet are recorded. By 2003 it is expected that private rentals in France will only be done either by a licensed French agency or that an owner will advertise their personal property individually, that this property will be officially registered as a seasonal rental property and the registration number and insurance will be shown on the advertisement. If not both the owner and the publication (or website) face prosecution.

This is not mindless bureaucracy, although France has plenty of bureaucrats, I hear of many cases of deliberate fraud, inadequate and inaccurately described properties, dangerous facilities and services and poor value for money.

The bottom line is of course - money. Private home rentals is now very big business and all this business is taxable. Until very recently it simply was not worthwhile for the French authorities to collect tax on the thousands of non French residents who rented out their second home in. Now with the total disclosure of information treaties which apply to all previous "tax havens" it is a simple matter to discover and collect these taxes. C'est la France.

The Law and Renting Your Home in France