{"id":71207,"date":"2023-03-13T07:30:00","date_gmt":"2023-03-13T06:30:00","guid":{"rendered":"https:\/\/www.ovonetwork.com\/blog\/?p=71207"},"modified":"2024-09-19T12:58:05","modified_gmt":"2024-09-19T10:58:05","slug":"legal-status-alpine-chalets","status":"publish","type":"post","link":"https:\/\/www.ovonetwork.com\/blog\/legal-status-alpine-chalets\/","title":{"rendered":"What legal status is required for rental chalets?"},"content":{"rendered":"\n

When you are renting out your chalet in France, the choice of legal status can be a real headache \u2013 SCI, SARL or LMNP? It can all seem very complicated. <\/strong><\/p>\n\n\n\n

Offering your chalet as a holiday let is a wise choice if you want to generate income or make a profit on your investment. However, the status under which you rent will have a real influence on the conditions of the rental management and the tax you pay on your holiday rental property.<\/strong><\/p>\n\n\n\n

This comprehensive guide explains the different statuses, to help you make the right choice for your business.<\/strong><\/p>\n\n\n\n

Please note, due to official legislation guidance, in some instances, we are only able to link to French versions of external web pages.<\/strong><\/em><\/em><\/p>\n\n\n\n

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The various statuses for holiday rental<\/h2>\n\n\n
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As an owner, it\u2019s important to choose the right status for your business \u00a9 Photo by Maria Ziegler<\/a> on Unsplash<\/a><\/figcaption><\/figure>\n<\/div>\n\n\n

The Soci\u00e9t\u00e9 Civile Immobili\u00e8re or SCI<\/h3>\n\n\n\n

A soci\u00e9t\u00e9 civile immobili\u00e8re is a legal structure<\/a><\/strong> made up of at least two partners, the purpose of which is to manage one or more properties<\/strong>. <\/p>\n\n\n\n

The SCI owns the property and the partners receive shares in proportion to their contribution. The SCI has articles of association or rules for its operating procedures. Its manager will be responsible for the day-to-day management of the company\u2019s property. <\/p>\n\n\n\n

However, the SCI is a property company. By definition, it is intended to carry out a civil activity. However, furnished rental is a commercial activity. As a result, the SCI would usually rent out an unfurnished property. Therefore, it is not usually suitable for a furnished property. <\/strong><\/p>\n\n\n\n

There are two exceptions to this rule:<\/strong><\/p>\n\n\n\n

Become an SCI subject to corporation tax<\/strong> (IS)<\/strong><\/h4>\n\n\n\n

It is possible to register your SCI for corporation tax and to pay that instead of income tax<\/strong>. In this case, the company pays tax on the profits. <\/p>\n\n\n\n

The SCI will be able to deduct its expenses from its income and it, not the shareholders, will be taxed on its profits. <\/p>\n\n\n\n

In addition, an SCI subject to corporation tax can write off the purchase of the property. In this case, if you rent a furnished property, there will be no distinction between the rental income from an empty property and that of a furnished property. <\/p>\n\n\n\n

Advantages<\/strong>: The SCI will be able to deduct its expenses from the income and pay tax just on the profits from its activity. The company will be able to account for the depreciation of the purchase of its properties on the balance sheet. <\/p>\n\n\n\n

Please note: <\/strong>If you choose to set up a company subject to corporation tax, you will have to comply with the system\u2019s tax and accounting obligations. In particular, you will have to keep full accounts and draw up annual accounts.<\/p>\n\n\n\n

Remain subject to income tax (IR) while having limited rental income from furnished rentals<\/strong><\/h4>\n\n\n\n

In this particular case, it is the partners who will pay tax on the profits, according to the shares they hold in the company. However, the income from the letting of the furnished property must not exceed 10%<\/strong> of the total income of the SCI.<\/p>\n\n\n\n

Therefore, it will only be possible to choose the SCI status if the business is not the company\u2019s main activity.<\/strong><\/p>\n\n\n\n

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\n Legal requirements for holiday rentals<\/a>\n <\/div>\n<\/div>\n\n\n\n

The Soci\u00e9t\u00e9 \u00e0 Responsabilit\u00e9 Limit\u00e9e or SARL<\/h3>\n\n\n
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The furnished bedroom at Lomatika in Doussard<\/a> with a view over Lake Annecy<\/figcaption><\/figure>\n<\/div>\n\n\n

The SARL or limited liability company<\/h4>\n\n\n\n

A SARL is a commercial company<\/strong> set up to buy, manage and operate one or more real estate properties. <\/p>\n\n\n\n

The SARL consists of a minimum of two partners and a maximum of 100. Each partner is only liable for the company\u2019s debts up to the amount of their contribution. No minimum capital is required. <\/p>\n\n\n\n

The SARL status can be used for seasonal rental of mountain chalets. It\u2019s also possible to create a family limited liability company, where the partners are members of the same family. <\/p>\n\n\n\n

To create a SARL you will need to: <\/p>\n\n\n\n