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Comparison between ‘régime réel’ and ‘micro-BIC’

The income you receive from the rental of furnished property, as ‘loueur en meublé non professionnel’ (LMNP), is subject to the progressive scale of income tax. They must be declared as industrial and commercial profits (BIC) and not as tax on property income which would be less favorable.

Thus, you are entitled between two types of tax regimes: either the micro-BIC regime or ‘réel simplifié’ regime.

In the following sections, we offer you a comparison of these two statuses on all of these criteria in order to assist you in choosing the status that best suits your profile.

Régime BICRégime réel simplifiéRégime réel normal
Procedures– Complete the POi form to get a SIRET identification number;
– If you own more than one property, you must enter the address for which you receive most of the income;
– Choose a tax option (Micro, réel simplifié, normal réel)
Conditions for classic rentalsAnnual turnover excluding VAT < €72.600/yearTurnover excluding VAT between: €72 600 and €247 000Turnover excluding VAT >€247 000
Conditions for classified seasonal rentalsAnnual turnover excluding VAT <€176 200Turnover excluding VAT between: €176 200 and €818 000Turnover excluding VAT >€818 000
Calculation of taxable profitAutomatic abatement of:   71 % of turnover for classified seasonal rentals  
50 % of turnover for classic rentals
Taxation based on net profitsTaxation based on net profits
Income to be declaredGross annual turnover (excluding VAT, without deducting any allowance) + any realized capital gains or lossesNet profit + Any realized capital gains or losses  Net profit + Any realized capital gains or losses  
Tax declarations and accounting obligationsN°2042 C ProN°2042 C Pro ‘Déclaration de résultat des BIC n°2031’ Liasse of annex tables n°2033-A à 2033-GN°2042 C Pro ‘Déclaration de résultat des BIC n°2031’ Liasse of annex tables n°2050, n°2051, n°2052, n°2053, n°2059-F, n°2059-G
Accounting obligationsStay up-to-date with the accounts in the event that the owner wishes to switch to régime reel.You must keep a journal of receipts and expenses, and, if applicable, a register of fixed assets.
Material obligationsIf the owner rents a furnished property, he must respect a list of mandatory equipment inherent to the comfort of his tenant. This list of 11 mandatory items will include: Baking trays A classic oven or microwave A table and chairs or seats Complete bedding (bed or sofa bed + duvet or blanket) Crockery and cutlery Lighting Household maintenance equipment A refrigerator and a freezer Kitchen utensils A window shading device in the bedroom(s) Storage shelves
AdvantagesThis regime is favorable if you are taxed low and have good profitability, especially in furnished accommodation, which allows you to benefit from a reduction of 71%.The ‘régime réel’ allows you to optimize your taxation in most cases. Indeed, it is common for the amount of loan interest, amortization and deductible charges to lead to a zero tax results. The lessor has no income tax or social security contributions.  
DisadvantagesThe 50% allowance is often less attractive for tax purposes than the deduction of deductible charges and depreciation from the ‘réel simplifié’ régime.For the declaration formalities, a specialist accountant should be used.

The tax on furnished rentals is not only one of the oldest loopholes in France, but certainly one of the most interesting ones to minimize taxes on your rental investments.

However, as a non-professional furnished rental company (LMNP), you have a choice in terms of the taxation of your rental income: the micro-BIC regime or the ‘régime réel’.

This choice will largely determine the taxes you will pay on your rental income.

If you do not know which plan is the most advantageous, do not hesitate to contact our experts who will offer you customized support to ensure you maximum profitability.

French Tax Online is a tax consultancy firm specialized in foreigners investing and living in France.

A member of the Budiz Company Group, which is a French chartered accountant registered with the Order of French Chartered Accountants (OEC).

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