Differences between Micro-BIC regime and the Simplifie reel regime
Furnished renting is considered as a commercial activity. You are taxed in Commercial and Industrial Benefits regime (BIC). This regime offers two possibilities: the micro-BIC regime and the regime reel.
A good knowledge of the differences between the two options is an essential prerequisite to making an insightful choice. What distinguishes the two? which one to choose base on my income range? what the exoneration criteria they confer? Is it possible to switch from one to the other?
The following sections are here to provide answers to these interrogations you may have and therefore guide you to get the most out of your investment. Our free simulator will help you chose the right regime for you !
Legislation for a micro-BIC in case of furnished rental
The micro-Bic regime is a simplified taxation regime designed for property owners willing to rent their good as furnished. It allows to deduct a flat rate of charges made compulsory by the state.
What is the advantage and inconvenient of micro-BIC? what are the owner’s obligations?
To be eligible for a micro-BIC regime your annual rental revenues should be below the threshold value of €72600.
Your taxable profit from renting in a micro-BIC regime is equal to half of annual revenue (lease payments including charges plus accessory proceeds). The resulting figure is added to your income from other sources and is subject to the progressive income taxation (cf article on income taxation)
This 50% standard abatement shall be deemed to take into account all the charges related to the management of the property. You cannot add any other charge.
In the case of a rental of rental of tourist accommodation, eligibility threshold is raised to revenue of €176200 a year. The lump sum abatement also changes. The owner benefits from a new tax base at 29% of annual revenue which increases the abatement to 71% of rental income.
If your revenue exceeds the threshold, you are not eligible for the micro-Bic regime. The owner has to move to the “regime réel”. This new regime has a higher threshold and allow for many expense deductions.
However, the “regime reel” display more obligations for the owner and is more constraining in terms of accounting requirements. As an owner of a property, you have to register as an independent worker and may face the CFE (Company Real Estate Contribution). Note that in order to rent a furnished property a SIREN number and therefore a registration is compulsory.
If you opt for the micro-BIC regime, you have to report the amount of your furnished rental revenue (rents collected including charges and accessory receipts)
Si vous optez pour le régime micro BIC, il faut reporter le montant de vos recettes LMNP (loyers perçus charges comprises et recettes accessoires) directement sur votre déclaration de revenus.
The French tax administration will automatically apply the 50% or 71% abatement depending on, your situation.
Social contributions are automatically levied from furnished rentals.
A particular thing about the fiscal regime applied to furnished rental is that the owner is exempted from many obligations.
The priority is to set up an accounts book that will contain all the rents collected over the year. Then, he has to keep accounts of all the expenses spend on his property. Can be written down on it the costs of work carried, that of equipment and moveable as well as other expenses.
It is important to keep these books of account up to date to ease the process of regime switch. Indeed, in the “regime reel” the new accounting standards will have to be applied in more rigorous way.
Finally, if the owner rents a furnished property, the latter has to contain a list of equipment relative to the comfort of the tenants. This list consists of 11 compulsory equipment:
The micro-BIC regime offers simple reporting formalities; however, the 50% abatement may be less interesting than charges deductions and tax-deductible provisions for depreciation of the "régime réel simplifié".
You can try our free simulator in order to chose the right regime for you !
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