Resident in France for less than 5 years and a gîte owner - what do you need to know to apply for your new residence card?
One of the thorny questions that we're hearing a lot is whether someone who runs gîtes is active or inactive for the purposes of applying for their new residence status and card. In this article we look at this in detail and bring you a few precisions.
Firstly, remember that the distinction between economically active and inactive only applies if you’ve been resident in France for less than 5 years. Those who’ve been in France for over 5 years only have to prove residence, not that they meet particular conditions or are in a particular category. If you've lived in France for 5 years or more, you don’t therefore need to rely on the information in this article for the purposes of applying for your new residence status and card.
Unfortunately, there is no ‘one size fits all’ answer to whether a gîte owner is active or inactive as it depends on their legal and fiscal status - and that in turn depends on your turnover and other things. Under the Code des Impôts, a gîte operator may be either professional or non-professional.
Professional gîte owners
Your activity as a gîte owner is deemed to be professional if
- The turnover from your gîte rental and any other furnished rental that you operate is more than 23,000 euros a year (even if it split between, for example, you and your spouse, or someone else who’s part of your tax household); and
- This represents more than half of your overall household income.
If you fall into this category, you are running a commercial activity and you are obliged to register with the Registre du Commerce et des Sociétés (RCS) as a loueur professionnel (Article 155 du Code Général des Impôts).
This means that you have to choose your legal and fiscal status as a professional. Most people in this situation will be registered as a microentrepreneur, but you can also choose to declare as a travailleur indépendent or under the régime réel.
As a professional gîte owner you will pay cotisations and build up pension trimestres; you will be covered for health care by virtue of your professional registration.
If you fall into the professional category, you are considered to be active and you will apply for your new residence status and card following the ‘I am employed or self-employed’ route on the online platform. You will need to provide proof of your registration in the RCS, plus proof that your business is genuine: a declaration of turnover, sales book, accounts etc. But you are not, in this category, required to show a minimum level of income or ‘sufficient resources'.
If you have come late in life to running your gîtes and you are hoping to apply for an S1 from the UK on your eventual retirement, you need to know that retiring here from self-employment as a professional gîte owner means that France will be your competent state for health care and you won’t be eligible for an S1. For more information about competent states, see here: https://www.britishineurope.org/page/1016540-explanatory-guides#GN3.
Non-professional gîte owners
If you don’t meet both conditions in the paragraph above, you are deemed to be a non-professional gîte owner - a loueur en meublé non professionnel (LMNP). Anyone running just one or two gîtes is likely to be in this situation. The 23,000 euros turnover required to be seen as professional is an absolute, and is not discretionary - if your takings are below this you will be deemed to be non-professional even if you have no other income. If you have other income from furnished rental - a long term furnished rental, for example, this is added to your gîte income to calculate whether you have reached the 23,000 euro threshold.
As an LMNP, you cannot register with the RCS and you cannot become a microentrepreneur or have any other professional status for your gîte rental. You must instead declare your gîte turnover on your tax return, as ‘revenus de patrimoine’, and it will be added - minus the appropriate abattement, or reduction, to your overall income for the purposes of calculating your tax and your revenu fiscal de référence. You will pay social charges on the net amount ( ie the amount declared minus the appropriate abattement - see the next paragraph) but this doesn’t build up pension trimestres or qualify you for health care. Non professional gîte owners must either be registered for health care under the PUMa scheme, or have a UK-issued S1 because they have a UK state pension.
If you are a non-professional gîte owner, you are considered to be inactive and you will apply for your new residence card using the ‘I live in France without working/sufficient resources’ route. You will have to submit details of your resources.
We suggest that rather than using your tax statements to show your gîte income, you provide a declaration of and, where possible, proof of your overall income/turnover - bank account receipts, your sales book etc. Why do we say this? Well, the abattement for an unclassified gîte is 50%, and that for a classified gîte is 71%; this means that whether your gîte has a classification or not, the amount that shows on your tax statement will always be considerably less than your actual income, and if you simply use your tax statement to show your income you may not meet the guideline figures for ‘sufficient resources’.
Example: you have 2 gîtes that you let from June to September. Your gross income - your turnover - is 20,000 euros a year. You are classified by the local tourist board and therefore an abattement of 71% is applied to your gross income by the tax office; your net income on your tax statement is therefore just 5800 euros - not enough to demonstrate that you have sufficient resources.
Making your application
The application form is now online, here: https://contacts-demarches.interieur.gouv.fr/brexit/brexit-residence-permit-application/. However, the decree that will give final clarity to the process and in particular to the income guidelines has not yet been published (although we're told that it is due 'imminently'). Because there is still some uncertainty about which guideline figures will be used by préfectures to determine 'sufficient resources' for those who are inactive, we suggest that those in this situation may wish to wait until the legislation has appeared so that you're not applying blind.
You can find out more about the application process on our website, starting here: https://www.francerights.org/applying-for-your-new-cds.html. Once the decree has been published we'll be adding category-specific pages for those with less than 5 years' residence.
Important note: France Rights provides this information solely to help you decide how to apply for your residence status and card using the online application form. It is not intended, and should not be taken as, legal or fiscal advice. If you need advice on your fiscal régime you will need to contact an accountant with experience in this area.