How is the rental value of a business premises calculated?
Verified 18 July 2022 - Directorate for Legal and Administrative Information (Prime Minister)
The rental value of business premises (VLLP) is used as the basis for calculating local direct taxes property tax and the companies' property levy (CFE).
By business premises, all types of premises (commercial and professional) other than those used for housing or for the exercise of an employed activity at home must be included.
The rental value of such business premises shall be calculated taking into account 3 criteria :
- Weighted area of the room
- Category of the premises (and its dedicated rate)
- Space location coefficient
Weighted area of the room
To calculate the rental value, the overall area of the premises is weighted according to the use and physical characteristics of the different parts of the premises for the activity pursued.
- 1 weighting for the main surfaces of the room : these are the areas essential to the exercise of the activity (e.g. sales spaces accessible to the public, offices, meeting rooms, etc.).
- Weighting to 0.5 for covered secondary surfaces : these are the areas covered corresponding to elements used for the activity but whose commercial potential is lower (e.g. reserve, boiler room, technical rooms, covered parking spaces, etc.).
- Weight to 0.2 for uncovered secondary surfaces : these are areas not covered corresponding to elements used for the activity but whose commercial potential is lower (e.g. open storage areas and places, uncovered parking spaces, etc.).
A bakery/patisserie has an area intended for the reception of customers equal to 40 m² (essential area) and an area intended for reserves and kitchens equal to 60 m² (secondary area covered).
Weighted area = (40 x 1) + (60 x 0.5) = 70 m²
Category of the premises
Each room is attached to one of the 38 categories, according touse of the premises (e.g. store, office, depot, hotel, etc.) and its physical characteristics (e.g. street shops and shops, supermarkets, etc.).
In the case of pluriactivity in the premises, the category occupying the largest area is selected.
If the room is vacant on 1er January of the year, the category must be the last known assignment.
Of rates per square meter have been determined in each evaluation sector (representing a homogeneous rental market) and in each category of premises within a department.
These rates are updated annually by the departmental commissions for the rental values of professional premises (CDVLLP). They are published in the Administrative Acts (AAR) of each department, available on the tax website.
Any change in the premises that could affect the rental value (e.g. change of category, distribution of the premises' areas) must be communicated to the tax administration by its owner via the 6660-REV statement. For buildings completed before 31 December 2016, the 6660-CBD statement should also be done.
The localization coefficient is intended to to take account of the geographical situation of the premises in the evaluation area, up or down.
The localization coefficient can take different values between 0.70 and 1.30. It applies to the rate per square meter of the category of each business premises.
The rates per square meter of the categories of all the business premises of the plot concerned will be:
- Increased by 10%, 15%, 20% or 30% (localization coefficient of 1,1, 1,15, 1,2 or 1,3)
- Minor by 30%, 20%, 15% or 10% (localization coefficient of 0,7, 0,8, 0,85 or 0,9).
The location coefficients are defined by the departmental commissions and are published in each department's Code of Administrative Acts. They are available on the tax website.
In the final analysis, the calculation of the rental value of commercial premises is carried out using the following formula:
Rental value of the commercial premises = Weighted area of the premises x Category rate x Location coefficient.
A large surface area of 5000 m² with a category rate of €318 / m². The base parcel of the large area is assigned a localization coefficient of 1.10.
The rental value of the commercial premises is equal to: 5000 x 318 x 1,10 = €1,749,000.
Who can help me?
Find who can answer your questions in your region
- General Tax Code: Articles 1498 to 1498aAssessment of the rental value of business premises
- Company Property Tax (CFE)
- Property tax on built properties (TFPB)
- Categories of business premises for the purpose of assessing rental valueDirectorate of Legal and Administrative Information (Dila) - Prime Minister
- Rate Schedules and Locator Coefficients for Assessing Rental ValueMinistry of Economy