Tax treatment of the professional furnished tenant (LMP)

Verified 16 February 2024 - Directorate for Legal and Administrative Information (Prime Minister)

The commercial activity of professional furnished rentals can be carried out in business or not, under certain conditions. The tax system for furnished commercial rentals (LMP) is reserved for residential premises containing all the movable elements necessary for normal occupation by the tenant.

To have the status of professional furnished rentals (LMP), the two following conditions must be brought together:

  • The annual revenue from this activity (total rents including all taxes and charges) for all members of the tax household must exceed €23,000 on calendar year. This must also be the case when the accounting year is closed in the course of the year. If an activity is created during the year, the ceiling is adjusted.
  • This revenue must be higher than the total amount of other income from the activity of the tax household (salaries, other BICs).

If one of these conditions is not met, the renter is considered to be a non-professional furnished renter (PNML).

The professional or non-professional nature of the furnished rental applies to all furnished rentals in the tax shelter.

The rental may be only seasonal, provided that the activity is carried out in a professional and usual manner.

The professional furnished rental agency is not obliged to be registered in the Commercial and business Register (RCS) and the National company Register (RNE).

VAT

Furnished rentals, without provision of services, are not subject to VAT: titleContent.

Taxation system

The renter of professional furniture is subject to income tax (IR) in the category of Industrial and Commercial Benefits (BIC) individual business where he carries out his activity in If he carries out his activity through an SCI, he shall be subject to business tax (IS).

The renter in furnished professional entrepreneur individually, is subject to the micro-company regime or to an effective taxation regime according to his turnover (CA).

New turnover thresholds (turnover thresholds) have been introduced for the rental of unclassified furniture. These thresholds apply from the AC generated in 2023. The lessor may elect to have the former plan apply to its 2023 revenues.

Old Regime

The renter in professional furniture who rents out classified tourist furnitureis subject to the micro-company regime if its AC does not exceed €188,700.

The renter in professional furniture who rents out unclassified tourist furniture is subject to the micro-company regime if its AC does not exceed €77,700.

For more information on the tax treatment of micro-companies, see the dedicated card on our website.

New Scheme

The renter in professional furniture who rents out classified tourist furnitureis subject to the micro-company regime if its AC does not exceed €188,700.

The renter in professional furniture who rents out unclassified tourist furniture is subject to the micro-company regime if its AC does not exceed €15,000. If this is his only rental activity, then he will no longer be able to benefit from the micro-company scheme, the overall CA threshold to be a professional furnished renter (€23,000) being greater than the threshold of the micro-company (€15,000).

For more information on the tax treatment of micro-companies, see the dedicated card on our website.

FYI  

On the other hand, for turnover generated from 2024 onwards, only the new micro-company regime will apply.

Since this is a professional activity subject to the real tax regime (except for micro-company), the following charges may be deducted from income tax (i.e. rent collected):

  • Establishment costs (notary fees, business costs in particular)
  • Maintenance and repair costs
  • Local taxes
  • Management and insurance costs
  • Interest on loans
  • Depreciation furniture and improvements (lasting 5 to 10 years, for a rate between 10% and 20% per year)

Furthermore, the trader may depreciate the premises. The purchase price of real estate is not a deductible expense, but can be amortized depending on the actual holding period. If it is estimated at 50 years, 2% the price of the property may be deducted during that period each year.

Exemption from disposal capital gains

The type of exemption changes depending on the amount of your revenue:

  • Exemption is total where rental income is less than €90,000 excluding taxes (HT) during the 2 calendar years preceding the assignment. Furnished rentals must also have been in operation for at least 5 years.
  • Exemption is partial where such revenue is between €90,000 and €126,000 HT.

On the other hand, when the rental of bed and breakfasts and tourist furniture comes under the regime of the para-hotelerie, these thresholds change:

  • Exemption is total where rental income is less than €250,000 excluding taxes (HT) during the 2 calendar years preceding the assignment. Furnished rentals must also have been in operation for at least 5 years.
  • Exemption is partial where such revenue is between €250,000 and €350,000 HT.

Furnished rented premises are subject to the following local taxes:

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