Para-hotel Business
Para-Hotel Activities
What are the regulatory specifications and tax implications of this concept?
In a context where the furnished rental sector is constantly evolving, para-hotel activities stand out as an innovative solution, combining the flexibility of seasonal rentals with traditional hotel services. On this page, we will guide you through the essential details of para-hotel activities to discover how this type of rental system can offer attractive opportunities while ensuring compliance with specific obligations.
Para-Hotel Activities
In a context where the furnished rental sector is constantly evolving, para-hotel activities stand out as an innovative solution, combining the flexibility of seasonal rentals with traditional hotel services. On this page, we will guide you through the essential details of para-hotel activities to discover how this type of rental system can offer attractive opportunities while ensuring compliance with specific obligations.
What are the regulatory specifications and tax implications of this concept?
Required services
The para-hotel business is a hybrid version of seasonal furnished rental, characterized by the additional provision of at least 3 of the following 4 services:
Owners or managers must provide a physical welcome to guests upon arrival. The regulations are quite flexible on this first criterion, specifying that the welcome may take place in a location other than the rented premises (in a rental agency, for example). Furthermore, tax doctrine specifies that a simple electronic reception system is sufficient.
Housekeeping services must be provided regularly during guests' stays. The tax authorities specify that simple cleaning at the beginning and end of the stay is insufficient. At the very least, the operator must "have the means" to offer cleaning services to the tenant during their stay, on a regular basis.
Para-hotel businesses must include the provision of household linens, such as sheets and towels, for all tenants.
The owner must be able to provide breakfast to all tenants in a similar manner to a hotel, meaning, either directly in the rented apartments or rooms, or in a dedicated area for the consumption of food (ex., a buffet or canteen). Simply providing a vending machine, or even a coffee machine, is insufficient to meet this requirement.
New in 2024
The 2024 Finance Act for metropolitan France has slightly amended the article regulating this activity, which now specifies that this accommodation service must be offered for a period not exceeding 30 nights (without prejudice to the proposed renewal options).
Para-hotel income taxation
How is taxable profit calculated?
Income from the para-hotel industry is considered "Industrial and Commercial Profits." Income is generally declared under the actual tax regime, which requires the maintenance of commercial accounting records.
All expenses incurred in the direct interest of the business and evidenced by supporting documents are deductible when calculating taxable income: electricity, water, heating, condominium fees, various subscriptions, loan interest, depreciation of real estate/furniture, etc. The taxable base is therefore generally low or even negative.
All expenses incurred in the direct interest of the business and evidenced by supporting documents are deductible when calculating taxable income: electricity, water, heating, condominium fees, various subscriptions, loan interest, depreciation of real estate/furniture, etc. The taxable base is therefore generally low or even negative.
Which tax rate is applicable?
Purchase in the name of a French resident
When the taxable income is positive, it is subject to the standard income tax scale (see table) and, subject to certain conditions and to social security contributions (CSG CRDS) at a rate of 17.2%.
2024 income tax scale.
2024 income tax scale.
More products
For non-resident owners
These results must be declared in your country of residence.
More products
Purchase through an intermediary of a new company in St. Barth
During the first five years, the company's profit is generally negative, meaning no tax is levied. If your company makes a profit despite offsetting losses, this profit is taxable in Basse-Terre (Guadeloupe) at a rate of 15% up to €42,500, and 25% thereafter.
Back
Purchase through an intermediary of a company whose effective management has been in St. Barth for more than 5 years
Here, profits will be exempt, as will withdrawals from your current account, but dividends will be taxable in your country of residence.
Back
Resale of the property: capital-gain taxation
The profit earned on the resale of real estate operated under the para-hotel regime is taxed according to the capital gains rules of Saint-Barthélemy.
Exemption from CSG CRDS (social security contributions and debts). After five years, capital gains are exempt if the average turnover per partner does not exceed €250,000 over the two financial years preceding the sale.
To qualify for the exemption, the following two conditions must be met:
This system is potentially more advantageous than the tax deduction based on the duration of ownership, but its application is also more subjective, particularly regarding the assessment of the professional nature of the activity.
Capital gains are subject to a 35% tax rate for sales of less than eight years' ownership. Above that, the rate is 20% with a 10% annual tax deduction, resulting in an exemption at age 18.
To qualify for the exemption, the following two conditions must be met:
- The activity must have been carried out professionally (whether or not as the main activity) for at least five years. This presupposes that the operator (or the partner of a fiscally transparent company) has been personally and continuously involved in the management of the business and can demonstrate genuine diligence, without the para-hotel activity having to be their main activity;
- The average net income over the two years preceding the sale may not exceed €250,000 to qualify for full exemption (a partial exemption is possible for a turnover between €250,000 and €350,000).
This system is potentially more advantageous than the tax deduction based on the duration of ownership, but its application is also more subjective, particularly regarding the assessment of the professional nature of the activity.
Capital gains are subject to a 35% tax rate for sales of less than eight years' ownership. Above that, the rate is 20% with a 10% annual tax deduction, resulting in an exemption at age 18.
A possible exemption from wealth tax on real estate
Provided certain conditions are met, specific to real estate ownership or to the main activity of this para-hotel business (less common), the operator may be exempt from wealth tax on real estate.
Provided certain conditions are met, specific to real estate ownership or to the main activity of this para-hotel business (less common), the operator may be exempt from wealth tax on real estate.
Subject to the social security scheme for self-employed persons (TNS)
When the operator carries out this activity as a private individual or as the main director of a commercial company (such as a family limited liability company), they are liable for social security contributions. These social security contributions represent an average of 40% of the company's net income.
If the company's income is zero or negative, which is quite common, minimum contributions of approximately €1,100 to €1,600 per year apply. Special provisions apply to operators not established in France.
When the operator carries out this activity as a private individual or as the main director of a commercial company (such as a family limited liability company), they are liable for social security contributions. These social security contributions represent an average of 40% of the company's net income.
If the company's income is zero or negative, which is quite common, minimum contributions of approximately €1,100 to €1,600 per year apply. Special provisions apply to operators not established in France.
A specific case? Contact us
We understand that every case is unique. To receive a personalized quote, please describe your financial situation by email and we will respond as soon as possible.
+590 690 41 49 50
rochechristian@cabinetrochecaraibes.com
+590 690 41 49 50
rochechristian@cabinetrochecaraibes.com
By clicking the button, you agree to our Privacy Policy
Discover our other missions
About
Cabinet Roche Caraïbes is a firm of chartered accountants specializing in the areas of taxation, real estate and wealth transfer.
Discover
Contact
- rochechristian@cabinetrochecaraibes.com
- +590 690 51 14 94
- Anse des Cayes, 97133
- Saint Barthélemy
Newsletter subscription
About
Cabinet Roche Caraïbes is a firm of chartered accountants specializing in the areas of taxation, real estate and wealth transfer.
Discover
Contact
- rochechristian@cabinetrochecaraibes.com
- +590 690 51 14 94
- Anse des Cayes, 97133
- Saint Barthélemy
Newsletter subscription
