What is the difference between the Regime Réel and the Regime Micro-Entreprise?

Regime des Micro-Entreprises

Whenever total income for the year is less than 15.000 Euros (or 77.700 Euros when the property has been awarded with a tourist classification), unless the taxpayer opts for an alternative method of calculation, the tax office will apply the “Regime des Micro-Entreprises”, whereby for a UK resident tax will be applied to 70% of income, or 50% of income if the property has been awarded with a tourist classification.

The obvious disadvantage with this route is that losses cannot arise. If there is a mortgage on the property and if depreciation is available, actual expenses for furnished holiday letting are likely to exceed 70% or 50% of income, especially in the early years.

Regime Réel

Compulsory when turnover exceeds 15.000 Euros (or 77.700 Euros when the property has been awarded with a tourist classification), or applicable by option, the regime requires simplified figures to be drawn up and presented each year, with tax being assessed against actual income with expenditure incurred being offset.

Losses can therefore arise to be carried forward, as well as excess depreciation which can be offset against future profits. As a result an altogether more tax efficient approach can be maintained.