The government has confirmed that social charges are not payable on the furnished lettings made by non-residents.

Last September we reported on the news of the introduction of social charges (prélèvements sociaux) on the capital gains from second home sales, as well as the French rental income of non-residents.

These charges were introduced through under Article 29 of the Loi n° 2012-958 du 16 août 2012 de finances rectificative 2012.

They apply at the rate of 15.5%, in relation to rent income received from 1st January 2012 and for capital gains since 17th August 2012.

At the time, it was not clear if these social charges applied to both unfurnished and furnished lettings, a critical point for most non-residents, as the vast majority of such lettings are furnished holiday homes.

In the published guidance that has now been issued by the government, it would appear that the social charges will only apply on unfurnished accommodation.

As a result, most non-residents who let out their furnished second home in France, whether long-term or holiday letting, will not face the new charges.

We await to hear more detailed information from the government, in order that there is complete clarity on this issue. If you find they are actually imposed, then you should query the imposition with the tax office. There also remains serious doubt that such charges are legal under European law.

In France, there is a confusing array of separate tax regimes for income from rental property, with both furnished and unfurnished lettings each operating on a different legal and fiscal basis.

In particular, the letting of unfurnished property is not subject to business registration, whereas this is potentially the case for residents who let a furnished letting.

Whether or not business registered, all France resident landlords pay social charges on their rental income, although in the case of registered business owners the level of the charge will depend on the nature of their business tax status.

You can read more about the law and practice of letting property in France, in our comprehensive guide below.