Investing in Parking Spaces in France: Legal and Tax Guide

The Investment Case

Urban parking shortages make parking spaces attractive as a rental investment — but only in cities where that shortage is acute. Yield and pricing vary sharply by location. Beyond the pure rental investment, a parking space near an existing residential or commercial property the investor already owns adds value to that property and improves its resalability or lettability.

A parking investment only makes financial sense in cities where the deficit in spaces is significant. Investors should resist treating it as a universally attractive proposition: the market is highly local.

Acquisition Structures

There are several ways to hold a parking space in France, each with different legal characteristics.

Direct ownership: copropriété lot or volume division

The most straightforward approach is direct acquisition of a parking lot as a lot de copropriété within a building subject to the copropriété statute. An alternative — common in large commercial or business centres — is acquisition through division en volume, which allows public and private car parks to coexist within the same physical complex.

Indirect ownership: shares in a société d'attribution

The investor may alternatively acquire shares (parts de société) in a company that gives them the right to occupy a defined parking space. This structure is particularly common for car parks developed on land held by local authorities under concession arrangements.

Limited-duration investments: concessions and long leases

Two main structures are used for limited-duration rights: the bail emphytéotique and the bail à construction. Both share common features: minimum durations of 12 years up to a maximum of 99 years; the right conferred is a real property right; and any buildings erected or improved revert to the landlord at the end of the lease. Limited-duration investments require careful thought: as the end of the term approaches, resale becomes progressively harder and the resale value falls towards zero. The investor must therefore extract sufficient rental yield throughout the period to recover the initial capital, which will not be returned at the end.

Car parks on public domain: concessions

On the domaine privé of a local authority, all structures are possible including outright sale. More typically, the local authority grants a bail à construction to a developer who builds the car park, and the developer then commercialises individual spaces either through a société d'attribution (investors acquire shares giving personal use rights for the duration of the concession) or through a société de construction (investors acquire time-limited real property rights over individual spaces). On the domaine public, investors in a private car park acquire a personal right of use for the concession's duration — but the precarious and revocable character of public domain occupation authorisations is a significant risk.

Tenancy Regimes

Which legal regime governs the letting of a parking space depends on its relationship to any other premises in the same letting arrangement. There is no single parking-specific tenancy framework.

Loi 1989: when the garage is accessory to a residential or mixed-use letting

If the garage is let by the same landlord as an accessory to residential premises (or mixed residential/professional premises) governed by the Loi du 6 juillet 1989, the accessory follows the principal: the entire letting — including the garage — is subject to the 1989 framework (Loi 89-462, Art. 2, al. 1). Some landlords attempt to separate the residential and parking lettings into two distinct contracts; the courts accept this only if the separation is not intended to circumvent the law.

Code civil: standalone garage or accessory to a furnished letting

Where the lease covers only the garage, or where the garage is accessory to a non-principal-residence furnished letting, the applicable regime is the contract and the Code civil: no mandatory duration, and free fixing and adjustment of the rent. If the garage is accessory to a furnished letting that constitutes the tenant's principal residence, the furnished lease rules apply — a one-year renewable term.

Bail professionnel: accessory to professional premises

A garage let accessory to exclusively professional premises follows the professional lease framework (Loi 86-1290, Art. 57A): minimum six-year duration, freely fixed rent.

Bail commercial: the position of parking spaces

The commercial lease statute applies only to premises in which a business fund is operated, or to accessory premises indispensable to that exploitation. A parking space, as a purely open area, is neither a local (an enclosed and covered space capable of receiving customers) nor an accessory local in the commercial lease sense — established by consistent Cour de cassation case law (Cass. 3e civ. 18-3-1992 n° 90-15.686; Cass. 3e civ. 4-1-1995 n° 92-21.585; Cass. 3e civ. 12-7-1995 n° 93-20.599). However, enclosed garages or boxes could potentially benefit from the commercial lease statute as accessory premises where they are indispensable to the operation of the business fund or where their removal would jeopardise the main business (Cass. 3e civ. 22-3-2006 n° 05-12.106).

Income Tax

Rental income from garages and parking spaces received by an individual (or a non-IS entity) is taxed:

• as revenus fonciers where the letting involves no services or facilities beyond simple caretaking (gardiennage);
• as bénéfices industriels et commerciaux (BIC) where the letting is accompanied by commercial services — for example, vehicle washing, maintenance, or other additional services.

Under the revenus fonciers regime, rental income is included in the taxpayer's overall income and taxed at the progressive income tax scale, with social charges on top. The régime micro-foncier (30% flat deduction) is available where total annual property income does not exceed €15,000; above that threshold, or by option, the régime réel applies and actual charges are deductible.

VAT: A Critical Distinction for Parking Lettings

The letting of premises used for vehicle parking is expressly excluded from the VAT exemption that applies to the letting of bare premises, and is therefore subject to VAT as a matter of law — it is not optional and no election is needed or possible (CGI Art. 261 D, 2°). This mandatory VAT applies regardless of: the type of vehicle; the characteristics or type of space (garages, boxes, open-air, underground, surface-level); whether the letting is accompanied by any commercial services; and the periodicity or method of payment (hourly, daily, monthly). A landlord who lets parking spaces must register for VAT, charge VAT on the rent, and file VAT returns.

The two exemptions from the parking VAT rule

Exemption 1 — Accessory to a VAT-exempt letting: Where the parking space is let in conjunction with premises that are themselves exempt from VAT (principally residential or professional premises where no VAT option has been exercised), and all three following conditions are met: (i) the space and the main premises are in the same building complex; (ii) they are let by the same landlord to the same tenant; and (iii) the parking space is genuinely accessory to the main premises. Separate leases with separate rents are acceptable provided the three conditions are met (BOI-TVA-CHAMP-10-10-30 n° 180). The exemption applies whether the main letting is mandatorily exempt or only optionally exempt.

Exemption 2 — Below the VAT franchise threshold: Where the landlord's total annual receipts from parking lettings do not exceed the VAT franchise en base threshold — set at €36,800 in 2023. Below this threshold, VAT registration and collection is not required.

Acquisition Taxes

New garages

The purchase of a new garage is in principle subject to VAT at the normal rate (20%), to which the taxe de publicité foncière of 0.71498% of the price excluding VAT is added.

Old garages

The purchase of an old (existing) garage is in principle subject to droits d'enregistrement at the standard rate, which is generally 5.80665%.

Reduced rate: three-year non-commercial use commitment

In certain départements, the transfer duty base is reduced by an abatement where the buyer undertakes not to use the land or garage for commercial or professional purposes for at least three years from the date of the acquisition deed (CGI Art. 1594 F ter).

Local Taxes

Taxe foncière: The owner of a parking space is subject to taxe foncière on built properties in the ordinary way.

Taxe d'habitation: The tenant of a parking space is liable for taxe d'habitation (where still due — applicable to secondary residences) if the parking space is located within one kilometre of their residence. In that case the parking space is treated as a dependency of the residence. If it is located beyond one kilometre, taxe d'habitation is not due on the parking space.

Capital Gains on Sale

Where a private individual sells a parking space held as a private asset, any capital gain is taxed under the ordinary private real estate capital gains regime — in principle at the combined rate of 36.2% (19% income tax plus 17.2% social charges), with the standard holding period abatements reducing the taxable gain progressively to zero after 22 years (income tax) and 30 years (social charges).

One specific relief applies: where the disposal price does not exceed €15,000, the capital gain is fully exempt from tax (CGI Art. 150 U, II-6°). For low-value parking spaces, this may provide a complete exemption.

This article covers the French legal and tax framework for parking space investment. The VAT franchise en base threshold of €36,800 applies for 2023; this figure is reviewed periodically. The transfer duty rate of 5.80665% is the general standard rate; actual rates vary by département. The capital gains combined rate of 36.2% (19% income tax + 17.2% social charges) is the standard rate before holding period abatements.