French General Tax Code
In force1° The homes are let bare, within twelve months of their completion or acquisition if later and for a period of at least five years, to a low-income housing organisation mentioned in Article L. 411-2 of the French Code de la construction et de l'habitation, with the exception of sociétés anonymes coopératives d'intérêt collectif pour l'accession à la propriété, to a semi-public company carrying out real estate activities overseas, to an organisation mentioned in article L. 365-1 of the same code or, in the overseas collectivities, to any social housing organisation approved in accordance with local regulations by the competent public authority. The transaction may take the form of a property lease;
2° The housing units are sublet, unfurnished or furnished, by the organisation mentioned in 1° and for a period of at least five years to individuals who use them as their main residence and whose resources do not exceed ceilings set by decree depending on the number of people intended to occupy the housing unit as their main residence and the location of the housing unit ;
3° The amount of rent payable by the individuals referred to in 2° may not exceed limits set by decree depending in particular on the location of the accommodation;
4° The accommodation may be specially adapted for the accommodation of people aged over sixty-five or disabled people who may be offered services of a hotel nature ;
5° A minimum proportion, defined by decree, of the habitable surface area of the accommodation included in an investment package notified simultaneously to the Minister responsible for the budget under the conditions set out in VII is sublet, under the conditions defined in 2°, to individuals whose income is below the ceilings mentioned in 2°, for rents below the limits mentioned in 3°. A decree specifies the resource and rental ceilings for the application of this 5°;
6° A fraction, defined by decree, of the cost price of a set of investments reported simultaneously to the minister responsible for the budget corresponds to expenditure incurred for the acquisition of renewable energy production equipment, appliances using a renewable energy source or insulation materials. An order by the ministers responsible for the budget, ecology, energy, sustainable development and overseas departments and territories respectively sets the nature of the equipment expenditure concerned;
7° At the end of the rental period referred to in 1°, the dwellings or the shares of the companies that own them are sold, under conditions, in particular in terms of price, defined by an agreement between their owner and the lessee organisation no later than when the lease is concluded, to the lessee organisation or to natural persons chosen by it whose resources, in respect of the year preceding that of the first occupation of the accommodation, do not exceed ceilings set by decree according to the number of persons intended to occupy the accommodation on a principal basis and the location of the accommodation ;
8° An amount corresponding to at least 70% of the reduction acquired is retroceded by the taxpayer in the form of a reduction in the rents paid by the tenant organisation mentioned in 1° and a reduction in the sale price to the tenant organisation or, where applicable, to the natural persons mentioned in 7° ;
9° (repealed)
The condition mentioned in 5° does not apply to housing for which the agreement mentioned in 7° provides for the transfer to natural persons at the end of the rental period.
In order to qualify for the tax reduction, the construction or acquisition of housing benefiting from the subsidised loans defined in article D. 372-21 of the French Construction and Housing Code must, however, have received the prior approval of the State representative in the overseas territorial collectivity. The number of homes approved by the State representative in any one year may not exceed 25% of the number of homes that meet the conditions set out in 2° and 3° of this I delivered the previous year in the overseas territorial collectivity.
II. - The tax reduction is equal to 50% of an amount equal to the cost price of the homes less, on the one hand, taxes and acquisition commissions paid and, on the other hand, public grants received. This amount is deducted from the limit mentioned in section 5 of article 199 undecies A, assessed per square metre of habitable surface area and, in the case of the accommodation mentioned in section 4 of I, the surface area of the communal areas in which services are provided. This limit is raised each year, on the date and under the conditions set out in Article 199 undecies A.5.
A decree may specify, as necessary, the nature of the sums used to assess the cost price referred to in the first paragraph.
Article 199 undecies B III is applicable to investments giving entitlement to the tax reduction provided for in this article.
III. - The tax reduction is granted in respect of the year of completion of the home or of its acquisition if later.
When the amount of the tax reduction exceeds the tax owed by the taxpayer who made the investment, the balance may be carried forward, under the same conditions, against income tax for subsequent years up to and including the fifth.
IV. - The tax reduction also applies to investments made by a société civile de placement immobilier governed by articles L. 214-114 et seq. of the Monetary and Financial Code or by any other company mentioned in Article 8 of this Code, excluding joint ventures, the units or shares of which are held, directly or through a single-member limited liability company, by taxpayers domiciled in France within the meaning of Article 4 B, whose share of the company's income is subject to income tax in their name, with the exception of shares held by semi-public companies for the construction and management of social housing as referred to in Article L. 481-1 of the Code de la Construction et de l'Habitation, in accordance with article L. 472-1-9 of the Code de la Construction et de l'Habitation, by sociétés d'habitations à loyer modéré. In this case, the tax reduction is applied by the partners or members in a proportion corresponding to their rights in the company in respect of the year during which the units or shares are subscribed. Where the investment takes the form of the construction of a building or the acquisition of a building to be constructed, the tax reduction only applies if the company making the investment undertakes to complete the foundations of the building within two years of the close of the subscription and to complete the building within two years of the date of completion of the foundations.
The tax reduction is acquired, under the same conditions, in respect of investments made by a company automatically subject to corporation tax, the shares of which are wholly and directly held by individual taxpayers domiciled in France within the meaning of Article 4 B, subject to the shares held by semi-public companies for the construction and management of social housing as referred to in Article L. 481-1 of the Code de la Construction et de l'Habitation, subject to shares held, in accordance with article L. 472-1-9 of the Code de la Construction et de l'Habitation, by sociétés d'habitations à loyer modéré. In this case, the tax reduction is applied by the shareholders in a proportion corresponding to their rights in the company. The application of this provision is subject to compliance with the following conditions:
1° The investments have received prior approval from the minister responsible for the budget under the conditions set out in III of Article 217 undecies;
2° The company making the investment has as its exclusive purpose the acquisition, construction and rental of the housing mentioned in I.
The individual shareholders mentioned in the second paragraph may not benefit, for the subscription to the capital of the company mentioned in the same paragraph, from the tax reductions provided for in Articles 199 terdecies-0 A and 199 terdecies-0 AB and the company mentioned may not benefit from the provisions provided for in Article 217 undecies.
11 of Article 150-0 D does not apply to capital losses recognised by the shareholders on the disposal of the securities of the companies. 2° of 3 of article 158 does not apply to income distributed by these companies.
The tax reduction, which does not apply to units or shares whose ownership right is dismembered, is subject to the condition that 95% of the subscription is used exclusively to finance an investment for which the conditions for application of this article are met. The shareholder must undertake to retain all of his shares until the end of the lease provided for in 1° of I. All subscription proceeds must be invested within eighteen months of the end of the subscription period.
V. - The tax reduction is subject to a reversal in respect of the year during which:
1° The conditions mentioned in I or, where applicable, in IV are not met;
2° The commitment provided for in IV is not met;
3° Before the expiry of the period mentioned in 1° of I, the housing units mentioned in I or the units or shares mentioned in IV are sold or their ownership rights are stripped. However, this right is not called into question if the dismemberment of this right or the transfer of ownership of the property is the result of the death of the taxpayer or one of the members of the couple subject to joint taxation and if the assignee of the property or the holder of its usufruct undertakes to respect the commitments provided for, under the same terms and conditions, for the period remaining at the date of death.
VI. - The tax reduction provided for in this article is also available for the acquisition of housing that meets the conditions set out in I, that has been completed for more than twenty years and that has undergone renovation work defined by decree, enabling the housing to acquire technical performance similar to that of new housing or enabling it to be protected against the risk of earthquakes or cyclones. In this case, the tax reduction is based on the cost price of the housing plus the cost of the renovation work, less any taxes and acquisition commissions paid and less any public assistance received. The limit mentioned in II applies. The tax reduction is granted for the year in which the work is completed.
VI bis. - A.-The tax reduction provided for in this article is also available for renovation or refurbishment work on housing that meets the conditions set out in I, has been completed for more than twenty years, is owned by the bodies mentioned in 1° of the same I and is located on the island of Tahiti, in the communes of Nouméa, Dumbéa, Païta, Le Mont-Dore, Voh, Koné and Pouembout and in Saint-Martin, enabling the housing to acquire technical performance similar to that of new housing or enabling it to be protected against the risk of earthquakes or cyclones. The tax reduction is based on the cost price of the refurbishment work, less tax paid and less public assistance received. This amount is subject to a ceiling of €50,000 per home. The tax reduction is granted for the year in which the work is completed.
B.-The tax reduction provided for in this article is also available for demolition work prior to the construction of the housing mentioned in I, where the building's foundations are completed within two years of the demolition work being completed. The tax reduction is based on the cost price of the demolition work less, on the one hand, the taxes paid and, on the other hand, the public grants received for the same work. This amount is subject to a ceiling of €25,000 per home demolished. The tax reduction is granted, for this work only, in respect of the year in which it is completed.
VI ter. - The tax reduction is reversed for the year in which the conditions mentioned in VI or VI bis are not met.
VII. - When the amount per programme of investments exceeds two million euros, the benefit of the tax reduction provided for in this article is subject to obtaining prior approval issued by the Minister responsible for the budget under the conditions provided for in III of article 217 undecies. When the investment project is covered by an order from the State representative awarding a subsidy under development contracts, the approval relates exclusively to determining the eligible tax base and the conditions for guaranteeing the protection of investors and third parties. It is tacit in the absence of a response from the administration within a period of two months, this period being renewable only once, under the conditions set out in the last paragraph of 2 of III of the same article 217 undecies. This simplified procedure only applies to social housing programmes included in development contracts in New Caledonia and in the project contract for French Polynesia.
VIII. - A taxpayer may not, for the same dwelling or the same subscription of units or shares, benefit from both one of the tax reductions provided for in Articles 199 undecies A, 199 tervicies or 199 septvicies and the provisions of this article.
The expenditure on works used to calculate the tax reduction provided for in this article may not be deducted to determine property income.
IX. - This article applies to the acquisition or construction of housing between the date of promulgation of Law no. 2009-594 of 27 May 2009 for the economic development of overseas France and 24 September 2018, in Guadeloupe, French Guiana, Martinique, Mayotte and Reunion Island, and 31 December 2025 in Saint-Pierre-et-Miquelon, New Caledonia, French Polynesia, Saint-Martin, Saint-Barthélemy and the Wallis and Futuna Islands. For the application of this IX, constructions mean buildings that have been the subject of a declaration of the start of construction.
However, this article remains applicable, for investments made in Guadeloupe, French Guiana, Martinique, Mayotte and La Réunion, to investments for the approval of which an application has reached the administration no later than 24 September 2018.
1° (Repealed)
2° (Repealed)
X. - The benefit of the tax reduction provided for in I is subject, for investments made in the overseas departments and Saint-Martin, to compliance with Commission Decision 2012/21/EU of 20 December 2011 on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest.
