The French government has introduced an amendment to the Draft Finance Bill for 2021 in order to introduce a tax credit for lessors who have granted rent waivers to their lessees who are particularly vulnerable to the current crisis.
On the basis of the text adopted at this stage by the National Assembly, the tax credit would be equal to 50% of the rents waived during the period of application of the lockdown measures that began on October 30, 2020, by lessors who are individuals or legal entities, it being specified that it could also concern tax-exempt lessors such as real estate investment vehicles as SIICs (sociétés d’investissement immobilier cotées) and OPCIs (organismes de placement collectif immobilier). As regards tax transparent entities (Article 8 of the French Tax Code), SCPI (société civile de placement immobilier) and OPCI, this tax credit may be used by their partners.
The tax credit will only apply to rents in respect of (i) premises that are subject to a ban on receiving the public during the lockdown period, or (ii) tenant companies that carry out their main activity in a sector particularly suffering from the financial consequences of the crisis (hotels, restaurants, tourism, culture, events, etc.), mentioned in Appendix 1 of Decree no. 2020-371 of March 30, 2020.
To benefit from the tax credit, tenant companies must employ less than 5,000 employees. Companies in difficulty as of December 31, 2019 or in compulsory liquidation as of March 1, 2020 would be excluded from the regime.
The tax credit will be deductible from the personal income tax due in 2021 and from the corporate income tax due in 2021. The unallocated tax credit may be refunded.
As parliamentary discussions are still ongoing, this measure will have to be closely monitored in the coming weeks.
Arsene Real Estate Team