Tax alert 18 December 2020

COVID-19: The rent waivers tax credit is implemented!

On December 17, the Finance Act for 2021 has been voted by Parliament. Now the terms of application of this tax credit are final under confirmation of the Constitutional Council

As a reminder, the measure aims at granting a tax credit, equal to 50% of the rents waived during the period of application of the lock-down measures that began on October 30th, 2020, to lessors who are tax French residents or legal entities (including lessors exempt from corporate tax such as French SIICs and OPCIs).

The tax credit can be used by members of French SCPIs and companies subject to the tax transparency regime under Article 8 of the French Tax Code. OPCIs in the form of SPPICAVs have however been explicitly excluded from this setting: this tax credit has therefore to be used at their own level.

The conditions for benefiting from the tax credit are as follows:

Conditions relating to rents

  • Rents due in November 2020 only and definitively waived as of December 31st 2021;
  • Rents relating to (i) premises located in France that have been prohibited from receiving public during the period, or (ii) tenant companies who carry out their main activity in a sector particularly impacted by the financial consequences of the crisis (hotels, restaurants, tourism, culture, events, etc.), mentioned in Appendix 1 of the decree no. 2020-371 of March 30th 2020;
  • The total amount of waived rents taken into account for the determination of the tax credit may not exceed €800,000 per tenant company.

Conditions relating to the tenant company

  • The tenant company must not be a related entity of the landlord company;
  • The tenant company must employ less than 5,000 employees (all employees of related entities are taken into account in this respect). If the tenant company has 250 employees or more, the amount of rent waived for the month of November is limited to two thirds of the amount of rent stipulated in the lease agreement;
  • The tenant company must not be a company in difficulty as of December 31st, 2019 or having entered a compulsory liquidation procedure as of March 1st, 2020. Tenant companies qualifying as micro or small companies within the meaning of European Union legislation should not be concerned by this condition.

This tax credit equal to 50% of the waived rents should be deductible from the income tax due for the fiscal year 2020 as long as the rents waivers are effective as of December 31st, 2020. The tax credit resulting from waivers carried out during the 2021 tax year should be deducted from the income tax due for the fiscal year 2021. In the absence of corporate income tax to which the tax credit could be allocated, a refund in cash would have to be requested.

In addition, the mechanism for the deductibility of rent waivers introduced by the Second Amending Finance Act for 2020 is extended and covers waivers made between April 15th, 2020 and June 30th, 2021.


Arsene’s Real Estate team