Are you an owner or a professional furnished rental company, or an LMP? Article 22 of the Social Security Financing Law 2021 Spell out has changed for you. From now on, you will be subject to social security contributions whereas until now, you may not be subject to the social security system (Social security for the self-employed).

What is the impact for you? The excellent article by Rivières Avocats explains for us the impact of such a measure. To read it, click here. In summary, the impact will mainly be made during the sale of buildings dedicated to seasonal rentals. And thanks to deductible amortization, the social security contribution base will be modest.

The short-term rental business is increasingly of interest in the legislator and it is a safe bet that other changes are in the works. OIQIA deciphers the new rule for you, in all simplicity!

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Owner, Professional Furnished Rental Company: Reminder of the General Principles

In a previous article, we experience you of the difference between the Professional Furnished Rental Company (LMP) and the Non-Professional Furnished Rental Company (LMNP). For the record, the Professional Furnished Renter Must generate more than 23,000 euros in net income per year. And his income must exceed the income of the fiscal household. The two conditions are cumulative: that is to say, you must meet both conditions to benefit from this status.

And in social matters?

Until the new law mentioned, a furnished rental company was only liable to pay social security contributions:

• When its turnover exceeded 23,000 euros.
• When, either the furnished apartment was dedicated to short-term rentals, or the lessor had registered with the Trade and Companies Register (RCS).

However, as many owners, professional furnished renters, did not register with the RCS, they therefore fell under the social security system (at a rate of 17.2%).

Since the new Social Security Financing Law 2021, there are no longer two regimes (the one where the furnished tenant pays social security contributions and the one where he is subject to social security contributions). From now on, all professional furnished renters will pay social security contributions.

From when will this come into force for the owner, professional furnished rental company?

This comes into effect as of January 1, 2021 and is not applicable to 2020 income.

Owner, Professional Furnished Rental Company: What Impact?

The impact of this new measure will be more effective during the transfer of the property, rather than during its exploitation. Why? Because during operation, the contribution base is based on net operating profit. However, as this profit is impacted downwards due to amortization, it is almost zero. In fine, the minimum annual contribution imposed by the legislator is around €1200. On the other hand, in the case of a sale, the short-term capital gain is entirely subject to social security contributions.

In conclusion

Owners, professional furnished renters, are now subject to social security contributions, applicable since January 1, 2021. In fact, this change will hardly be noticeable during the operation of short-term rentals. But it will be different when the property is sold!