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Non-essential businesses: a tax credit for lessors

Posted November 05, 2020 - 2 mins reading time
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Since October 30, 2020, the first day of reconfinement, businesses considered non-essential are once again closed. To encourage landlords to lower rents, the government has introduced a tax credit scheme.

How does the tax credit for commercial leases work?

As explained by Economy and Finance Minister Bruno Le Maire at a press conference on the terms of the reconfinement on October 29, a tax credit scheme will be introduced in the Finance Bill for 2021, "to encourage lessors to cancel part of their rents".

In concrete terms, any lessor of commercial premises considered as non-essential will be able to benefit from a 30% tax credit, provided they forego at least one month's rent over the period from October to December 2020.

The Finance Minister gave the following example:

"For a restaurant owner's monthly rent of 5,000 euros - i.e. 15,000 euros over three months - if the lessor foregoes at least 5,000 euros (one month's rent), he will benefit from a tax credit of 1,500 euros (5,000 x 30%). The lessor will therefore lose 3,500 euros instead of the 5,000 euros waived. The restaurateur will pay 10,000 euros in rent instead of 15,000 euros".

Which lessors can benefit from this tax credit?

The tax credit is available to both professional and private lessors, regardless of legal status. To qualify, lessors must lease their premises to companies with fewer than 250 employees. Premises must be either administratively closed or belong to the HCR sector (hotels, cafés and restaurants).  

François Asselin, President of the French Confederation of Small and Medium-sized Enterprises (CPME), welcomed the measure: "We've been pushing for months to tackle the problem of rents. This is a victory", he declared.

The president of the Fédération nationale de l'immobilier (FNAIM) du Grand Paris is equally satisfied, believing that this tax credit scheme "will enable both small retailers and independent landlords to come out of the crisis on top", and will have "a positive impact on job preservation".

The French government has earmarked 1 billion euros for this scheme, which can be combined with the solidarity fund.