The French Senate has approved measures to subject Airbnb and similar platforms to VAT in an effort to address competition imbalances with the hotel sector.
ADVERTISEMENTThe French Senate has approved regulatory measures to enhance the taxation of furnished tourist accommodations, such as those offered by Airbnb.
The development comes through amendments to the Finance Bill for 2024, a decision made against the government's recommendations, although the executive retains the authority to potentially override these changes.
Driven by various political factions in the upper house, notably the liberal-conservative Les Républicains and the Communist group, the Senate is taking steps to subject furnished tourist accommodation rentals to VAT.
Airbnb not subject to VAT
The focal point of the measure is undeniably Airbnb. According to proponents of the adopted amendments, the holiday rental company benefits from a perceived "distortion of competition" when compared to the hotel sector, which is currently subject to VAT.
Under the current system, furnished tourist accommodations are only subjected to VAT if they provide three specified services, including breakfast, regular cleaning, and the provision of household linen—a scenario that seldom occurs.
The adopted measure, approved by a show of hands among senators, abolishes this distinction. Its objective is to "ensure fair competition among the various forms of tourist accommodation," as articulated by Senator Max Brisson, the representative from Pyrénées-Atlantiques, a region significantly impacted by the surge in seasonal rentals.
Communist representative Ian Brossat strongly criticised what he termed an "excessively favourable tax system for tourist rental platforms, to the detriment of housing and the hotel industry".
Brossat expressed concern about the unwavering commitment to defend tourist rental platforms at any cost and directed his warning to Public Accounts Minister Thomas Cazenave, a vocal opponent of the Senate's amendments.
Finished but not final
Despite these developments, the government retains the ability to reject the measure during the remaining parliamentary process, leveraging Article 49.3 of the Constitution.
The provision enables the government to enact its own legislation on the same subject without requiring a vote in the National Assembly.
Over the weekend, the Senate had previously endorsed an initial measure to regulate furnished tourist accommodations by reducing tax deductions on income from these rentals in areas experiencing rental pressure.
In the National Assembly, the Renaissance group anticipates a similar examination of measures next week through a proposed bill to be discussed in a public session.
