Rental Payment Aid
Tax credit to encourage landlords to waive rents for business leaseholders.
The government has proposed that a tax credit be introduced in the Finance Law project for 2021 to encourage the landlords to waive part of the rents owed by their business leaseholders who are administratively closed or particularly affected by the health restrictions implemented.
This scheme will prevent the landlord from being faced with default or unpaid rent by the leaseholder and will allow businesses to benefit from significantly reduced rents. The government has obtained a commitment from the main landlord representatives to cancel the rents of November 2020.
Who can benefit from the landlord tax credit?
Any landlord can benefit from the tax credit, regardless of their legal status. The tax system is open to :
- natural persons, provided they are domiciled for tax purposes in France.
- legal entities under private law (companies, associations, etc.) and public law (public institutions, for example).
A special revenue deduction system is provided for local authorities and their groupings that waive rents under the same conditions.
Conditions concerning the renting company for the eligibility of the landlord to the tax credit
The renting company must rent the premises that are subject to a ban on public reception during the month of November 2020 or carry out its main activity in a sector mentioned in Appendix 1 of decree no 2020-371 of 30 march 2020 relating to the solidarity fund (hotel-restaurant-café sector, for example).
What are the eligibility criteria?
The business premises for which rent waivers are granted must be located in France.
Amongst the eligible companies, those that have practiced drive-in or click and collect during the month of November remain eligible.
In addition, the renting company must
- have a headcount of less than 5,000 employees,
- not have been in difficulty on 31 December 2019, with the exception of micro and small companies, provided that they are not the subject of a safeguard procedure, a recovery procedure or a judicial liquidation,
- not have been in judicial liquidation on 1 March 2020.
What is the amount of the landlord tax credit?
- For landlords of companies with less than 250 employees
The amount of the tax credit is 50% of the amounts waived. For example: a landlord who waives €600 in rent will receive €300 in state aid in the form of a tax credit. He pays €300, the company saves €600.
- For landlords of companies with 250 to 5,000 employees
The amount of the tax credit is 50% of the amounts waived, up to a limit of 2/3 of the rent. For example, a landlord who waives €12,000 of rent from a company with 400 employees will receive €4,000 in aid from the State in the form of a tax credit. The landlord will pay €4,000 and the company €4,000.
How to calculate the headcount of the renter for the eligibility of the landlord to the tax credit?
The thresholds of 250 and 5,000 employees for the tax credit are calculated according to the terms of the Social Security Code. This is therefore the calculation method that applies in the context of relations with the URSSAF and the nominative social declaration. Il est déterminé au 1er janvier de l’année N en calculant la moyenne des effectifs de chaque mois de l'année civile précédente (année N-1). Il est valable toute l’année N.
It is determined on 1 January of year N by calculating the average number of employees for each month of the previous calendar year (year N-1). It is valid throughout the year N.
What happens if the landlord decides to waive the November rent after 31/12/2020?
Landlords will be eligible for the tax credit for rent waivers made up to 31 December 2021.
Thus, a landlord who waives the rent for November 2020 after 31/12/2020 will be eligible for the tax credit if he waives the rent by 31/12/2021 at the latest. The benefit of the tax credit will have to be claimed within the framework of the following income tax return or company tax return.
The year in which the landlord benefits from the tax credit depends on the date on which the rent waiver is granted:
- waivers granted before 31/12/2020 will be taken into account in the calculation of income tax or profits for 2020 (or for the year in progress at the date of the waiver),
- waivers granted as from 01/01/2021 will be taken into account in the calculation of income or profit tax for 2021 (or for the financial year in progress at the date of the waiver).
Does the tax credit apply to companies that are closed after 1 December 2020?
No. The tax credit is only applicable for the waivers granted for the month of November 2020.
The State has in fact put in place other measures to help companies that are still closed to cover their fixed costs. In addition to deferrals or exemptions from social security contributions and the partial unemployment scheme,
aid paid under the solidarity fund has been increased since 1 December to support the sectors most exposed to the crisis.
Thus, for the month of December, companies in sectors subject to a ban on receiving the public, such as restaurants, cafés, discotheques or sports halls, will be able to benefit from :
- aid of up to €10 000
- or compensation of 20% of monthly turnover up to a maximum of €200,000 per month.
To find out more, download the offical bulletin of Public Finance-Taxes of 25/02/2021
Our experts are constantly monitoring regulatory changes providing support to businesses. Our articles are updated by midday on the basis of press releases and the publication of decrees by official bodies, which are deciphered by our experts. There may sometimes be a couple of hours delay between the official texts and our publication, the purpose of which is to provide you with preliminary answers to your questions.