Before you turn your French renovation into a business - the taxes, the costs and the exit strategy, with Lisa Clappison
Episode #19, Season 1
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How to turn your French renovation into a successful business
Buying a French property and turning it into a business - a gîte, chambre d’hôtes, wedding venue, retreat or campsite - is one of the most common dreams among people renovating in France. It’s also one of the areas where the most expensive mistakes get made, often before a single artisan has been called.
In this episode, Sue Peake-Russell is joined by Lisa Clapisson, a freelance business accountancy adviser who spent years working as an accountant before going independent to focus on what she actually cares about: educating people. Lisa now specialises in guiding business owners through the complexities of French business structures, cotisations, tax planning and business planning. She’s seen the successes, the failures and every expensive mistake in between - and she doesn’t sugarcoat any of it.
Note: Rosie is away this week working on a chateau project in Normandy.
What’s the biggest mistake people make when buying property in France to run as a business?
Lisa’s answer is unequivocal:
The biggest mistake people make is first of all falling in love with the property and then trying to find a business that will fit their property instead of coming with a business plan and then finding the property that will suit their business plan - and they tend to think about the business plan far, far too late in the day.
This is the foundation upon which everything else in this episode is built. The property is not the business. The business plan comes first.
Is running a gîte business in France still a good idea?
The gîte market in France is heavily saturated. The question isn’t whether you can create a beautiful property. It’s why anyone would choose yours over the dozens of others in your area.
There’s also a structural problem for people using a gîte or holiday let business in France as their primary income source, particularly for British people coming over post-Brexit. To validate a work visa, you need to show a minimum of around €22,000 of taxable revenue per year. But a properly structured property-based business - one that’s been set up to be tax efficient - is specifically designed not to show much profit in its early years, because of the significant depreciation available on the property and renovation costs.
The two things are actually at odds. You can either choose to satisfy your visa requirements or you can choose to optimise your tax. You can’t do both at the same time.
Lisa’s advice: if you need to validate a work visa, have a separate income-generating activity - consultancy, freelancing, whatever your background allows - and treat the gîte as a secondary revenue stream. A holiday let business in France works well as a supplementary income. As a primary income used to satisfy visa requirements, it becomes an expensive way to give money to the state.
How do I know if a wedding venue or chambre d’hôtes business is viable in France?
Before you look at a single property, do the research. For a wedding venue specifically, Lisa recommends speaking with wedding planners* first - find out what kind of venues are in demand, what accommodation is required, what size of wedding is most sought-after, and what realistic annual turnover looks like. Then see whether a potential property could meet those requirements within your budget.
Sue Peake-Russell adds an important practical point: any property receiving the public - a wedding venue, event space or hospitality business - falls under ERP rules (Établissement Recevant du Public), which means laws around fire exits, disabled access, ramps and accessible bathrooms are applicable. These aren’t things you can retrofit as an afterthought. They have to be part of the plan from the start, and they can significantly affect the layout of an old building.
For more on ERP and what it means for renovating a commercial property in France, see Episode #13 - Do you really need a project manager for your French renovation?.
*Sue has a wedding planning business with her partner, Louisa, which she runs alongside the family renovation business, S.R. Charpenterie. Sue and Louisa offer consultancy services to people thinking about opening a wedding venue in France. You can contact them at Chic et Unique.
Is a micro entreprise the right structure for running a hospitality business in France?
Almost certainly not as a long-term solution - and possibly not even as a starting point if you’re renovating a property at significant cost.
Lisa is emphatic about this. A micro entreprise is the simplest business structure in France. It is not the cheapest.
Nobody ever in any of the official documentation said that a micro was the cheapest way to run a business. They said it’s the simplest way to run a business.
Here’s why it matters for property-based businesses. A micro entreprise does not allow you to deduct expenses. Any money you put into renovating, furnishing or equipping your property comes out of your own pocket with no way of claiming it back through the business - unless and until you sell the property. You also can’t reclaim TVA on artisan invoices as a micro, which on a significant renovation can amount to a very large sum.
A properly structured property-based business, by contrast, can depreciate the property itself, the renovation costs, the furnishings and equipment - meaning that for several years, that depreciation cancels out any taxable profit, leaving you with minimal tax and social charges to pay.
The danger is that people start as a micro because it’s easy and familiar, then invest tens or hundreds of thousands into improving the property, and only later discover how much that’s cost them in lost deductions.
Lisa has a client who finally made the move from micro to a limited liability company after years of operating the wrong way. When she sold the accrued value of her micro to her new company, it turned out to be worth tens of thousands of euros - money she’d effectively been leaving on the table every year.
If you want to get out of it you can recuperate some of that money. But you can’t do it if you stay in your micro. You need to make a move.
Can I renovate first and sort out the business paperwork later?
No. This is one of the most expensive approaches you can take.
In the UK, you can be relatively flexible about what you do with a property - flip it, rent it, live in it yourself. You can change your mind as circumstances change. That flexibility does not exist in France. The tax system is rigid, and every time you change your intended use of a property, there’s a cost.
You need to know right from the start when you buy your property: am I going to live in this myself? Am I going to do it up and sell it on? Am I going to hold it long term and rent it out? All of those things will have a separate approach.
Lisa gives the example of a client who bought a chateau specifically as a wedding venue. Nothing was done - no hammer was lifted - until a full business plan was in place, including research into the optimal number of bedrooms, bathroom requirements, the most bookable wedding sizes and the best layout for the purpose. The result: a property projected to generate over €300,000 per year in turnover once operational, with the renovation done once and done right.
Planning first saves money. Renovating first and working it out later costs it.
What business structure should I use for a property business in France?
This depends entirely on what you’re doing, what your revenue looks like and what your long-term plans are. Lisa doesn’t give a one-size-fits-all answer - but she does flag the structures most relevant to property businesses.
Micro entreprise - administratively simple, but you can’t deduct expenses, can’t reclaim TVA, and it becomes tax-inefficient above a certain turnover. For chambre d’hôtes specifically, the allowable tax deduction has just been cut from 71% to 50%, which is causing real problems for people who built their model around the previous rate.
Entreprise individuelle (sole trader France) - more flexible than a micro, but still carries significant social charges and limited tax planning options.
SARL / SAS (limited liability company) - more complex to set up and administer, but allows you to deduct expenses, depreciate assets, reclaim TVA on artisan invoices and structure the business tax-efficiently. For a property-based business with significant renovation costs, this is almost always the right long-term structure.
SCI (Société Civile Immobilière) - a property holding company. Lisa’s high-budget wedding venue client used an SCI to hold the property, a separate company for the venue rental business, and a holding company above both, allowing money to flow between entities without triggering tax or social charges at each step. Most people don’t need this level of complexity, but the principle of separating property ownership from business operation is worth understanding.
For English-speaking support in France with holiday lets, gîtes and hospitality businesses, Lisa Clapisson offers freelance business accountancy advice specifically focused on helping people navigate French business structures. See her details in the resources section below.
What does it actually cost to run a hospitality business in France day to day?
More than people expect - and in ways they don’t always anticipate.
Ongoing consumables - sheets, towels, mattresses (which don’t last long under heavy use), crockery, glassware. These need a regular budget, not a one-off purchase.
Kitchen equipment - fridges, cookers, pizza ovens. There’s always something you’ll want to add or upgrade.
Garden and property maintenance - the image of floating around the garden in a white dress picking wildflowers is, as Lisa’s chambre d’hôtes clients confirm, not the reality. The reality is weeding, cleaning and general maintenance - either done yourself in old jogging bottoms, or paid for.
Staff costs - and if you can only find people willing to work for cash, those costs aren’t deductible. That’s money straight out of your pocket with no tax benefit.
Accountancy fees - for chambre d’hôtes that collect tourist tax directly (rather than through platforms like Airbnb or Booking.com), you’ll need a traditional accountant rather than a freelance adviser. Budget around €300 per month - and that’s for compliance only, not advice. Your advice has to come from elsewhere.
Taxe foncière - property tax in France, payable annually as the property owner regardless of whether the business is trading.
How does capital gains tax work in France when you sell a property used for business?
This is the conversation almost nobody has at the start - and the one that causes the most shock at the end.
The common assumption is that because it’s your primary residence, there’ll be no capital gains tax on sale. That’s not necessarily true if you’ve been running a commercial operation from the property.
As soon as you start using your property for commercial reasons, you expose yourself to capital gains tax.
Stopping the commercial activity a couple of years before selling may help - but Lisa expects the tax office to look increasingly critically at this strategy as they become more aware of it, particularly where someone has been running a commercial venue for thirty years and stops two years before putting the property on the market.
There’s also the question of what stopping the activity does to the sale. If you cease trading before selling, you’re selling a property, not a business. That’s potentially significantly less valuable than selling a going concern with established bookings, reputation and revenue. But selling as a going concern means the commercial activity is live, which reintroduces the capital gains exposure.
What can offset capital gains? Renovation costs from registered artisans with proper invoices - new roofs, new plumbing, new electrics, new septic tanks - are deductible. DIY work is not. This is another reason why using registered artisans and keeping all invoices matters enormously.
The only clean exit from capital gains tax on a property sale in France is if there is no link whatsoever to a commercial operation and it is genuinely your primary residence. Anything else, budget for tax on the sale.
For more on artisan invoices and why they matter, see Episode #15 - Rants & Bants and Episode #17 - Don’t buy that French ruin until you’ve heard what veteran estate agent Dan Newton has to say
Should I rent a venue or buy property for a retreat business in France?
If you want to run retreats, you almost certainly don’t need to own the property. This is Lisa’s clear view - and Sue agrees.
There are already many beautiful retreat venues and chambres d’hôtes across France available to rent on a weekly or weekend basis. A retreat operator can curate and sell the experience - the programme, the catering, the activities, etc - without carrying the costs of owning, renovating, maintaining, insuring and paying tax on a property.
Sue references a woman in Provence who runs high-end retreats for American women at around €8,000 per person per week. She doesn’t own the property. She rents it from a partner property owner, curates everything around it and earns her income from the retreat. The property owner earns from the rental. Nobody has to do both jobs.
Why do you need to be the owner of this magnificent property to be able to do that? There are tonnes of beautiful places available. You can definitely find one to rent.
If you’re planning to run retreats, this is worth seriously considering before committing to buying and renovating a property for that purpose.
Is property a good investment in France?
Not necessarily - and both Lisa and Dan Newton (in episode #17) make this point.
France is currently one of the most taxed property investment environments available. Property may gain in value over time, but the combination of ongoing property tax in France, social charges, income tax on rental revenue, and potential capital gains tax on sale means the net return is often less impressive than the headline figures suggest.
This doesn’t mean property in France is a bad investment - but it means going in with clear figures, a realistic understanding of ongoing costs and a properly planned exit strategy.
What are the most underestimated costs when renovating a French property for business?
Renovation costs - they almost always exceed the original budget. Quotes go out of date. Material prices rise. Deliveries get delayed, adding months to the project and months of living costs to the bill.
Purchase costs - notaire fees on a French property purchase are significant and need to be in the budget from day one.
Social charges - the cotisations bill that arrives once you start earning is consistently one of the biggest shocks for new business owners in France. See Episode #15 for more.
Accountant’s fees - often not budgeted for at all, especially by people who think a micro simplifies everything.
The cost of doing it yourself - if you could be earning money doing something you’re qualified for, the hours spent on DIY renovations that take longer than expected and can’t be deducted from tax may actually cost more than hiring a professional. And only artisan invoices are deductible against capital gains at sale - so DIY work is doubly undeductible.
If you have another thing you could be doing which would mean a more productive use of your time - do that thing and pay a professional.
Lisa’s rant: the box problem
Every element of the French administrative system, Lisa says, is individually logical. The problem is that the individual elements don’t tie up with each other - and as soon as you’re operating outside any one of the predefined boxes, the answer is c’est pas possible.
All of us are outside the box just because we weren’t born in France and haven’t had our whole career here. So naturally we’re presenting an administrative problem right from the start.
The specific contradiction that frustrates Lisa most: what’s fiscally optimal - structuring a business to minimise tax - is incompatible with showing the revenue required to validate a work visa. Two legitimate goals. Completely at odds with each other. No logical solution within the system.
Lisa’s top-line advice for anyone thinking of running a business from a French property
Research first. Know the area, know the market, know what people are actually looking for and what they’ll pay. Dan Newton said the same thing in Episode #17. If it’s cheap, there’s probably a reason.
Do the figures. Don’t avoid the numbers. Run your projected revenue, your ongoing costs, your living costs before you commit to anything.
Think about your exit strategy from day one. What’s this property going to be when you want to sell it? How will you be taxed? What’s the optimal route out?
Get advice before you start. Not when you’re already 50 or 100 thousand euros in and wondering where it went wrong.
Consider having it as a secondary income, not a primary one. Seven times out of ten, a property-based business works better as a supplementary revenue stream than a primary income - particularly in terms of tax optimisation.
Glossary
Micro entreprise - France’s simplest business structure; no expense deductions, no TVA recovery, and a flat-rate tax allowance applied to turnover. Administratively simple, but not tax-efficient for property businesses with significant costs.
Entreprise individuelle - sole trader structure in France; more flexible than a micro but still subject to high social charges.
SARL / SAS - French limited liability company structures; more complex to set up but allow full expense deduction, TVA recovery and tax optimisation.
SCI (Société Civile Immobilière) - a property holding company used to separate property ownership from a trading business.
Cotisations - French social charges, paid by anyone working in France. Calculated on declared revenue and can be substantial.
TVA - French VAT (currently 20% standard rate). Recoverable if you’re registered for TVA; not recoverable as a micro.
Micro entreprise tax allowance - the percentage of turnover the tax office assumes you keep after expenses. For chambre d’hôtes, this has recently been cut from 71% to 50%.
ERP (Établissement Recevant du Public) - public-facing building classification with strict requirements around fire safety, disabled access and accessible facilities.
Capital gains tax (plus-value immobilière) - tax on the profit made when selling a French property. Exemptions for primary residences may not apply if the property has been used for commercial purposes.
Taxe foncière - annual French property tax, payable by the owner regardless of whether the property is earning income.
Taxe de séjour - tourist tax, collected from guests and paid to the local mairie. Handled automatically by platforms like Airbnb and Booking.com; must be managed manually for direct bookings.
Artisan invoice (facture d’artisan) - a VAT invoice from a registered artisan. Essential for deducting renovation costs against capital gains at sale. DIY works are not deductible.
Going concern - a business sold as a live, operational entity with established revenue, bookings and reputation. More valuable than selling the property alone, but with different tax implications.
Décennale - the 10-year structural liability insurance held by registered artisans. See Episode #5 - Why insurance IS worth the paper it’s written on for more.
Work visa (visa travailleur) - required for non-EU nationals (including post-Brexit UK nationals) to work in France. Requires demonstrating a minimum annual revenue of approximately €22,000.
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Resources and further reading
Lisa Clapisson - freelance business accountancy adviser specialising in French business structures, cotisations and tax planning for English-speaking business owners in France. Contact Lisa via her website www.abcaccounting.fr, and get free advice from Lisa on her YouTube channel and Facebook page
Chic et Unique Events - Sue and her business partner, Louisa’s wedding planning business, which includes wedding venue business consultancy services. Contact them via the Chic et Unique website, Instagram or Facebook.
Dan Newton / Agence Newton - estate agent featured in Episode #17 - Don’t buy that French ruin until you’ve heard what veteran estate agent Dan Newton has to say. His point that cheap properties are cheap for a reason, and that location determines resale value, correlates with Lisa’s advice in this episode.
ERP rules and public-facing renovations - also discussed in Episode #13 - Do you really need a project manager for your French renovation?
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S.R. Charpenterie (Sue Peake-Russell)
Maison Bretagne (Rosie Ellis)