Do you operate an industrial facility? You could benefit from savings on property tax on built-up properties and business property tax (cotisation foncière des entreprises) if residential premises, such as a janitor's lodge, are present on your site! Find out how to take advantage of this new opportunity before the end of 2024.
The criterion of distinct use
Thearticle 1494 of the French General Tax Code (CGI) stipulates that the rental value of assets subject to property tax on built-up properties is determined for each property - or fraction of a property - normally used for a distinct purpose.
Thearticle 324 A of Appendix III to the aforementioned Code specifies that, in the case of industrial establishments, "property normally intended for a distinct use" means all the land, buildings and installations that contribute to the same operation and form part of the same topographical grouping.
An industrial establishment is therefore an economic entity whose constituent parts are indissociable from the operator's [See the Bulletin Officiel des Finances Publiques-Impôts (BOFiP-Impôts) referenced under the legal identifier BOI-IF-TFB-20-10-10-30, no. 160].
It follows from the above that the definition of the properties to be taken into account when choosing the applicable valuation method depends solely on the criterion of their distinct use, even if the properties concerned belong to different owners. This is the case, for example:
- premises leased to an industrial operator and used for the same purpose as an industrial building located on an adjoining plot belonging to another owner but leased to the same operator (V. CE, November 21, 2007, no. 293 538) ;
- the janitor's accommodation on the premises of the industrial plant, which necessarily contributes to the operation of the plant (V. CE, May 21, 2014, no. 365 751).
A partially reported administrative doctrine
The administrative doctrine initially published in BOFiP-Impôts under the legal identifier BOI-IF-TFB-20-10-50-10, no. 110 took a different approach to that of the Conseil d'Etat with regard to residential premises located within the industrial plant. It stated that :
" Buildings which, although located on the premises of the plant, cannot be considered as part of the plant's operations, remain outside the scope of this section. This applies to living quarters (janitor's quarters, manager's quarters, etc.). and premises used for commercial activities other than industrial ones (retail outlets, etc.).
Even when they are an integral part of other buildings, these premises are considered separately and valued according to the rules laid down for goods of the same kind "[emphasis added].
However, this doctrine has been withdrawn with effect from June 14, 2023. From now on, the BOFiP-Impôts published under the legal identifier BOI-IF-TFB-20-10-50-20, no. 30 is worded as follows:
" Buildings which, although located on the premises of the plant, cannot be considered as being used for operating purposes, are not included in these fixed assets. This is the case for premises used for a commercial activity distinct from the industrial activity (retail outlets, etc.). Even when they form an integral part of other buildings, these premises are considered separately and valued according to the rules laid down for assets of the same kind. On the other hand, residential premises contributing to the operation, such as the janitor's accommodation, are retained (CE, decision of May 21, 2014, no. 365,751) "[emphasis added].
Consequences
It is possible to exclude from the property base of an industrial establishment all premises located on the premises of this establishment which are :
- used for a commercial activity distinct from the industrial activity (exclusion on the basis of the law as interpreted by the Conseil d'Etat and administrative doctrine);
- for residential use (exclusion on the basis of administrative doctrine alone, but only for taxes triggered before June 14, 2023, where this doctrine is more favorable than the law).
Our expert's advice
Given the date of the taxable event for property tax on built-up properties (and business property tax), set at 1er January, we recommend filing a claim for the 2023 tax year before December 31, 2024. in accordance with the provisions ofarticle R.* 196-2 of the French Tax Code.
Would you like to discuss this point with one of our tax experts?
Insofar as the valuation rules for residential premises are generally more favorable than those for industrial establishments, the purpose of this claim is first to identify all the residential premises located within the industrial establishment (most often the janitor's lodge), and then to request their valuation according to the rules specific to them (i.e. those set by thearticle 1496 of the CGI).
Finally, it will be sufficient to invoke the last paragraph of thearticle L. 80 A of the French Tax Code on the enforceability of administrative doctrine, the BOI-IF-TFB-20-10-50-10, no. 110 in the version in force on 1er January 2023.
In a nutshell
- Reduce your costs Revaluing your premises can save you money on property tax on built-up properties and business property tax (cotisation foncière des entreprises).
- Deadline approaching you have until December 31, 2024 to submit your claim for the 2023 tax year.
- Simple procedure All you have to do is identify the premises concerned (such as the janitor's lodge, the factory manager's lodge, etc.) and ask for them to be valued according to the rules applicable to dwellings.
Article written by:
Aymeric GIVORD - Local tax expert at G.A.C. Group
A local tax consultant since 2002, Aymeric has been working for over 15 years with eminent lawyers and associate professors, with a view to developing case law in a way that is favorable to taxpayers. With his teams, he is notably behind the Plénière fiscale ruling "SA GKN Driveline" (CE, December 11, 2020, n° 422 418) as well as the landmark decision in favor of SAS Rousseau (CE, April 5, 2022, n° 448 710). Its day-to-day work consists of analyzing the tax bases of industrial establishments, business premises and certain residential premises owned and/or operated by companies or certain organizations, in order to make recommendations and identify potential optimizations, and to support them in implementing these actions, particularly in the event of legal disputes.
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