Is a Gite Business in France a Good Idea



I am happy to give my thoughts and share my experience on almost anything – I am qualified to teach photography, so just about everything else is based on half a century of the slings and arrows of (often outrageous) fortune. For the last 20 years we have been involved in vacations and rentals in France, so I can give some opinion and share experience about this.

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Hi Tony,

We are looking at buying a gite complex in Charente Maritime. We have the turnover data and the outgoings etc,. but have no clue about what tax is payable – there’s no point us knowing what the gross income is when we don’t know what we’ll end up with (ie, if tax is 20% we’ll live a lot better than if it’s 50%!). Can you give us a steer, and also point us in the right direction – perhaps to an accountant who knows about gites? We’re happy to pay for the right advice as clearly it could make or break a deal.

Many thanks in anticipation,

Louise

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Hello Louise,

I wish you success with your proposed venture. You are right to do very severe due diligence on any vacation business, especially in France.

My opinion of accountants is very very low – I have been deceived and tricked by these rascals too often and have absolutely no confidence in their opinion on anything to do with business or enterprise – their opinion is worthless regarding the viability of a business (or much else).

Tourism in France is a big business (I believe officially, the biggest business), but there is not much potential for growth. France claims in excess of 70 million visitors a year, by far the largest number in the world, but this has not grown in recent years and revenue figures suggest a shrinkage – accurate figures are not yet in for 2010, but are likely to show a 20 percent drop from 2009, which was down from 2008 – so any figures for any tourist business are largely irrelevant.

However 70 million or so potential customers offer a fantastic opportunity – the trick is to identify how you can beat the competition in your area for your market profile.

The problem getting any realistic projections for a business is compounded by the huge amount of competition and growth in the supply of accommodation over the last ten years. in many areas this is unsupportable by the demand and growth in demand is very uncertain as I have indicated.

You question is about taxes – for a small Ma and Pa operation, up to 15 people or 5 rooms – there are good options – it can be a fixed 13 percent of gross income if it is under 70,000 euro (this depends on other factors in the AutoEntrepeneur scheme). However, for a viable business you need the structure of company, usually a SARL, here you need good accounting software and need to keep firm control of all costs and expenses – I cannot go into all the options and paperwork here – there are many websites and people able to advise and help – but direct taxation, social charges etc will account for between 50 to 60 percent of your gross revenue (the social charges are very high) – if you have to employ anybody then this is likely to completely wipe out any chance of a profit.

If the business already employs people, they are unsackable and expensive – I know of companies ruined by a payroll of only three people. Short term contracts can only be renewed once and after a year they become permanent staff – be very very careful.

But if this is less than five Gites and under 15 people maximum, with no employees, turning over less than 70,000 euro then think of it as a lifestyle business – you will work hard for very little residual income, but it is a good life while you are fit and well and can fix drains, plumbing, power cuts and can keep accountants off your land.

Please let me know how you get on

Bonne Chance

Tony

Entrance from front parking at Villa Roquette in the South of France

Front Entrance from parking area to our Gite and B&B at Villa Roquette


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5 thoughts on “Is a Gite Business in France a Good Idea

  1. Hi Tony,
    I know nothing of the gite business, but could not resist echoing your thoughts re: accountants. I find it so sad experience has taught me that advice from any accountants I have dealt with in France is not very useful. The really frustrating part is the laws in France are so complex and ever-changing it is no wonder a mere mortal, professional or not, cannot keep up. Thus the great success of the auto-entrepreneur scheme. At least you can know what you will need to pay out and the running expenses for accounting are very low, as you can do it yourself with some guidance.

  2. Perhaps we can open the door a little further and give some of our experience of runnimg a ‘Gite’ for the last 12 years. Much depends on where you are in your ‘work’ lifecycle. We began just in our sixties with a courtyard farm that the incumbent farmer had allowed to deteriorate. A year of frantic restoration and we had a farmhouse with 6x double bedrooms, a 2x bedroom annexe, a pool, a games room and alot of land/woods for guests to roam. We needed a top to our pension which this has given us. Our chosen market was extended families or couples meeting once year; an environment to sit round a table and talk, laugh, eat etc. In the early years, we had 2x weekers during the high season and usually 1x weekers beyond with a season of around 12 weeks. Our rental income is at level that we only pay tax on 50% of revenue – no need to keep invoices etc. We are full time resident and devote out of season to maintenance and travelling. That is the brief ‘case study’ of an operation in our part of the market.

    The lessons we have learnt:
    It is hard work and some ability to ‘make and mend’ is essential – not to be under estimated; much more a ‘Lifestyle Occupation’ than a regular business.
    By living ‘on site’ we can have a quick reaction to any problem; pool gone green [it happens!], an accident [we’ve had a few nasty ones] etc. and general ability make the all too brief holiday of our guests a success.
    Choose your market carefully and focus the facilities to service it.
    It is important to analyse carefully the pricing of properties which might compete with you in your area. We price just below what we perceive as the average for the area. Be wary of properties saying they sleep a large number at a low price – frequently there are dormitories and people sleeping in the lounge; divide the price by the number of beds in bedrooms. We advertise 12 beds and they are all in double bedrooms!
    Facilities: En suite bathrooms, pool and nearby village are plus factors. WiFi if you have internet access.
    Establish good relationship with your Mairie, the Gendarmerie, the Pompiers, the Postman and, most important, your neighbours. They can be invaluable in your support. We are in a hamlet 5 minutes from our rural village where it is comfortable to know that these people would support you when you are away.

    There is no doubt much more that we could pass on but, just to add, if there is anyone ‘out here’ looking to change their lifestyle and run an operation such as ours – we feel age sapping our energy and have put our courtyard fam on the market.

  3. I got this reply from a reader – – –

    Hi Tony, I saw your response to someone about buying a gite business. Firslty I do believe the autentrepreneur maximum gross revenue threshold is 80,000 per year and the 5 rooms applies to chambres d’hotes not gites, so if their gross revenues are under 80K then they can slip into the 13% taxable regime. The other option is to have an SCI which can then offset all expenses, including mortgage, insurance, maintenance, etc. against income too. Regards, Rosemary

  4. hi, so which figure is correct 70000 or 80000 ?? what technically is a gite?? and because its classed as a gite, can you have more than 5 units so accomodating more than the limit for a chambres d’hotes. in what area does Barry bawtree live and finally what is a ” SCI ” cheers Keith

  5. Hello Keith

    You are best looking up the definitive definitions of the AutoEntrpreneur scheme for details – I understood it to be 72000 – this is what we have – it has varying rates of social charges and taxes, but we qualify for 13% of our gross turnover to cover this as we are operating a Chambre d’Hote. The definition for chambre d’hote is very specific, in essence it is for catering, with breakfast, in your own home for up to 15 people in up to 5 rooms – it is very much an “in your own persoanl main home” specification – Gites are usually individual accommodation, apartments, converted buildings or small accommodation units which are self catering – it is possible to have a couple of Gites included in a place which is a chambre d’hote as long as this is not the main business – if it is, then the taxes are likely to be much higher and the limit lower.

    If a business is just gites, or there are more accommodation units in gites than there are in the chambres d’hotes then it can be any number, but this needs a corporate structure, probably a SCI, or bigger, a limited company, a SARL

    A SCI is a company owning the home – here is some information http://www.frenchentree.com/fe-legal/displayarticle.asp?id=415 – It needs a tax declaration, accounts and all the usual paperwork in running a company

    Make me an offer I can’t refuse for VilllaRoquette :)

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