LMNP vs Para-Hôtellerie: Which Tax Regimes for Your French Ski Property Investment

Understanding the Critical Choice Ahead

When acquiring a new-build ski property in France, the decision between LMNP (Loueur en Meublé Non-Professionnel) and para-hôtellerie taxation regimes represents one of your most consequential investment choices. This isn’t merely an accounting preference—it fundamentally shapes your property’s financial performance, tax burden, and exit strategy.

Having advised clients through both pathways, I’ve witnessed how the right regime selection can save investors six figures upfront while positioning them for optimal long-term returns. Conversely, the wrong choice can create unnecessary complexity or forgo substantial tax advantages.

The LMNP Framework: Simplicity with Strategic Benefits

LMNP remains the go-to structure for individual property owners seeking straightforward rental operations with meaningful tax benefits.

Core LMNP Mechanics

Under LMNP, you operate as an individual landlord declaring furnished rental income through the BIC (Bénéfices Industriels et Commerciaux) regime. This classification unlocks several powerful deductions:

• Operating expenses: Mortgage interest, insurance premiums, property management fees, and maintenance costs

• Depreciation advantages: You can depreciate both the building structure and furnishings over their useful lives—typically creating paper losses that shelter rental income from taxation for years

The depreciation benefit often proves transformative. On a €600,000 Alpine property, annual depreciation might reach €15,000-20,000, frequently eliminating taxable rental income entirely during the early ownership years.

Capital Gains Treatment: The LMNP Advantage

Here’s where LMNP truly shines: upon disposal, your property falls under the private capital gains regime, not the professional property disposal rules. Critically, the tax administration ignores previously claimed depreciation when calculating your capital gains liability.

This creates a powerful arbitrage—you benefit from depreciation during ownership while paying capital gains tax as if no depreciation occurred. For long-term holders, this represents substantial tax savings.

Para-Hôtellerie: Complex Structure, Compelling Economics

Para-hôtellerie demands significantly more operational commitment but offers immediate and potentially transformative financial benefits.

Qualifying Requirements

To access para-hôtellerie benefits, your operation must meet specific criteria:

• Service provision: Deliver at least three of four hotel-style services (reception, linen service, cleaning, breakfast)

• Professional registration: Obtain SIRET number, VAT registration, and URSSAF compliance

• Property eligibility: Generally limited to new-build properties or those under five years old

• Rental pattern: Short-term lettings (under 30 days per tenant)

The VAT Recovery Opportunity

Para-hôtellerie’s headline benefit is immediate VAT recovery on your purchase price. France’s 20% VAT rate means substantial upfront savings—€100,000 on a €500,000 property acquisition.

This isn’t merely deferred taxation; it’s genuine cash flow improvement that reduces your effective investment cost and enhances returns from day one.

Comparative Analysis: Two Investors, Same Property

Let me illustrate with a practical example involving two clients who purchased identical €600,000 ski apartments in Val d’Isère:

Anna (LMNP Route)

• Purchase cost: €600,000 (full price)

• Annual depreciation: €18,000 (eliminating rental income tax liability)

• Operational complexity: Minimal

• Exit taxation: Private capital gains regime (favorable treatment)

James (Para-Hôtellerie Route)

• Purchase cost: €500,000 (after €100,000 VAT recovery)

• Additional requirements: Professional services, VAT compliance

• Operational complexity: Significant

• Exit taxation: Potential full exemption under Article 151 septies if turnover remains below €250,000