The SARL de Famille + Para-Hôtelier Model: The Smartest Way to Own a French Ski Property
Imagine buying a €720,000 ski apartment in the French Alps—and immediately getting €120,000 back. Then paying virtually no tax on rental income for years. Then selling it after 22 years with only 7.5% tax total, while UK owners still pay 28%.
Sound too good to be true? It’s not. It’s just French tax law done right.
The combination of a SARL de famille and a para-hôtelier rental agreement creates one of the most tax-efficient property structures in Europe. While UK buyers face permanent capital gains tax with zero relief, French Alpine property owners benefit from progressive tax reductions that increase every single year.
Here’s how it works—and why the numbers make UK holiday lets look frankly obsolete.
What Is a SARL de Famille?
A SARL de famille is a French family company where all shareholders must be directly related—parents, children, grandparents. Unlike standard corporate structures, it elects to be taxed under the income tax regime rather than corporate tax, preserving favorable personal capital gains rules.
This structure combines the flexibility of private ownership with tax optimization of business treatment, access to depreciation and VAT recovery, and progressive long-term capital gains reductions. It’s dramatically more efficient than a UK limited company or personal holiday-home ownership.
The Para-Hôtelier Secret Weapon
To unlock the crown jewel—a full 20% VAT refund—your property must operate under a para-hôtelier regime. This means providing at least three of four hotel-style services: check-in/check-out, linen, regular cleaning, or breakfast.
A rental management company handles everything. You still use the property whenever you want. You just need to meet the service threshold and commit to renting under the para-hotel regime for 20 years.
Once qualified, the benefits cascade. You recover 20% VAT on purchase price plus furnishings. You deduct every expense. You depreciate everything. And you shield rental income from tax for years—sometimes decades.
The Four Tax Advantages That Change Everything
Full Building Depreciation
France allows depreciation of the building, structure, fixtures, and furniture. Combined, you can offset most or all rental income for many years—something impossible in the UK. While UK owners pay tax on gross rental profit, French owners report near-zero taxable income.
The €120,000 VAT Refund
On a €720,000 property (before VAT), you pay €720,000 total with 20% VAT added. The VAT recovery gives you €120,000 back, dropping your net cost to €600,000. This isn’t a deduction—it’s money back in your account. UK buyers pay full price plus SDLT with zero equivalent.
Unlimited Fiscal Deficit Carryforward
Depreciation plus mortgage interest plus operating expenses creates a fiscal deficit that carries forward indefinitely. UK holiday lets offer no equivalent. French Alpine owners can run rental operations for years with zero taxable income.
Progressive Capital Gains Taper Relief
Unlike the UK’s flat-rate system, France reduces your capital gains tax every single year you hold the property. From year 6 onwards, you receive 6% annual relief on the 19% CGT portion and 1.65% annual relief on social charges. After 15 years, your effective CGT rate drops to just 13.9%. After 22 years, you pay only o% CGT and only 7.5% non-resident social charges.
Capital Gains for Non-Residents: Progressive Reductions
Whether owned personally or through a SARL de famille, the capital gains system remains the same. For non-residents, the base rate is 19% capital gains tax plus social charges.
The UK/EU Advantage on Social Charges
UK, EU, EEA, and Swiss residents pay only 7.5% in social charges instead of the full 17.2%. This reduced rate applies when you’re affiliated with a compulsory social-security system in your home country, based on a 2015 European Court ruling.
Progressive Taper Relief Schedule
From year 6 onwards, France applies automatic reductions:
CGT (19% portion): 6% reduction per year from years 6-21, then 4% in year 22 = full exemption
Social charges: 1.65% reduction per year from years 6-21, continuing through year 30
UK properties? 18-28% capital gains tax at year 5, year 15, year 22, and year 50—with zero taper relief ever.
Real Numbers: 15-Year and 22-Year Projections
France: €720,000 Two-Bedroom Apartment in Les Gets
Purchase: €720,000 less €120,000 VAT refund equals €600,000 net cost. Annual depreciation of €12,000–€18,000 plus mortgage interest plus operating expenses creates years of zero taxable income.
15-Year Projection:
Assume €300,000 capital gain:
Base rate would be: €300,000 × 26.5% = €79,500
After progressive relief: €300,000 × 13.9% = €41,700
Tax savings: €37,800
22-Year Projection:
Assume €400,000 capital gain:
Base rate would be: €400,000 × 26.5% = €106,000
After full CGT exemption: €400,000 × 7.5% = €30,000
Tax savings: €76,000
Result: High rental income with minimal tax, plus automatic tax reductions every year, reaching only 7.5% total after 22 years.
UK: €720,000 Euro-Equivalent Holiday Flat in the Lake District
Purchase: Full €720,000 price plus SDLT with no VAT recovery. No building depreciation means rental profits appear immediately, taxed at 20–45%.
15-Year Projection:
€300,000 capital gain:
Tax: €300,000 × 28% = €84,000
No relief available
22-Year Projection:
€400,000 capital gain:
Tax: €400,000 × 28% = €112,000
Still no relief available
Result: Higher income tax during ownership, permanent 28% capital gains tax with zero time-based relief ever.
The Tax Savings Comparison
On a €400,000 capital gain after 22 years:
France (UK/EU resident): €30,000 (7.5% only on social charges)
UK property: €112,000 (28% permanent rate)
Difference: €82,000 in additional wealth retained
Add the €120,000 VAT recovery at purchase and years of zero taxable rental income, and the cumulative advantage becomes transformational.
The Verdict
The French progressive system transforms long-term ownership economics. At 22 years, you pay only 7.5% versus the UK’s permanent 28%—saving €82,000 on a €400,000 gain. You also saved €120,000 at purchase through VAT recovery and paid virtually zero tax on rental income during ownership.
The UK system treats year 5 the same as year 50. France rewards patience: every year you hold reduces your exit tax automatically. After 22 years, the entire 19% CGT disappears, leaving only the 7.5% social charge for UK/EU residents. After 30 years, everything drops to zero.
For anyone considering a €720,000+ second home with a 15-25 year horizon, the SARL de famille + para-hôtellerie combination isn’t just smart tax planning. It’s the difference between building generational wealth and watching it evaporate to HMRC.
The Alps offer more than skiing. They offer Europe’s most progressive property tax system—one that actually rewards long-term ownership instead of penalising it forever.
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