Tax policy directorate – Bureau a

3 – Agricultural profits 
Agricultural profits include in principle all income that farmers, tenant farmers or working owners derive 
from the operation of rural property. Generally speaking, agricultural profits include income derived 
from crop farming, livestock breeding, forestry, and the sale of biomass or energy mostly derived from 
farming.
Depending on the level of farming income, the “micro agricultural profits” (or “micro-BA”) regime 
applies. This regime replaces the flat-rate agricultural regime as from the 2016 tax year.
20
The taxable 
income for small farming operations under the micro-BA regime is equal to the average of income for 
the current year and the two previous years, from which a fixed-rate allowance of 87% for expenses is 
deducted. By comparison, under the previous flat-rate agricultural regime, taxable profits were based 
on physical criteria, to which negotiated rates were applied.
4 – Income from property 
Unless otherwise specified in international tax treaties, tax is due on income from developed or 
undeveloped property, even when such property is not located in France. 
However, where such income is linked to the pursuit of an industrial, commercial, craft, agricultural or 
non-commercial activity, it is included in the profits of the activity according to the relevant rules. The 
2016 Supplementary Budget Act
21
provides that all income from furnished rentals shall be treated as 
business profits beginning in 2017, even in cases of occasional or seasonal furnished rentals.
Net income from property is determined in one of the following two ways: the simplified “micro-foncier” 
regime, or the actual regime. 
Taxpayers whose gross income from property does not exceed €15,000 and who do not let properties 
covered by certain special regimes automatically benefit from a simplified tax regime called “micro-
foncier”. In this case, the taxable income from property is determined after deducting a notional 30% 
allowance representing all expenses on the property from the revenue received for the year of taxation. 
Taxpayers whose annual gross income from property exceeds €15,000 are covered by an actual 
regime. In this case, the taxable income from property is the difference between the amount of revenue 
received for the year of taxation and the total amount of expenses on the property paid during the 
same year. An exhaustive list of eligible expenses is given by law.
However, persons entitled to automatically benefit from the “micro-foncier” regime may opt for the 
actual regime. 
Furthermore, there are a certain number of incentive schemes to encourage buy-to-let investment.
Thus, the 2016 Supplementary Budget Act
22
created the “Cosse” incentive scheme. Beginning with 
income tax for the 2017 tax year, this scheme allows landlords who rent property as part of an 
agreement with ANAH (Agence Nationale de l’Habitat – the national housing agency) to benefit from a 
specific deduction for rental income. This deduction ranges from 15% to 85% depending on how tight 
the rental market is in certain areas of France.
19
22.5% for social security contributions and 2.2% for income tax. 
20
Article 33 of the 2015 Supplementary Budget Act no. 2015-1786 of 29 December 2015. 
21
Article 114 of the 2016 Supplementary Budget Act no. 2016-1918 of 29 December 2016. 
22
Article 46 of the 2016 Supplementary Budget Act no. 2016-1918 of 29 December 2016. 

---

21 
Alternatively, the tax incentive for buy-to-let investments may take the form of an income tax cut. 
Under the Pinel Act, acquisitions of new housing units made between 1 September 2014 and 31 
December 2017
23
provide entitlement to a reduction in income tax to promote buy-to-let investment in 
the middle-income sector.
The tax reduction rate is 12% for an initial six-year rental commitment and 18% for an initial nine-year 
commitment. Following these six- or nine-year periods, taxpayers are entitled to an additional tax 
reduction of 6% or 3%, accordingly, for each three-year extension of the rental commitment. The tax 
reduction could ultimately reach a maximum of 21% for a twelve-year rental commitment. To benefit 
from this tax reduction, landlords must respect caps on rent and on tenants' resources. These caps are 
adjusted on an annual basis. Moreover, to be eligible for this tax reduction, housing must meet certain 
energy performance criteria.