Phase 2 · Bringing the Property into Compliance

VAT: When It Applies to You

Furnished rentals are exempt from VAT, unless you provide at least three hotel-style services.

VAT on furnished rentals is the tax issue that short-term landlords understand the least. The principle is simple, however: renting furnished housing is exempt from VAT, and it only becomes subject to VAT if your offering resembles that of a hotel. It all comes down to a test known as the “three out of four services” test.

This page applies the test to your situation with Loca'Zen, explains why the issue matters, and highlights the tipping point to watch for if you're considering expanding your range of services for travelers.

Landmark

With our standard plan, you’ve already met two of the four requirements: your short-term rental remains VAT-exempt.

The "Three Out of Four" Test

You are subject to VAT if, in addition to lodging, you provide at least three of the following four services:

Service

Your situation with Loca'Zen

Breakfast

Not included

Regular cleaning of the premises

Cleaning only between stays, which is not considered a regular service

Supply of household linens

Yes

Customer Reception

Yes, by checking in in person or at a branch

Why It Matters

Registration for VAT is not a matter of convenience. It requires you to charge VAT on your rent, report it, and, in return, deduct the VAT you incur, including on our fees and, if applicable, on the purchase of the property.

The tipping point to watch for

Just one additional service would make all the difference: a mid-stay cleaning service offered as standard, or an option to include breakfast. If you’re considering expanding your offerings in this way, do so with full knowledge of the facts.

Good to Know

An occasional cleaning service requested by a traveler doesn't change anything: it's the regularity that matters. A long stay with a one-time cleaning service still qualifies for the exemption.

The Mistake to Avoid

Expand your offerings without factoring in the impact of VAT. If you routinely offer housekeeping during a guest’s stay or breakfast, you’ll be providing three out of four services—which means you’ll have to bill for them and report VAT. Decide before, not after.

Points to Watch For

The services provided through us count as if you had provided them yourself. It is your overall offer to the traveler that is being evaluated.
Tax liability may sometimes be sought intentionally, for the deduction it provides, including on the purchase of the property. This is a financial matter that should be discussed with an advisor; it is not a default setting.
Review the assessment every time your offering changes. Traveler services, long-term packages, hospitality options: each new feature should be evaluated against the four service criteria.

Warning

The determining factor is not your legal form. A taxable individual may deduct VAT, while a non-taxable corporation may not: it is the tax regime that determines this, not the legal status.

Frequently Asked Questions

With Loca'Zen, am I subject to VAT?

No. You provide two out of four services—laundry and reception—so the rental remains tax-exempt.

Can I offer breakfast to my guests?

There's nothing stopping you from doing so, but this third payment would cause you to exceed the tax threshold. The decision should be made after assessing the full impact, backed by the numbers.

Is being subject to something necessarily bad news?

No. We issue invoices and file tax returns, but we deduct the input VAT, including on our fees and, if applicable, on purchases. It all depends on your situation and your project.

Is a company automatically subject to taxation?

No. It is the tax regime that determines this, not the tax status: a non-taxable corporation cannot claim any deductions, while a taxable individual can. The tax structure is discussed on page 7.6.