French Government introduces new tax credit for landlords to waive rent payments

The French Government has introduced a new support measure for companies experiencing difficulty due to the COVID-19 pandemic. A new tax credit will encourage landlords to fully or partially waive rent payments due during the second lockdown period.

The new measure is aimed at all types of landlords – both individuals and companies, taxed or exempt – provided that they waive all or part of the rent due by a company that:

• Is administratively closed or belongs to the hospitality, cultural or events sector;
• Employs fewer than 5,000 employees; and
• Was not in compulsory liquidation on 1 March 2020 or in difficulty (within the context of Commission Regulation (EU) No. 651/2014 of 17 June 2014) on 31 December 2019.

The tax credit is equal to 50% of the amount of rent waived. It is specified that, for landlords of companies with more than 250 employees, the tax credit base would be capped at two thirds of the rent provided for the lease.

The total amount of rent waivers giving rise to a tax credit for the landlord may not exceed €800,000 per tenant.

The tax credit will be chargeable against the French personal or corporate income tax for 2021. Any excess will be refundable.

This support measure will be cumulative with that paid by the solidarity fund, enabling the most heavily impacted businesses to receive compensation of up to €10,000. It is introduced in addition to another incentive measure for landlords that was introduced during the first lockdown period, which until 31 December, means that waived rents are not taken into account in the landlord's taxable income.