Everything you need to know about the hotel-style accommodation scheme: your rental just like a hotel

Investing in the mountains whilst enjoying genuinely favourable tax conditions is possible. The ‘para-hôtelier’ scheme allows you to reclaim VAT on your purchase, deduct your expenses and depreciate your property, all in areas where most standard tax schemes do not apply. 

In ski resorts such as Méribel or Courchevel, it is even one of the few tax-saving measures that actually works. The BARMA scheme in La Tania perfectly illustrates this potential.

Key points of the article

• The para-hotel scheme requires you to provide at least 3 out of 4 hotel services
• Recoverable VAT amounts to 20% of the pre-VAT price of your property
• The minimum commitment is 20 years to retain the VAT benefits

What is the para-hotel scheme? How does it work?

The para-hotel scheme refers to a furnished rental business combined with hotel services, halfway between traditional letting and the hotel industry. This status transforms your property into a commercial activity subject to BIC (industrial and commercial profits), with VAT liability that opens the door to considerable tax benefits.

In practical terms, you are not simply renting out a furnished flat. You are offering an experience similar to that of a hotel. For the tax authorities to recognise your business as a para-hotel business, you must provide at least 3 of the following 4 services under conditions similar to those of hotel establishments:

1. Breakfast
2. Regular cleaning of the premises during the stay
3. The provision of linen
4. A customer reception or check-in service

The difference from a standard furnished rental is obvious. With LMNP, you rent out a furnished property. Full stop. With a hotel-style business, you are selling a service. This distinction changes everything from a tax perspective: you charge VAT, you reclaim it, and you benefit from a much more flexible tax regime.

If you’re thinking of investing in a ski apartment, this status is well worth considering.

Can we talk about a para-hotel scheme in the mountains?

The mountains are the ideal setting for the para-hotel sector. Ski resorts attract a clientele accustomed to high-end amenities, willing to pay for a premium service in seasonal rentals. Méribel, Courchevel, the entire 3 Vallées area: these tourist destinations tick all the boxes.

Which properties are suitable for this scheme? High-end chalets, of course, but also apartments in holiday residences or luxury villas. The common thread: a location in a tourist area and a standard of service that justifies ‘para-hotel’ status.

Be aware of one detail that is often overlooked. In some local authorities, a ‘furnished tourist accommodation’ classification is required to fully access the scheme’s benefits. Check with the local council or a tax adviser before committing.

The minimum commitment period is also something to bear in mind. To retain your VAT benefits, you must continue the business for at least 20 years. That’s a long time, but in mountain areas where rental demand remains strong in both winter and summer, it’s a reasonable gamble.

How does VAT recovery work in the holiday rental sector?

The VAT recovery mechanism

As a bed and breakfast operator, you are liable for VAT. This may seem like a constraint, but it is actually an advantage. You charge 10% VAT on accommodation and breakfast to your guests. In return, you reclaim 20% VAT on the purchase of the property, building works, furniture and equipment.

Let’s take a concrete example:

1. You buy a flat for €500,000 excluding VAT. 
2. The 20% VAT amounts to €100,000. 
3. This amount is refunded to you by the tax authorities. 
4. The mechanism is the same for furniture and fitting-out work. 

This provides a significant cash flow boost, right from the very first years!

Tax conditions and obligations to bear in mind

The VAT refund is not a gift without strings attached. The commitment covers 20 years of continuous operation. If you sell the property before this period ends, you will have to repay the VAT on a pro rata basis. In practical terms, selling after 10 years means repaying 50% of the VAT initially recovered.

Bear in mind that tax audits are routine for refund applications. Your file must be in perfect order: invoices, management contracts, proof of service provision.

The good news, however, is that in the event of a resale, the commitment can be transferred to the new buyer. The property changes hands, but the 20-year clock continues to tick.

What are the tax benefits of such a scheme?

1. Optimising your income tax

Under the BIC regime, you can deduct all your expenses: loan interest, renovation costs, management fees, insurance, and accounting fees. The property is depreciated over a shorter period than under the standard LMNP scheme, which amplifies the tax-saving effect in the early years.

Any loss incurred can be set off against your BIC income of the same type. If you carry out your activity on a professional basis (LMP status or equivalent), this loss can be set off against your total income. You can carry forward any unused losses for the following six years.

To find out more about the tax implications of buying a property in the mountains, please consult our dedicated guide.

2. Optimising capital gains and the IFI

This is where the para-hotelier scheme really stands out. Your business falls under the professional capital gains regime, not the private capital gains regime. The rules of the game change.

Short-term capital gains are subject to income tax. Long-term capital gains are taxed at a rate of 12.8% plus 17.2% in social security contributions, subject to certain conditions. Full exemption is possible depending on the level of annual revenue, in accordance with Article 151 septies of the French General Tax Code (CGI).

As for the IFI (property wealth tax), your property may be exempt if the para-hotel business constitutes your main activity or if you operate it through a company. The conditions remain strict: significant income, genuine business activity and a status equivalent to that of a professional.

The BARMA scheme in Méribel: a concrete example of the para-hotel sector

The BARMA programme, promoted by Agence Saulire, embodies the very best that the para-hotel sector has to offer in a resort. Located in the heart of La Tania, between Méribel and Courchevel, it combines a strategic location with a full range of para-hotel services.

Buyers benefit from a dedicated concierge service, daily cleaning and a personalised welcome for each tenant. All services required by the scheme are included upon handover. On the tax front, the arrangement allows for VAT recovery and tax relief tailored to each investor’s profile.

Buying off-plan also allows you to benefit from reduced notary fees (around 2–3% compared to 7–8% for existing properties). Agence Saulire supports investors with the purchase of properties within this residence. 

Parahotellerie vs other schemes: why is it the best choice in the mountains?

The para-hotel scheme is not merely a good option. In mountain areas, it is often the only viable one. The other options have structural limitations that few advisers mention off the cuff.

The old Pinel scheme never worked in holiday resorts. The LMNP remains attractive but without VAT recovery, the tax benefit is significantly reduced. Unfurnished rentals offer lower returns due to the lack of premium amenities.

Pricing flexibility is another key advantage. There is no rent cap to limit your rental income potential. In high season, you set your prices according to the market. Compared to the LMNP scheme in mountain resorts, the difference in yield can be several percentage points.

FAQ: everything you need to know about the para-hotel scheme

Can you use your property under the para-hotel scheme for your own holidays?

Yes, you can enjoy your property. The general recommendation is not to exceed 6 to 8 weeks per year. If you go over this limit, don’t panic: you only need to repay the pro-rata amount of the excess, calculated as 1/20th of the stay’s price. In practice, the amount remains very small.

How long must you hold onto the property to retain the VAT benefits?

The commitment is for a minimum of 20 years. Any early resale will result in a VAT refund pro-rata to the remaining term. You can, however, transfer this commitment to the new buyer to avoid having to settle the account.

What services are mandatory to qualify for the para-hotel scheme?

You must provide at least 3 of the following 4 services: breakfast, regular cleaning during the stay, provision of linen, and a reception service. These services must be provided under conditions comparable to those in the hotel industry.

What is the difference between the para-hotel scheme and standard furnished rentals?

Traditional furnished rentals involve letting a fully equipped property without any specific services. The para-hotel scheme adds mandatory hotel services that transform the activity into a commercial operation. This distinction opens up access to VAT recovery and a much more advantageous tax regime.

Is it possible to opt out of this scheme? 

It is entirely possible to stop claiming VAT at any time; you simply need to repay the remaining 20% of VAT. If you decide to stop operating under this scheme after 15 years, 5/20ths will remain to be repaid.