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Do European countries offer tax (or other) advantages to B&B owners?

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Feb 27th, 2015, 12:48 PM
  #1
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Do European countries offer tax (or other) advantages to B&B owners?

I was idly musing about some wonderful B&Bs where we have stayed, and wondered how some came to exist.

One we stayed at in SW France was run by an ex-sales director of a well-known toy company.
Another in central France was in one of 5 houses owned by the owner.

There have been numerous others, but why would someone who seemingly doesn't need the money bother with housing guests? Early in the morning to buy croissants? Checking to see if the cleaners cleaned well enough? Having to be on call to give arriving guests the key?

Maybe they just like the thought of an easy 100€, but it wouldn't be worth it to me. Sure, if the person otherwise had only $15,000 annual income, one does what one must. But with a Mercedes Benz in the garage, these folks don't seem to really be hurting for spending money.

Does a French, German, British, Czech homeowner get a special tax deduction or other inducement for the rental of his property?
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Feb 27th, 2015, 01:05 PM
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Each country makes its own rules. In the UK, I'm not aware of any special tax concessions of this kind, if anything, rather complications if you're using your own home for a business purpose. The attraction, I suppose, is that of running your own business; hence the problems some B&B owners run into when they realise they aren't entirely their own masters, since they have customers and various sorts of legal requirements to contend with that wouldn't apply when you're putting up your friends and relatives for a night or two. And some people just like meeting lots of new people.

Like you, I wouldn't do it for all the tea in China. But is it possible that that Mercedes Benz might be the result of running the business, rather than a sign they don't need to?
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Feb 27th, 2015, 01:07 PM
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In some places in Italy owners of very large family houses in very very old towns have been given tax breaks or other incentives to use the homes as b&bs. This is partly to keep them from simply falling into disuse and being abandoned, or to help families stay in town. It used to be in Italy that multi-generational families with many brothers and sisters all lived in the same house all their lives, with lots of children. But now families are smaller, or some have moved away, and some people have all this apartment space or house space that they can't sell, so it's actually good for the town to help them use it for business. I have been in some Italian towns where you can see that some some apartments and town houses are abandoned, and that birds are nesting inside, vegetaition is growing through the roof, etc. It can create hazards because walls weaken and roofs collapse, and these houses are attached to other houses.

Also, regional Italian governments often provides subsidies and incentives to farmers who use part of their farms as an agriturismo, which may or may not include lodgings. But this is seen as a way of helping to preserve family-owned farms and open space, plus the high qualty of Italian food.

On the other hand, people who own property they would like to convert to a lodgings business sometimes run into obstacles with local authorities or neighbors about doing so, sometimes because hotels don't want the competition, or the town is discouraging tourism (it does happen!) or neighbors don't want the noise and hassle. It's also true that in the past few years the Italian government has increased property taxes in just about every way, and this is having an impact on the attractiveness of people holding on to family property and providing tourists with accommodation.

Lastly, I did know a man who had made a very handsome living working in one of Italy's most successful corporations who chucked it all to by a vinyard in Umbria and renovate many of the outbuildings as apartments for vacationers, hosting weddings, etc, just because he wanted to. But almost everyone else I know involved in tourist accommodations in Italy is making a modest living, and that it it. They need the money.
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Feb 27th, 2015, 01:16 PM
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(By the way, I met this man who became an Umbrian vintner because I was driving a Mercedes in Umbria that got compltely stuck in mud on a dirt road. A farmer with a tractor showed up to pull me out, but this other man driving by saw that the farmer was wrapping chains around the Mercedes bumper, and he intervened to get a special towing tool out of the trunk of my rented Mercedes that fit into the front bumper so it could be towed correctly. Once my rental was freed, He then offered me the use of the hoses on his nearby vinyard to wash the mud off my tires and wheel wells, and that's how I got to hear his story about how he left being an executive to own a vineyard and luxury rentals. )
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Feb 27th, 2015, 04:26 PM
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The same question about American B&Bs. No?
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Feb 27th, 2015, 05:17 PM
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In UK, furnished holiday let is given favourable tax treatment compared to normal house or flat rental. In France, the government gives tax incentive to owners of disused farm buildings etc to convert into Gites.
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Feb 27th, 2015, 06:00 PM
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I know a lot of people who operate inns in the US. There are tax advantages in that you can deduct a lot of maintenance and repairs, but the main motive is that if you work your tail off for the season, you can take the other four or five months off.

The problems are staff, staff, statff, customers, and staff. In that order. Much like any service business, really.

Back in the day, all the B&B we stayed in in the UK were housewives renting out the children's rooms after they had gone. Bed, breakfast, and that was pretty much it. That is still an appealing business model if it isn't your primary source of income, and it is the origin of AirBnB.
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Feb 27th, 2015, 06:22 PM
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Alec, could you please expand on that a bit? What kind of incentive?
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Feb 27th, 2015, 10:29 PM
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"But with a Mercedes Benz in the garage, these folks don't seem to really be hurting for spending money."

Just running the pointless status symbol will drain the nest-egg from a couple of years' doing a job you weren't up to anyway. If the alimony to wives 1 & 2, paying for a child's graduate school or funding wife 3's sprogs' deposit on a rabbit hutch in London aren't bankrupting you already. Or if your funds never recovered from their 2007 holiday in Iceland, or a house hundreds of miles from anywhere you really wanted to live is all you've got after your dabble at running your own business.

Or if the Merc's in the garage because you can't find anyone to take it off your hands so you can buy a sensible car. Or if you need spare cash till your pension kicks in.

There are infinite ways in which apparent affluence can mask deep financial crises, that even the affluent jobless can find new calls on their cash, or in which people can find cleaning up after paying guests go home fill gaps in their lives that their jobs used to.

Tax breaks - or the opportunity to create an income the taxman never spots - are rarely the sole motivation.
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Feb 28th, 2015, 02:56 AM
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In Germany, you only get tax breaks for those expenditures which are related to the B&B business.
IF you choose to run it as a seperate business.

In that case, you'd have to do the accountant work as for any other small "company" you have. And prove with every single invoice that the expenditures are fully related to the business. So if you put in new carpets in the guest rooms, you can deduct it. If you put new gravel on the driveway you can't. Or just by a share.

If you just have a room you get rented 20 nights a year, you may decide to let than income run on top your other sources of income, pay taxes on it, and not bother to get the expenditures back. Or rather not report it at all in your statement and hope you won't get caught.
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Feb 28th, 2015, 03:56 AM
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I think in Italy the tax incentives are often a very motivating factor for small farms creating lodgings on the their property. Otherwise, they might not be able to survive solely dependent on the kind of farming they do, some of which is organic and therefore highly financially risky year to year.

I also stayed in a place in Sicily where the young owner told me that the regional government offered significant incentives to people who converted some of the grander family palazzi in town to holiday accommodations. Part of this was prevent it being bought by developers connected to organized crime, which had become quite a problem in Sicily at one point. Too many young people were putting large family properties on the market, and laundering money through property renovation and construction is a very popular trick in organized crime, and it was beginning to ruin some Sicilian towns.
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