When theadministration rationaleadministration appraising a luxury cottage melts away like snow in the sun
A real estate investment company (SCI) owned by individuals had purchased a luxury chalet in Courchevel 1850, which it leased on an annual basis to a Swiss company. The companies had entered into a lease agreement that did not specify a rent amount. The SCI nevertheless reported taxable income from this lease in 2016.
However, following the tax audit of the SCI,administration that the rent was undervalued and issued a tax assessment to the company.
In the reassessment proposal,administration the increase by arguing that the rent should be calculated based on a rental yield ranging from 3% to 7%, as this range was "generally accepted" in case law. According toadministration , the rate selected shouldadministration 4%, which would be "appropriate" for this exceptional property.
After losing in the Administrative Court,administration , before the Administrative Court of Appeal, to justify the reassessment by relying on the "average weekly rental rate per square meter for four chalets located in Courchevel 1850, as listed on two real estate agency websites."
The Administrative Court of Appeals will, however, note that:
The rates listed on the websites are those offered in 2024, not in 2016, andadministration notadministration that the prices would have been the same;
administration any evidence to show that the cottages listed on the websites are comparable to the cottage rented by the SCI;
The rates selected byadministration the weekly rates during peak season, which do not correspond to those for a property rented on an annual basis;
The rate determined using this method results in a rental yield of 9.88%, which is significantly higher than the rates mentioned in the reassessment proposal.
The Court thus finds thatadministration demonstrated that the rent is significantly lower than what could be obtained under normal commercial conditions.
It reverses the adjustment.
CAA Marseille, Oct. 20, 2025, No. 24MA00485
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