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Depending on the type of activity, one may want to set up his business from home. Is it legal? Do you have to meet certain conditions? Can this be advantageous?
It is possible for an individual entrepreneur or a company manager to install the headquarters of his activity in his main residence for a temporary period limited to 5 years. This solution is often advantageous from a financial point of view, and particularly suitable for individual activities (internet, provision of services, etc.).
If the entrepreneur wishes to set up his activity at his home for a period of more than 5 years, he must check in his lease or in the co-ownership regulations whether this is authorized. Indeed, it is rare that the installation of a home activity is authorized permanently in a dwelling.
What are the conditions?
There are important legal conditions to be respected in order to be able to carry out your activity from home. The law prohibits an entrepreneur from receiving customers or storing goods there. There are also formal conditions to be met: the entrepreneur who wishes to carry out his activity from home must first inform the lessor by registered letter if he is a tenant, or the syndicate of co-ownership if he is an owner. The exercise of an activity in a main residence is completely authorized for a period of less than 5 years, except if this is a source of disturbance for the neighborhood.
Are there tax benefits?
It all depends on whether the entrepreneur rents or owns his principal residence.
For a tenant, this solution is advantageous since he will be able to have part of the rent borne by his company. This rent, if set at a normal market price, will be considered as an expense deductible from the company’s results.
On the other hand, this is less interesting for an owner, since the fact of allocating part of his main residence to his business will cause him to lose the benefit of the exemption from the capital gain if he decides, one day, to sell his home. It is therefore advisable to carefully check the tax consequences before setting up your business from home.
Société d’Avocats DAMY , Nice, Business tax law – Home-based activity, Update 2022