Bordeaux Administrative Court of Appeal Judgement, 21 May 2026, no 24BX01030
This judgment clarifies the criteria for determining whether furnished holiday lettings fall under VAT exemption or must be taxed due to their hotel-like characteristics.
In this case, a French property management company was letting furnished apartments in a ski resort and had claimed VAT relief on related expenses. The Tax Authority rejected this claim, arguing that the activity was VAT exempt. The company countered that the services provided (reception, linen supply, ancillary services) amounted to hotel-type activity, entitling it to VAT recovery.
The court confirmed that under the VAT Directive, lettings of immovable property are generally exempt. However, this exemption does not apply to accommodation activities displaying hotel sector characteristics. It clarified that the three-service threshold (French Tax Code article 261 D, 4° b) cannot be applied mechanically. The Tax Authority must assess whether the activity places the lessor in genuine competition with hotels.
This judgment reflects ongoing CJEU case law on interpreting VAT Directive article 135. It confirms that whether a furnished letting is taxable hinges not on a formal checklist of services provided, but on a practical analysis of how the business operates and how directly it competes with traditional hospitality.
