- Beneficial ownership declaration - Ordonnances Macron - Short term apartment rentals

1. Newsletter January 2018
Our first newsletter for 2018 highlights
three topics that are now integrated
into French law.
Beneficial ownership declaration
A law known as « Sapin II », based on
the 4th EU Directive relating to anti-
money laundering and counter terrorist
financing has amended the Code
Monétaire et Financier by introducing
a register of beneficial owners for cor-
porate entities to be maintained by the
Register of Commerce (Article L. 561-
46). Decree n° 2017-1094 set out pro-
cedures that require :
♦ All new entities being registered
after 1 August 2017 to file informa-
tion concerning their beneficial ow-
ners at latest 15 days after registra-
tion documents are issued.
♦ Legal entities already registered
prior to 1 August 2017 to file this
information by 1 April 2018.
This disclosure concerns all entities
registered at the Register of Commerce
including foreign entities who have
registered a branch in France (but ex-
cluding companies listed on a regula-
ted stock exchange). Access to infor-
mation held on file is restricted to spe-
cific government authorities and avai-
lable only on request. The following
information is included in the declara-
tion to be signed by the entity’s legal
representative and filed at the Register
of Commerce relating to the location
of the registered office:
♦ Declaring entity: Name, type of
structure (e.g. SARL, SAS or SCI),
registered address and number.
♦ Beneficial owner: surnames, first
name, date & place of birth, natio-
nality, personal address and nature
of control in the declaring entity.
An entity’s beneficial owner is any
individual or individuals (not an enti-
ty) holding ultimate control, either di-
rectly or indirectly of more than 25%
of the share capital, voting rights or
otherwise exercising control by other
means such as control over the board
of directors or at general meetings
(Articles L. 561-2-2 & R 561-1 to R.
561-3 Code Monétaire et Financier).
Failure to respect this obligation can
result in criminal proceedings and fi-
nes for the individuals responsible (i.e.
primarily the entity’s legal representa-
tive) of up to six months imprisonment
and a fine of €7 500 as well as disqua-
lification as a director. For legal enti-
ties, the fine is €37 500 plus potentio-
nal disqualification from participation
in public sector contracts, being prohi-
bited from making public share issues
or even dissolution.
Ordonnances Macron
The new French government issued the
« Ordonannces Macron » in September
2017 which represented the first modi-
fications to French labour law under
Emmanuel Macron’s presidency. Key
highlights include:
- An employee’s length of service with
the same employer qualifying to enti-
tlement to redundancy indemnities is
reduced to 8 months.
- Minimum legal redundancy indemni-
ties have been revised. Now indem-
nities cannot be lower than:
♦ 1/4 x monthly salary x N° years’
length of service (< 10 years) .
♦ 1/3 x monthly salary x N° years’
length of service ( > 10 years).
- Mutual contract termination agree-
ments (rupture conventional) have
until now only been available for
individual employee scenarios - such
agreements may now also be negoti-
ated collectively.
- Minimum and maximum indemnity
scales have been introduced for da-
mages awarded by employment tri-
bunals where redundancies by an
employer are ruled to be unjustified.
The indemnity scale provides a lower
minimum of 3 months salary (- a
slightly lower scale applies to busi-
nesses with less than 10 employees)
rising to maximum amounts as be-
low:
- If a fixed term employment contract
(Contrats à Durée Déterminé or
CDD) was not provided to an em-
ployee with 2 working days of star-
ting his employment, the contract
could risk requalification as an inde-
finite term contract (Contrats à Du-
rée Indéterminée or CDI) by a labour
tribunal. This is no longer possible
however an employee may be enti-
tled to damages capped at one mon-
th’s salary if a contract is not trans-
mitted within the required timeframe.
- Employer declarative requirements
where employers are exposed to
physical hardship at work have been
Length of
service
(years)
Maximum
indemnity
(months
salary)
1 2
5 6
10 10
15 13
20 15.5
30 20
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2. reduced from 10 to 6 factors.
Working conditions that now
require employers to file a dec-
laration are night time employ-
ment, alternative night shifts,
activities under hyperbaric con-
ditions, extreme temperatures,
noise, and repetitive working
actions.
- A new employee representative
body, the Economic & Social
Council (Comité Social et Eco-
nomique or CSE) combines and
replaces all other employee re-
presentatives (namely, Délégue
de Personnel, Comité d’Entrepri-
se or CHCST). A CSE is requi-
red to be put in place by a busi-
ness when average staff numbers
exceed 10 employees over a 12
month period and where existing
employee representatives are in
place, implementation will be at
the end of current terms in offi-
ce. The number of representati-
ves and the length of mandate
may vary depending on the size
and specific circumstances of the
business.
The role of the CSE for busines-
ses with less than 50 employees
is defined as :
♦ presenting the employer with
individual or collective staff
reclamations based on em-
ployment law regulations.
♦ promoting health and safety
and improved working condi-
tions.
♦ notifying the Works Inspector
(l’Inspector du Travail) of all
complaints or observations re-
lating to application of em-
ployment law regulations.
Additional roles are present for
businesses with more than 50
employees
For business with less than 50
employees, the personnel dele-
gates should meet with their em-
ployer at least once a month plus
« on request » for urgent matters.
Time allocated to representatives
for fulfulling their roles are set at
10 hours for businesses with less
than 50 employees and 16 hours
for other businesses.
- Introduction of direct withhol-
ding of income tax at source is
now deferred until January 2019.
Short term apartment rentals
French apartment owners who rent
out on short term lets face new
regulations under a law for « Ac-
cès au Logement et un Urbanisme
Rénové » known as the loi ALUR.
The new regulations became ef-
fective in December 2017 and
introduced significant measures
aimed at short term apartment ren-
tals via sites such as AirBNB
which are seen as generating a
shortage of available apartments
for longer term rentals by local
tenants. The loi Alur applies to
cities with more than 200 000 in-
habitants.
Under the new regulations, renting
out an apartment ‘for residential
use in a frequent manner for short
term lettings to a transient cliente-
le’ is considered a change from
residential to commercial use for
a property. Such rentals are now
considered as being similar to ho-
tel activities because rent levels
are significantly higher than the
long term local market rents.
Consequently, apartment owners
may be required to apply for au-
thorisation for a change of use.
The law distinguishes between
owners or lessees using an apart-
ment as their main private residen-
ce. In these circumstances, a pro-
perty can be rented out for up to
120 days per year without need for
further authorisation.
Other owners or lessees seeking to
rent where the property is not their
main private residence are requi-
red to:
1. File a declaration requesting a
change of use from residential
to commercial use for the pro-
perty in respect of any rentals.
2. In addition, in order to maintain
an equilibrium in the quantity of
residential accomodation availa-
ble in Paris, a compensation is
required to be paid by an owner
so that equivalent commercial
space may be converted to resi-
dential accomodation. The level
of compensation will vary de-
pending on the location of the
apartment.
3. Obtain an authorisation number
from the Mairie de Paris for
registration on line as a com-
mercial rental. This number
must now be quoted in any ad-
vert to rent the apartment.
4. Pay the hotel levy the « taxe de
séjour » on any rental income
arising from the apartment.
Fines for non respect of the new
law can be up to €50 000 plus
costs relating to restoring the pro-
perty to its original state.
Newsletter January 2018
If you do have any questions
concerning our newsletter,
please contact:
Patrick Scanlon
FERRIERES & Co
46 Rue du Général Foy
75008 PARIS
France
info@ferrieres.net
+33 (0) 1 42 94 29 33
www.ferrieres.net