The taxable rent corresponds to the rent set out in the lease, with the main principle contained in Article 38, 2 bis of the FTC : the taxation of proceeds (in this case rents) is according to the rate at which the service is provided. For leases, the service is usually linear over the lifetime of the lease.
There may be a discrepancy between the accounting and the tax rules. In fact, in accounting terms, it is sometimes possible to take into account rents as the rent debt arises, irrespective of when the service is provided, without, for example, showing proceeds for a rent-free period (which is not in principle the case in tax terms).
In tax terms, the lessor must show annual proceeds of ≈ €888,889 (= (€1M X 8) / 9) for each of the 9 years.
|Rent collected (€M)||Rent-free
|Taxable rent||888 889||888 889||888 889||888 889||888 889||888 889||888 889||888 889||888 889||8 M€|
This linear averaging rule is also intended to apply in the case of progressive rents, where the tenant finances works that will be transferred to the owner or where the lessor receives an entry fee.
A parallel principle applies to the tenant for the deduction of rents paid (provided that the tenant will in fact keep commercial accounts, i.e. accruals accounting).