Investing in rental housing in French Guiana: what tax credit is available for companies subject to corporate income tax?

Key points to remember

A company subject to corporation tax and actually carrying out its activity in French Guiana can benefit from a tax credit for the acquisition or construction of new housing intended for rental.

Two systems must be distinguished:

• the 40% tax credit provided for in Article 244 quater X of the General Tax Code, reserved for operations benefiting from a subsidized social rental loan and prefectural approval;
• the 35% tax credit provided for in Article 244 quater W, applicable to other new rental housing subject to rent and income ceilings.

These schemes cannot be freely combined. The choice depends on the nature of the program, its financing, the level of rents, the beneficiaries sought, and the ability to obtain the necessary approvals.

A scheme open to Guyanese companies since 2019

Since the 2019 Finance Act, companies subject to corporation tax can benefit from the tax credit provided for in Article244 quater X of the General Tax Code when they acquire or build new housing in an overseas department where they carry out their activity.

This extension applies to buildings for which a declaration of commencement of works has been filed since January 1, 2019.

Therefore, this is not a scheme created in 2026. The date of January 1, 2026 corresponds to the entry into force of the extension of the scheme until December 31, 2029, decided by article 13 of the finance law for 2023.

This extension offers operators additional visibility, but it does not exempt them from examining the schedule specific to each project: for a construction or acquisition of a building to be constructed, the foundations must be completed within the time frame stipulated by the text.

Which companies can benefit from it?

The scheme is not only aimed at social housing organizations. It can also benefit a company that cumulatively meets the following conditions:

• be subject to corporation tax;
• to be established in French Guiana;
• to effectively carry out its activity there;
• to be up-to-date with one's tax and social obligations;
• having fulfilled its obligations to file annual accounts;
• to acquire or build new housing located in French Guiana;
• benefit from the required subsidized financing;
• to obtain prefectural approval for the program.

Establishing a company in French Guiana is not simply a matter of having an address or registering it. The reality of its activity, its resources, and its organization must be demonstrable.

The APE code alone does not determine eligibility. It is only one indicator among others. Similarly, the use of a metropolitan holding company does not necessarily preclude eligibility, but it cannot compensate for the lack of actual business activity of the company making the investment.

A civil society subject to income tax does not, as such, meet the condition of being subject to corporate income tax provided for in paragraph 5 of section I of article 244 quater X. A civil society that has validly opted for corporate income tax could be examined differently, provided that it fulfills all the other conditions, in particular that relating to the actual exercise of an activity in French Guiana.

The 40% tax credit provided for in Article 244 quater X

The tax credit rate is set at 40%.

This rate applies not to the total amount paid by the company, but to a tax base determined from the eligible cost price of the housing.

This plate is notably:

• less the taxes and acquisition fees excluded by the text;
• reduced by public aid received;
• capped per square meter of living space;
• determined based on expenses that are actually eligible.

It is therefore inaccurate to present the mechanism as allowing the company to "recover 40% of the purchase price." The company benefits from 40% of a recalculated and capped base amount.

Simplified example

A company is building a program in French Guiana with a total cost of 1.8 million euros.

After reprocessing expenses, deducting public aid and applying the ceiling per square meter, the eligible base is set at 1.5 million euros.

The theoretical tax credit then amounts to:

1 500 000 € × 40 % = 600 000 €

This example is indicative only. The final amount depends on the cost price breakdown, the eligible surface area, and the applicable ceilings at the time the investment is made.

The subsidized loan: the true gateway to the scheme

For companies subject to corporate income tax, the benefit of article 244 quater X requires that the housing be financed by means of the subsidized loans provided for in article D. 372-21 of the Construction and Housing Code.

These loans are part of the financing for social rental housing in overseas territories. They can be granted by the Caisse des dépôts et consignations (French Deposits and Consignments Fund) as well as by credit institutions or financing companies that have entered into an agreement with it under the aegis of the State.

The beneficiary must, in particular:

• to provide minimal equity financing;
• manage the housing itself or entrust it to an approved organization;
• to obtain a prior favorable decision;
• submit your loan application to the lending institution within six months of this decision.

When granted by a credit institution or financing company, the loan must in principle represent at least 50% of the total cost of the operation, subject to the exceptions provided for by law. Articles D. 372-20 to D. 372-25 of the French Building and Housing Code.

The application for subsidized financing must therefore be submitted very early in the process. It would be risky to first acquire the land or begin construction and then seek financing that qualifies for the tax credit.

Prefectural approval and the applicable quota in French Guiana

Operations benefiting from these subsidized loans must receive prior approval from the State representative in the department.

This approval presents an additional practical difficulty: the number of accommodations that can be approved is limited.

In French Guiana, the number of housing units that can be approved for a given year cannot currently exceed 25% of the average number of social housing units delivered in the department during the previous three years.

This quota is increased to 35% in Guadeloupe, Martinique and Réunion, but this increase does not apply to French Guiana.

The legal eligibility of a project does not, in itself, guarantee approval. The availability of the annual quota and the application submission deadline must be verified with the relevant government departments before the investment is made.

What are the rental obligations?

The accommodations must be rented out:

• naked;
• within twelve months of their completion or acquisition if the latter is later;
• for a minimum period of five years;
• to natural persons;
• as a main residence;
• subject to rent ceilings;
• to tenants who meet the income limits.

Seasonal rentals, tourist accommodation or the allocation of premises for professional use are therefore incompatible with this system.

The income limits are updated periodically. Compliance must be checked at each rental and documented by retaining supporting documents relating to the tenants' income.

Additional requirements for major programs

When a program exceeds two million euros, a portion of its cost price must correspond to expenses relating in particular to:

• renewable energy production equipment;
• devices using a renewable energy source;
• insulation materials.

The requirement relates to the composition of the program's cost price. It must be integrated into the technical design, the works contracts, and the accounting monitoring of the operation.

Unlike the regulations applicable to social housing organizations, paragraph 5 of section I of Article 244 quater X does not expressly refer to the obligation to reserve 30% of the floor space for tenants subject to the lowest rent ceilings. Therefore, all the conditions applicable to social housing organizations should not be automatically extended to businesses.

Article 244 quater X or article 244 quater W?

Article 244 quater X is not the only provision that may apply to a new rental housing program in French Guiana.

Article244 quater W of the CGI also provides for a tax credit for companies subject to IS which carry out their activity in the department where the investment is made.

Article 244 quater W expressly excludes from its rental component housing that meets the criteria of point 5 of section I of article 244 quater X. The two schemes therefore do not constitute two rates between which the company could freely choose for the same housing.

The analysis must be carried out beforehand:

• a program financed by subsidized loans and relating to social housing may fall within the scope of 244 quater X;
• A new rental program not meeting these criteria may, where appropriate, fall under 244 quater W, with a rate of 35% and its own ceilings.

The tax credit is granted at the pace of the operation

In the case of the acquisition of a completed dwelling, the triggering event occurs in the tax year of acquisition.

For the construction or acquisition of a building under construction, the loan is granted progressively:

• 70% upon completion of the foundations;
• 20% when the water is removed;
• the balance upon delivery, after calculation on the final cost price.

This timeline improves the financing of the operation, but the tax credit should not be considered as a subsidy received immediately.

Its allocation, the recognition of any receivable, and its repayment must be integrated into the cash flow forecast, taking into account tax returns, their processing, and any audits that may be carried out. It is prudent not to finance the project on the assumption of immediate repayment.

The regime applicable to older housing must be distinguished

The opening provided for in paragraph 5 of section I of article 244 quater X in favour of companies subject to corporate income tax aims at the acquisition or construction of new housing.

Article 244 quater X also contains provisions relating to the acquisition of housing units over twenty years old that are undergoing rehabilitation or certain renovation work. However, these provisions fall under other paragraphs of the text and mainly concern social housing organizations referred to in point 1 of section I.

A commercial company should therefore not assume that it can automatically apply the 40% tax credit to the acquisition and rehabilitation of an old building.

Anticipating the risk of recovery

The tax credit may be reclaimed when the legal conditions are no longer met, particularly in the following cases:

• failure to rent out the property within twelve months;
• renting to an occupant who does not meet the income limits;
• exceeding the rent ceiling;
• change of use of the dwelling;
• of premature transfer;
• failure to comply with the minimum rental period;
• failure to complete the building on time;
• of tax, social or reporting irregularities of the company;
• due to a lack of understanding of the conditions attached to the approval or the subsidized loan.

A monitoring system must be in place for the entire duration of the commitment, including the retention of leases, tenants' tax notices, approvals, certificates of progress of the construction site and justifications of the cost price.

Why is this question particularly important in French Guiana?

The value of the scheme does not stem solely from its rate. It must be considered in relation to the structural needs of the territory of French Guiana: population growth, pressure on the rental housing stock, construction costs, and the need to develop a supply of affordable housing.

This territorial reality does not, however, negate the need for a project-by-project study. The location of the land, its accessibility, its connection to networks, its land status, urban planning regulations, the risk of flooding, and the cost of transporting materials can have a greater impact than any tax advantage alone.

The support must therefore combine tax analysis with the legal and operational security of the program.

Secure the project before any final commitment

Before acquiring the land, signing a sale agreement for a property under construction, or starting construction, it is necessary to determine, in particular:

1. which company will carry out and operate the investment;
2. if it is actually established and active in French Guiana;
3. if the program falls under Article 244 quater X or Article 244 quater W;
4. if the agreed financing can be obtained;
5. if the prefectural quota still allows for the approval of housing;
6. what will be the actually eligible base;
7. What rent and income ceilings will apply?
8. what suspensive conditions must be included in the deeds;
9. how will the leasing and monitoring of commitments be organised;
10. how the tax advantage will be integrated into the financing and cash flow plan.

ARST Avocats assists companies operating in French Guiana with the legal and tax analysis and structuring of their projects, in coordination with relevant finance, real estate and construction professionals.

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Main sources

• Article 244 quater X of the General Tax Code
• Article 244 quater W of the General Tax Code
• BOFiP – Scope of the overseas social housing tax credit
• BOFiP – Determination of the tax credit
• Articles D. 372-20 to D. 372-25 of the French Building and Housing Code

If you wish to make an investment in French Guiana, please contact us.

Article written by Morgan Jamet