French Overseas Tax Benefits
Explained for Investors

Why does Reunion have special tax rules?

Reunion Island is part of France — but French legislators have long recognized that overseas departments need specific economic tools to attract investment, support construction, and counterbalance higher living costs. This produced a family of tax incentives reserved for overseas territories: Girardin, Pinel Overseas, CIOP, LMNP Overseas. These are legitimate, decades-old schemes used by millions of French taxpayers.

1 · Girardin scheme (income tax reduction)

The most generous and the most specific. The Girardin scheme offers a direct reduction of income tax proportional to investment in eligible overseas projects. Two main variants apply to real estate:

• Girardin Immobilier Intermédiaire — for intermediate-rental-price housing
• Girardin Immobilier Social — for social housing operations

Typical tax reduction: 25% to 32% of invested capital, received in the year of investment. Available for French taxpayers only (must pay French income tax to benefit).

2 · Pinel Overseas (Pinel Outre-mer)

Standard Pinel scheme exists in mainland France with reduced rates. Overseas Pinel offers bonus rates:

• Commitment 6 years: 21.5% reduction (vs 9% mainland in 2024)
• Commitment 9 years: 26% (vs 12%)
• Commitment 12 years: 28.5%

Reduction spread over the rental period. Requires rent caps and tenant income caps. Applicable to new-build apartments in qualifying zones. Reunion is classified in zone B1 for Pinel Overseas.

3 · LMNP — Furnished rental regime

Loueur en Meublé Non Professionnel is a tax regime (not a property type) that allows furnished-rental income to be heavily optimized:

• Depreciation of the building: 2–3% per year, deductible from rental income
• Depreciation of furniture: 10–20% per year
• Deduction of all operating expenses (maintenance, management, loan interest)
• In practice: many landlords pay zero income tax on their furnished rental for 10–15 years

LMNP is particularly attractive for Reunion seasonal rentals (Saint-Gilles, Saint-Leu, cirques). Non-residents can also benefit under specific rules.

4 · CIOP — Productive Overseas Tax Credit

Crédit d'Impôt Outre-Mer Productif: a 35% tax credit on eligible productive investments in overseas territories. Applies to new-build rental housing in approved zones. Technical and subject to conditions — typically used for larger projects through a specialized fiscal intermediary.

5 · Tax niche ceiling raised to €18,000

French tax law limits the total tax reductions a household can claim to €10,000 per year — EXCEPT for overseas investments, which benefit from a €18,000 ceiling. This allows stacking of multiple schemes (Girardin + LMNP + Pinel Overseas) up to a much higher limit.

Who benefits from these incentives?

These schemes are primarily beneficial for French taxpayers. To use Girardin, Pinel Overseas, or CIOP, you must pay enough French income tax to absorb the reduction. Typical profiles:

• French taxpayer with income tax above €5,000/year — Girardin social efficient
• French taxpayer above €15,000–€25,000 income tax — full Girardin or Pinel Overseas
• Any taxpayer with furnished rental property — LMNP applies automatically

Non-French residents who pay French income tax on French-source income (including Reunion rental income) can also benefit from some of these schemes — we can assess eligibility on a case-by-case basis.

Summary table

Can non-residents benefit?

Partially. LMNP applies to anyone (rental income is French-source, taxed in France). Girardin and Pinel Overseas require French income tax payment — which non-residents can have, on French-source income such as Reunion rental income. We assess eligibility case by case. Always pair this analysis with your home-country tax advisor to verify double-taxation treaty impacts.