Simulator for Rent Reclassification
as Director Remuneration

Article 32, paragraph 2 of the Income Tax Code 1992 provides that when a company director rents real estate to their own company, the portion of rent exceeding 5/3 of the non-indexed cadastral income × revaluation coefficient is automatically reclassified as director remuneration. This anti-abuse mechanism aims to prevent directors from receiving income as rent (less taxed) rather than as remuneration.

The non-indexed cadastral income (CIni) appears on your tax assessment notice. For the reclassification rule of art. 32 para. 2 ITC 92, it is multiplied by a revaluation coefficient set annually by FPS Finance — distinct from the indexation coefficient used for ordinary PIT. The cap is then calculated as CIni × revaluation coeff. × 5/3.

Official coefficients: 2027: 5.75 · 2026: 5.63 · 2025: 5.46 · 2024: 5.37 · 2023: 4.86 · 2022: 4.63 · 2021: 4.60.

The reclassified portion is taxed as director remuneration under PIT, not as real estate income. This results in: (1) application of the marginal PIT rate (up to 50%), (2) director social contributions (~20.5%), (3) possible application of professional withholding tax, (4) in case of tax audit: fines and late interest. The company, for its part, can only deduct the non-reclassified portion as a business expense.

Several strategies are possible: (1) Reduce the rent below the 5/3 revalued CI cap, (2) Reassess the CI if it is undervalued (procedure with FPS Finance), (3) Rent only the professional portion of the property (office, etc.) and calculate the cap on that portion only, (4) Sell the property to the company to avoid renting, (5) Consult an accountant to find the most suitable structure for your situation.

Yes. Reclassification also applies when the property is owned by the director's spouse, legal cohabiting partner, or minor children who occupy the family home. The tax authority may consider that the director is the actual economic beneficiary of the rental, even if the property is formally in a family member's name.

In the case of furnished rental, the rent must be split into two parts: the real estate portion (the bare property) and the movable portion (furniture and equipment). Only the real estate portion is subject to the reclassification rule of art. 32 para. 2 ITC 92 and compared with the 5/3 indexed CI cap.

The movable portion, in turn, is taxed as movable income at the liberatory withholding tax rate of 30% — often more advantageous than the marginal PIT rate.

Practical allocation: The split must be realistic and justifiable (detailed furniture inventory, market value, etc.). The tax authority may challenge an exaggerated movable portion. In practice, the 60/40 rule is commonly applied: 60% attributed to real estate, 40% to furniture and equipment.

When the property is held jointly between the director and their spouse, only the director's share is subject to the rule of article 32 para. 2 ITC 92. The spouse's share who is not a director in the company is taxed as ordinary real estate income, without reclassification risk.

Example: If the property is held 50/50 and the total rent is €20,000/year, only the €10,000 attributable to the director is compared to the cap. This can allow the admissible rent to be doubled without exceeding it.

Note: if the spouse is also a director in the same company, both shares will be subject to the rule, cancelling the advantage of joint ownership.