Commercial lease: set and revise the rent

Verified 09 October 2025 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Justice

At the conclusion of the commercial lease, the amount of the rent is freely fixed by the parties. During the lease, the rent is revised according to different mechanisms. The review may take place every 3 years at the request of the owner or automatically through a sliding scale clause. In the event of a dispute over the amount of the revised rent, it is possible to refer the matter to the departmental commission for the conciliation of commercial leases (CDC) and/or the president of the judicial court.

The amount initial rent is not regulated. He is freely fixed by the parties to the contract. The owner (called landlord) is not bound by the rent of the previous tenant or by reference rents.

Usually, the payment of the rents takes place at the beginning of every quarter but parties can also choose to pay their rent at the end of the quarter. The payment of rent can also be made monthly at the beginning of the month or at the end of the month.

On the other hand, when reviewing the lease or renewing the lease, the amount of the rent is regulated.

If the lease is intended for all businesses, the rent is in principle higher than that of a lease authorizing only a defined activity.

The lease agreement may provide for the payment by the tenant of other sums in addition to the rent:

The door step corresponds to the payment of an entrance fee paid by the tenant (called taker) to the owner (called landlord) when entering the premises.

It is not mandatory and applies to vacant premises.

The amount of the door step is freely fixed by the parties and generally corresponds to 3 or 6 months of rents.

This entry fee may be paid in one go or by installments in addition to rent. It is usually offset by a lower rent.

It is not refunded at the end of the lease.

FYI  

The amount of the door step and the terms of payment must be indicated in the lease.

At the time of writing the lease agreement, the landlord and tenant must decide whether the step is a rent supplement (the most common case) or compensation.

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Rent supplement

In this hypothesis, the step is taken into account for the calculation of the triennial revision and for setting the rent of the renewed lease.

For the owner, it constitutes a property income.

Doorstep is subject to VAT if the rent of the lease is itself subject to it. The rent of equipped premises, i.e. equipped with furniture and equipment necessary for the operation of the tenant's activity is subject to VAT. If the lessor benefits from the exemption from VAT, it is not concerned by the declaration and payment of VAT.

For the tenant, the step constitutes an expense deductible from the results as a percentage of the contract duration (1/9e per year) provided that the rent fixed in the lease is abnormally low, i.e. significantly lower than the rental value.

Allowance

For the ownerHowever, there is no taxation.

For the tenant, the gate step is not a deductible charge and it cannot be depreciated.

Please note

Doorstep is subject to the contribution on rental income (CRL) of 2.50%. It must be paid only by the owners of legal entities (i.e. businesses, associations, private law bodies, etc.) if the premises are located in a building that has been completed for at least 15 years and if the rental income is not subject to VAT.

The VAT rules on commercial rents differ depending on whether the rented premises are equipped or bare.

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Premises equipped

The owner who rents equipped premises, i.e. equipped with furniture, equipment and facilities necessary for the operation of the tenant's business (e.g. auditorium fitted out to receive spectators) is subject to VAT equal to 20%.

If the owner benefits from the exemption from VAT, it is not concerned by the declaration and payment of VAT.

Bare Premises

The owner who rents bare premises, i.e. not equipped with equipment, furniture or equipment necessary for the operation for which they are intended, is exempt from VAT.

However, he can opt for VAT by sending a single letter to the companies' tax department of the location of the premises.

Who shall I contact

Please note

When renting does not give rise the actual payment of the VAT, the owner of the legal person (businesses, associations, private law bodies, etc.) must pay the contribution on rental income (CRL).

During the lease, the rent can be revised according to the triennial (legal) revision every 3 years, according to a sliding scale clause (usually annual) or according to a recipe clause.

Triennial review (legal review)

The rent can be revised at the request of the landlord (also called landlord) or the tenant (also called taker). This review is not automatic. This is a right that can be exercised even when the lease does not provide for it.

When is the triennial review taking place?

The three-year rent review can be requested by the landlord or tenant in a period of 3 years after any of the following:

  • Entry of the tenant into the premises
  • Renewal of a previous lease
  • The previous revision takes effect.

The review is requested only when the 3-year period has expired (i.e. from the day after its expiry). There is no maximum time limit.

The request for a triennial review may also occur after the expiry of a period of 4 years, 5 years or more.

The request for review must be sent by act of commissioner of justice (formerly act of judicial officer) or by registered letter with acknowledgement of receipt (LRAR). It must specify the amount of the rent requested.

When the tenant accepts the request to review the rent, he can either write to the landlord with his agreement or do nothing and pay the new rent.

Calculation of the revised rent

The triennial revision shall be established taking into account one of the following indices:

FYI  

The Quarterly Cost of Construction Index (CCI), which was used as the benchmark for the three-year commercial rent review, can no longer be used for leases entered into or renewed since September 2014.

The rules for calculating the rent are different if it is the first revision or a subsequent revision.

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First rent review

The calculation formula to obtain the revised rent is as follows:

Rent in progress x (last index published at the time of revision/ reference index at the time of initial fixing).

For contracts concluded or renewed since September 2014, the change in rent may not lead to an increase greater, for a year, than 10% the rent paid in the previous year.

Example :

A lease is signed on 1er october 2021 with a monthly rent of €500 based on the ILC. The first triennial review takes place on 1er October 2024.

To obtain the revised rent amount:

Rent in progress x (last index published at the time of revision/ reference index at the time of initial fixing)

= €500 x (index of 2e quarter 2024/index of 2e quarter 2021)

= €500 x (136.72 / 118.41)

= €577.31

Subsequent revisions

New requests for review may be submitted every 3 years.

The period runs from the moment when the previously revised rent is applied.

In calculating the revised rent, the current benchmark must be taken into account on the date of the last revision.

The calculation formula to obtain the revised rent is as follows:

Rent in progress x (last index published at the time of the revision/ benchmark at the time of the last revision).

Example :

A lease is signed on 1er october 2018 with a monthly rent of €500, based onILC.

During the 1re review in october 2021, the rent is set at €525.84.

=500 x (index of 2e quarter 2021 / index of 2e quarter 2018

= 500 x (118.41/112.59)

= €525.84

During the 2e triennial review of 1er october 2024, the following calculation formula must be applied:

Rent in progress x (last index published at the time of the revision/ benchmark at the time of the last revision)

= Current rent x (index of 2e quarter 2024 / index of 2e quarter 2021)

= 525.84 x (136.72/118.41)

= €607.15

Uncapping of the triennial review

The three-year rent review is in principle capped, i.e. it cannot exceed the change in the commercial rent index (ILC ) or the tertiary rent index (ILAT). However, in some cases, the rent revision is uncapped: it is then set according to the rental value.

The landlord may request an uncapping of the rent in one of the following cases:

  • Changes to local marketing factors (increase in population, new arteries, pedestrian street, etc.) which led to an increase or decrease of more than 10% of the rental value
  • Contract clause regarding the duration of the lease
  • Change of activity (called de-specialization) in the lease made by the tenant

In these different cases, the amount of the rent can be uncapped and thus correspond to the rental value locals.

The rental value of the property takes into account the following:

  • Characteristics of the premises (location, surface, standing and layout of the premises, etc.)
  • Destination of the premises (nature and number of shops authorized by the lease, for example, bakery)
  • Obligations of the parties, including distribution of taxes and charges of co-ownership
  • Local commercial factors
  • Prices in the neighborhood.

Warning  

The increase in rent as a result of the removal of the ceiling may not exceed, for a year, 10% the rent paid in the previous year. It's called the rent smoothing.

Scalable clause (or indexing clause)

Variation as a function of a benchmark

When concluding the lease, the parties may agree on a sliding scale clause (or indexing clause), allowing the variation of the rent according to a benchmark mentioned in the contract.

The index is different depending on the activity carried out:

  • For the commercial or craft activities, this is the quarterly commercial rent index (ILC).
  • For other activities, it is the tertiary rent index (ILAT)

The construction cost index (CCI) can also be used for rent indexation as part of a sliding scale clause.

The periodicity is freely fixed by the parties to the contract. In practice, the rent review often takes place every year.

The rent is then revised automatically on the expiry date specified in the contract, without intervention by the owner (lessor).

Protection against too high a variation of the rent

If, through the use of the sliding scale clause, the rent increases or decreases by more than ¼ compared to the previously fixed price, one of the parties may request the immediate rent review.

This request is made by registered letter with AR or by act of commissioner of justice (formerly act of judicial officer).

The judge will then set it at the rental value.

The increase cannot be greater than 10% the rent paid in the previous year.

Recipe Clause

The revenue clause (or variable rent clause) is a clause in the commercial lease that provides that the rent varies according to the tenant's turnover.

In addition to a variable part that corresponds to a percentage of the tenant's turnover, the rent often includes a fixed part (called Guaranteed minimum rent).

This clause is often used for premises located in shopping centers.

Where the landlord and tenant fail to reach an agreement, either party may seize:

  • Either the departmental commission of conciliation (CDC) of commercial leases
  • Either the president of the judicial tribunal

Referral to the Commercial Leases Conciliation Commission

In case of disagreement on the amount of the revised rent, the landlord or tenant can refer the matter to the Commercial Lease Conciliation Commission (CCBC). It is trying to reach an agreement between the parties. His referral is free of charge.

To refer the matter to the Commercial Lease Conciliation Commission (CCBC), the following steps must be followed:

  • Send a registered letter with acknowledgement of receipt
  • Mention the contact details of the landlord and the tenant
  • Attach the documents relating to the request (lease agreement, statement of expenses, letters, summary of the dispute and expectations of the parties...)

You must contact the conciliation committee of the department in which the activity is carried out. To find out about the relevant CCBC, you can contact the prefecture:

Who shall I contact

Please note

Referral to the Conciliation Commission is not mandatory. The parties may address themselves directly to the President of the judicial tribunal.

The Commission shall endeavor to reconcile the parties and delivers an opinion within 3 months.

If an agreement is reached on the rent of the revised lease, it notes the conciliation that must receive application.

If the parties are unable to reach an agreement, the committee issues an opinion showing the main points of disagreement and a reasoned rent proposal. The landlord or tenant can then refer the matter to the president of the court.

Referring the matter to the President of the Judicial Tribunal

The matter may be referred to it either after the failure of conciliation before the Conciliation Commission or directly by one of the parties.

One party must send a written submission to the other party by registered letter with AR. The President of the judicial court is seized 1 month after the tenant or the owner receives the first written brief.

The landlord and the tenant must be assisted by a lawyer.

Who shall I contact

During the procedure, the tenant does not have to continue to pay the rent provided for in the lease.

The president of the judicial tribunal may refer the parties to a Settlement Hearing (ARA) held by another judge. The proceedings are then interrupted and referred to another judge who tries to reach an amicable agreement.

Warning  

When the tenant or landlord are in collective procedure, it's the tribunal des activités économiques (TAE) which is responsible for the following 12 cities: Avignon, Auxerre, Le Havre, Le Mans, Limoges, Lyon, Marseille, Nancy, Nanterre, Paris, Saint-Brieuc and Versailles.

Know the competent court for procedures to prevent or treat difficulties

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