What is a Pas-de-Porte? Understanding the Doorstep Fee in French Commercial Leases

In French commercial leases, landlords often require tenants to pay a pas-de-porte, known as a doorstep fee. What exactly does this term entail?

Business owners occupying commercial premises may face two distinct payments: the pas-de-porte to the landlord or the droit au bail (lease right) to the outgoing tenant. These have different legal natures and must not be confused.

The Pas-de-Porte: Definition

The pas-de-porte is a lump-sum payment requested by the landlord upon signing the lease contract. Its amount is freely negotiated between the parties.

This entry fee can function as:

• Additional rent: In disputes, it shields the landlord from rents below the premises' true market value.
• Compensation: It may offset the decline in the premises' market value and transferred goodwill. If reclaiming the space, the landlord owes a substantial eviction indemnity; the pas-de-porte serves as a financial equivalent, potentially covering various commercial benefits provided by the landlord.

It can also blend both elements. Landlord and tenant should explicitly define its nature in the lease; otherwise, courts typically reclassify it as additional rent.

Drafting and Taxation of the Pas-de-Porte

A dedicated clause must outline the amount, nature, and payment terms. Signing commits the tenant to payment.

Tax treatment hinges on its classification: As additional rent, it's deductible as an expense over the lease term. As an indemnity, it's recorded as an intangible asset and non-deductible.

Droit au Bail vs. Pas-de-Porte: Key Differences

The droit au bail—paid to the outgoing tenant upon lease assignment—depends on location, premises features, and remaining term. It's unrelated to the landlord.

Avoid confusing lease transfer for a droit au bail with full business fund transfer; the lease is merely one component.